Invest Europe recently highlighted the need for increased
private-sector investment in infrastructures in Europe, citing similar
projects promised by American and Chinese leaders as a threat to the
continent’s competitiveness.
In an opinion piece, Invest Europe CEO Michael Collins said Europe
needs to triple its current infrastructure spending and private capital is the
way to supplement what the public sector cannot provide. Pension funds, insurers,
sovereign wealth funds and other long-term investors are ideal for infrastructure
funds, but have not been capitalized upon. Under the guidance of investment
managers with expertise in the area, infrastructure funds could draw in these
investors due to their long-term nature, with the caveat that European
governments ensure that these funds are predictable in their terms.
Unpredicted changes, such as fees and tariffs applied to
infrastructure owners, which are sometimes even retroactively instituted, make it
difficult to attract investors who need some assurance that the terms of their
investments won’t change.
The piece specifically cites Spain as an example of this
problem. Until 2013, the country was considered a sound investment for
long-term global investors due to its renewable energy developments, which
reached solar and wind power assets of $13.9 million. The government then
reversed it policies, slashing investor returns and removing any incentive for
future investments.
Invest Europe is an association of investment funds that provides information on private capital investment, including forecasts, industry trends and developments, throughout Europe, including the Balkan peninsula.
