The German Federal Government is providing considerable funds for the renovation and expansion of the infrastructure; the “special funds” alone total 500 billion euros. Despite all the political discussions, this is a significant step. However, digitalisation, the energy and heat transition, rail and road transport or social infrastructure require permanently high investments. Public funds alone will not be able to do this. Private capital can therefore take over an important part of the financing and thus close part of the gap between public investment needs and the public funds actually available.
Infrastructure can thus both make a contribution to the national economy and perform a meaningful function in the portfolios: For institutional investors, it is a stand-alone asset class with specific benefits. Many business models are based on long-term usage, lease or purchase agreements and thus on comparatively predictable cash flows. Depending on the contract structure, income may be linked to price development. In addition, there is often a balanced risk-return profile and a comparatively low correlation with liquid asset classes.
Infrastructure is far broader in scope than roads, railways or power generation. These include, for example, mobile telephone masts, fibre optic networks, storage, power and heat networks, data centres or social infrastructure. Investments in unlisted companies can also be economic infrastructure investments if their business model is based on the provision of such essential services.
Two examples of this are the previous investments of the infrastructure ELTIF infraVest from Commerz Real. With ATC Europe, the fund holds a stake in one of the leading European radio tower operators. The company has more than 30,000 locations, of which around 15,000 are in Germany. Cellular towers are a good example of digital infrastructure: They form the physical basis for increasing data volumes and are managed via long-term usage relationships by mobile phone companies. And they are a good example of a necessary infrastructure that is usually built and operated entirely without public funds, which would perhaps not exist without private capital.
The second investment is a stake in Munich’s rail vehicle provider Railpool. The company rents out around 500 electric locomotives in the full-service model to private and state railway operators in Europe. Infrastructure does not mean the rail itself, but the rolling stock needed for more efficient and climate-friendly rail transport. In addition, hybrid locomotive concepts play a role where lines or shunting areas are not continuously electrified with overhead lines.
Both investments are initially economically equity investments in unlisted companies. At the same time, these companies provide infrastructure directly. The examples thus show that the boundaries between private equity and infrastructure can be fluid.
Another starting point is the energy infrastructure - independent of infraVest. Commerz Real will take over the fund management of Pangaea Life Blue Energy on 1 January 2027. So far, the fund has mainly invested in wind, solar and hydropower as well as energy storage. In the future, the focus will also be on networks and other energy-related infrastructure. This is because additional generation capacity alone is not enough for the energy transition. Electricity must also be stored, transported and made available as required.