Investment Opportunities in German Infrastructure

According to a press release of the German federal government as of 14 October 2016, it has been resolved to establish an infrastructure entity for the German Autobahnen and federal roads organised under German private law as part of the reorganisation of the German Federal Financial Equalization Scheme (bundesstaatliches Finanzausgleichssystem). One aim is to further open up these parts of infrastructure to private financing and to attract private investors, such as i.e. investment funds, pension funds and major insurance companies, in this field.

The specific set-up of the infrastructure entity is still under discussion. This applies to the assets to be contributed, the legal form as well as to the future investment instruments. It is still unclear if there will be a carve-out of the title to infrastructure or if the infrastructure entity’s scope is limited to an asset management company. The hype of investment instruments to be attracted ranges from direct equity investments, corporate bonds to Public Private Partnerships (PPP). Discussed legal forms of organization are in particular the German stock corporation, like i.e. Deutsche Bahn AG, and different kind of fund entities.

The timeline has not been set yet. However, as the infrastructure entity shall be established as part of the new German Federal Financial Equalization Scheme it is likely that the German government intends to set the course until end of 2019.