European countries are paving the way for institutional investors to increase exposure to infrastructure assets by launching fiscal programs and changes to retirement plan rules.
Amid the ongoing battle with the coronavirus pandemic, the French, Dutch, Swiss and U.K. governments are all moving infrastructure higher on their priority lists.
For the governments, the push would help renew aging infrastructure and spur new industries such as solar energy while providing jobs for the unemployed. For investors, the initiatives offer the potential of snagging higher returns as fixed-income assets continue to disappoint.
France and the Netherlands each unveiled fresh stimulus programs on Sept. 3 and Sept. 7, respectively. The French government will make a fiscal injection of €100 billion ($118.4 billion) into its economy over the next two years with a heavy focus on sustainable transportation and green energy, while the Dutch government will spend €20 billion over the next five years to improve the country's overall infrastructure.
Simultaneously, the Swiss government — in a move that is said to have been accelerated by the pandemic — is allowing pension funds to devote a greater share of their assets exclusively to infrastructure, effective Oct. 1.
In a similar modification to retirement plan rules, the U.K. government proposed Sept. 11 to exclude direct investments in illiquid assets from fee cap rules to better enable infrastructure investments by defined contribution plans.
All of these developments are expected by sources to facilitate better access for institutional investors to infrastructure investments. The changes come as the demand for infrastructure strategies is set to return to its pre-pandemic levels, with investors showing more interest in the past two months, sources added.