Institutional investors want to commit more to European infrastructure

German investors would like to commit more to the asset class of infrastructure than they have to date. That is the key finding of a survey of 50 institutional investors conducted at the 2024 Investors Day hosted by investment boutique Palladio Partners, which is specialized in investments in real assets. The focus is in particular on Europe, followed by North America, while the survey respondents accord no priority to the rest of the world as a target for infrastructure investments.

Infrastructure as tangible assets ahead of Private Equity and Private Debt

In response to the question “In what private-market asset class would you like to invest more than you have to date?” (multiple answers were possible), 84 percent of the respondents chose Infrastructure, followed by Private Equity (52 percent) and Private Debt (42 percent). Real estate was not really in focus and scored only eight percent.

“Given the immense sums that are required to renew and expand infrastructure, a greater allocation by German investors is highly desirable,” comments Michael Rieder, Managing Partner of Palladio Partners. “And many would gladly invest more than they have to date. An improvement in the regulatory framework in Germany would definitely help in this regard.”

Regions outside Europe and the USA are not a priorit

50 percent of the investors polled stated that in coming years they would increase their investments in infrastructure, above all in Europe. Second place went to North America (27 percent) and third explicitly to Germany (19 percent). Only one investor each intends to increase investments above all in the APAC region and/or South America. According to the survey, the SSA and MENA regions were not being prioritized by any investors.

Risk management, ESG requirements and regulatory regimes all have an equal influence on investment decisions – only one quarter of respondents concerned themselves with impact measurement

Just short of two thirds of the investors stated that in each case Risk Management (66 percent), Regulatory Regimes (60 percent) and ESG Requirements (60 percent) were the topics that will most influence their investment decisions in coming months. Impact measurement only influences less than one quarter of the investors (24 percent).

“The survey confirms what we have observed, namely that impact measurement is often not an issue among our investors. The reason is that many do not yet have an impact strategy,” explains Barbara Treusch, Director at Palladio Partners and coresponsible for sustainability reporting to clients. “However, for many of our clients the future viability of their investments is key. For them, there’s a logical interconnect of all the topics, with above all ESG and impact playing a role in their risk management.”

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