10 May 20245 minute read

Infrastructure Investment & Finance Day: Key takeaways from our event in Frankfurt

Focus on Infrastructure and Regulatory

Together with INTREAL, we hosted an impressive gathering of nearly 100 attendees in our Frankfurt office initiated by our partners and ICT Sector Head Germany Manuel Indlekofer as well as Energy Sector Head Germany Michael Cieslarczyk.

With Germany's commitment to becoming a climate-neutral industrial country by 2045, investments in renewable energy have surged in attractiveness. Institutional investors and project developers are increasingly turning their gaze towards infrastructure projects, particularly in the renewable energy sector. This shift in focus was evident in the insightful discussions held during the event.

Bastian Hammer, Head of Tax and Pensions, BVI and Dr Peter Brodehser, Partner Infrastructure Investments, DWS shared their insights into infrastructure investment trends and set the stage for the insightful panel discussions that followed.

At our first panel discussion, the following industry representatives participated:

  • Birgit Benz, Head of Fund Management, FOM Invest
  • Bastian Hammer, Head of Tax and Pensions, BVI
  • Dr Caroline Herkströter, Partner, DLA Piper
  • Markus Schmidt, Head of Business Development Infrastructure, INTREAL
  • Moderators: Rudolf Kömen, Conducting Officer Portfolio Management and Distribution, INTREAL Luxembourg & Dr. Marie-Theres-Rämer, Partner, DLA Piper

Key takeaways from this discussion included:

  • The regulatory environment currently makes Germany a moderately attractive location for infrastructure investments. In order to achieve a turnaround in energy policy and secure Germany as an investment location, legislators must tackle the issue of regulation.
  • German capital currently tends to flow abroad. Institutional investors invest too little in their own country. One of the reasons for this is the lack of asset managers in their own country, as the market is largely driven by home bias. Countries such as France are cleverly making use of the home bias by using an ecosystem to promote private investment in start-ups through local asset managers. Germany in contrast relies entirely on state funding and state asset management.
  • German tax law is currently getting in the way of investments in infrastructure. In order to make the location more attractive, the VAT exemption for all types of funds needs to be extended. German funds need to be able to acquire infrastructure project companies and VC funds regardless of the type of activity and the legal structure. Furthermore, the management of foreign funds from Germany should not lead to any tax risk and international investors should be able to invest in German funds without any tax risk.
  • One question remains: Will the German legislator tackle these issues after the Future Financing Act has failed to address some of these issues? Is the tax burden in Germany is really the problem or does it come down to the attractiveness of investment products in Germany?

 

Focus on Renewables

In our second panel discussion focused on infrastructure investments in renewable energy we received great contributions particularly from:

  • Dr Peter Brodehser, Partner Infrastructure Investments, DWS
  • Marc Drießen, Board Member, Evolv Asset Management
  • Dirk Mous, Head of Infrastructure & Public Finance, DekaBank
  • Michael Volkermann, Head of Project Finance, Deutsche Bank
  • Jens Walzner, Managing Director, Prime Capital
  • Moderators: Dr Wolfram Distler & Dr Manuel Indlekofer, both Partners, DLA Piper

Key takeaways from the panel discussion:

  • Infrastructure investments are in a phase of realignment and currently have to overcome many hurdles, such as the relative attractiveness of fixed-income investments, a greatly reduced reinvestment volume and the denominator effect. This realignment phase is characterized by moderate investment behaviour.
  • Currently, there is a lack of products on the infrastructure market. Falling energy prices and rising interest rates have led to projects losing value and developers have so far been reluctant to offer their projects on the market at lower prices. However, project developers are increasingly being forced to bring projects to the market due to a growing liquidity squeeze. A flood of projects is expected in the coming years and the environment will change from a seller's to a buyer's market.
  • The demand for infrastructure investments in renewable energy in Germany and Europe is massive: with Europe wanting to switch completely to alternative energy sources by 2050, investments in renewable energies will have to grow by 7.5% p.a. in future. Capital for this growth is coming from institutional investors, but alternative sources of money (development institutions, banks, strategic investors, etc.) could become more relevant in the future.
  • The necessary growth in the renewable energy sector poses huge challenges for the investment industry: There will be a lack of asset managers and developers to handle the necessary growth and external providers of investment solutions and placement advisors will gain in importance.
  • The convergence of the real estate and infrastructure sectors could result in synergies for the lacking resources of the energy transition.

Find out more about our Infrastructure Expertise in Germany.

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