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European Pension Funds Investing in Infrastructure – July 2014

by Rebecca Gibney

  • 22 Jul 2014
  • INF

Europe is home to the largest number of institutional investors currently active in the global infrastructure market. Preqin is currently tracking 672 European investors with an allocation to infrastructure opportunities, 40% of which are a form of pension scheme. Preqin holds information on 162 European private sector pension schemes and 109 European Public pension plans that are actively investing in the infrastructure asset class, ranging in size from EUR 72 million to EUR 300 billion in total assets under management.

The majority of private sector and public pension funds based in Europe (45%) are located specifically in the UK. The Netherlands and Switzerland are also prominent locations, with 14% and 14% of investors based in each country respectively. Other notable countries include Sweden and Germany, both of which act as home to 5% of European pension schemes with an allocation to infrastructure.

Seventy-one percent of European pension funds will consider European investment opportunities, more than any other region. In comparison, 32% consider investments in North America, 14% make investments in Asia and Rest of World, and 49% have no real preference and will consider investment on a global scale. In terms of industry preference, core infrastructure sectors are the most popular among European pension plans with 57% investing in transportation infrastructure, 57% in the energy sector, 48% in utilities and 37% in telecommunications assets.

In terms of investment type, a significant 93% of European pension plans will consider investing in traditional unlisted infrastructure funds, while 15% seek direct investments and 11% target listed fund opportunities. With regard to strategy, 94% of these investors seek to invest in primary funds, while 16% will consider fund of funds vehicles.

In terms of European public pension funds, Bavarian Pension Chamber is currently one of the top investors with a current commitment to infrastructure totalling EUR 1.3 billion. The German public pension fund, which comprises 12 national pension funds, invests exclusively through unlisted infrastructure funds, although they remain exposed to a diverse range of industries and project stages. A prominent European private sector pension scheme actively investing in infrastructure is Universities Superannuation Scheme. The UK Private Sector pension Fund has already invested EUR 2.2 billion in 5 European unlisted infrastructure funds and 10 direct investments and will continue to invest in European infrastructure over the coming 12 months.

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