Current Needs for Infrastructure Investment on a Global Scale

Private Capital Plays an Important Role

In meeting the growing infrastructure needs of economies around the world. Infrastructure projects often require significant capital investment and complex implementation, which private capital can effectively address. By pooling resources from different investors, infrastructure funds can enable projects that would otherwise need public funds.

Infrastructure managers also bring a wealth of expertise to the table. Their teams of experts have in-depth knowledge of the sector, ensuring that investments are made in high- quality projects with strong potential returns.

Furthermore, infrastructure funds play an important role in aligning investors’ interests with the long-term goals of infrastructure development. By fostering collaborative partnerships with infrastructure developers and operators, funds can contribute to the successful delivery of projects that benefit economies and communities.

In conclusion, private capital channeled through infrastructure funds is essential to meeting the growing infrastructure needs of economies around the world. It provides the necessary capital, expertise, risk management and liquidity to support the development of key infrastructure projects.

Advantages of Investing in Infrastructure

Investing in infrastructure can offer a range of advantages, which can contribute to a client’s financial security and wealth accumulation. The possible benefits include attractive risk-adjusted returns, high cashflow visibility, diversification and the potential for long-term growth. Furthermore, Infrastructure assets are real assets. Much like Real Estate, infrastructure primarily involves physical structures that provide an essential service to customers. These are capital-intensive and can take years to build, limiting the competition. Many of the services Infrastructure companies provide, such as hospitals and airports, are regulated by government entities. These factors make it harder for new players to enter into competition with already existing assets. An important feature of infrastructure is the long-term nature of contracts these businesses have with their customers. This is particularly true in the transport and energy sectors. Apart from providing long-term stable cash flows, such contracts are often indexed to inflation and can serve as an inflation hedge.

European Long-Term (ELTIFs) Specifically designed for Private Investor

In 2015, the ELTIF funds (mainly in FPS format) were created to finance the real economy with private capital (infrastructure, Real Estate, SMEs/ETIs) with a rather mixed record since less than 60¹ funds had been launched. The new version of the ELTIF 2.0 regulation of 10 January 2024 has relaxed both the marketing rules by removing threshold constraints (especially for individuals) and allows exposure to more eligible assets on the management side.

This new European ELTIF 2.0 regulation is thus a regulated way for retail investors to access investments in unlisted assets with a low minimum subscription and a liquidity mechanism, often quarterly, within the funds.

Swiss Life (Lux) Privado Infrastructure SA Fund, a Srategy to Benefit from those Opportunities

The Swiss Life (LUX) Privado Infrastructure SA fund, launched in early 2024, is designed to capitalise on infrastructure investment opportunities. Our platform, with its extensive market experience, industry knowledge, strong partner network, and efficient risk management, is well-equipped to navigate the challenges of infrastructure investments. The fund has demonstrated robust risk mitigation strategies amidst global pandemics, fluctuating electricity prices, and high inflation by leveraging experienced management and a diversified investment approach.

We closely monitor regulatory and political developments to remain flexible and seize opportunities. Diversification across industries and regions helps mitigate the effects of interest rate fluctuations and market downturns. By focusing on megatrends such as digitalisation, urbanisation, new mobility, new logistics chains, circular economies, and sustainability, we identify and exploit emerging investment opportunities.

One of the first ELTIF 2.0 funds to offer retail clients access to infrastructure, the Privado fund features a highly diversified seed portfolio, providing access to fully invested portfolios of two institutional funds managed by Swiss Life. A key competitive advantage is the alignment of interests with Swiss Life AG, which invests on the same terms as Privado, demonstrating significant commitment with EUR 6.21 billion.

The fund is a semi-liquid investment, accessible to retail clients in Europe with a low minimum investment of EUR 1,000². It can be subscribed to monthly and redeemed quarterly and is available on platforms such as Clearstream and Euroclear.

¹ https://fr.privado-infrastructure.com/fr/home.html
² https://www.esma.europa. eu/document/register-authorised-european-long-term-investment-funds-eltifs

Philip Rauh, Head Operations and Products, Infrastructure Equity, Swiss Life AM