Real Assets
Sustainable infrastructure investments: the key to the energy transition?
Our Real Assets in Focus event took place on March 20, 2024, in the Gleisarena, overlooking the busy tracks of Zurich's main train station, a central infrastructure hub.
Are sustainable real estate and infrastructure investments a game changer in the energy transition? What are the opportunities for investors? Picard Angst moderated this debate with institutional investors and experts in the field as part of the "Real Assets in Focus" event. Two groundbreaking projects were presented: A battery storage project in Germany, financed by the AVENIRPLUS investment foundation, and the "Cool City" project for a lake water network in the heart of Zurich.
Modern, sustainable infrastructure requires significant investment
Global megatrends like population growth, digitalization, mobility, and the energy transition demand significant investment in modern, efficient infrastructure. This is crucial as the renovation and expansion of these systems form the backbone of a functioning economy and society. With many countries and institutions aiming for a net-zero target by 2050, infrastructure modernization and expansion are inevitable. Shifting energy generation from fossil fuels to renewables necessitates alternative power methods and the upgrade of existing plants and outdated distribution grids. According to the Swiss Federal Office of Energy, investments totalling around 1.4 trillion Swiss francs will be needed by 2050. Factoring in the net-zero target, the capital requirement increases by an additional CHF 109 billion.1 The growing trend towards ESG investments will further drive demand for sustainable infrastructure, since it is crucial for decarbonization and achieving climate goals.
Opportunity for institutional investors
This situation presents institutional investors with promising investment opportunities. During the "Real Assets in Focus" event, we explored how institutional investors can leverage the growing need for capital in the infrastructure sector. With high demand, stable and predictable cash flows, appealing returns, potential for value appreciation, and diversification benefits in the portfolio context, infrastructure investments hold significant appeal, especially for institutions with long-term investment horizons. The energy sector in particular promises potential within a market characterized by the aforementioned megatrends and increasing demand for renewable energy. Furthermore, these investments align with sustainability goals, making them attractive to investors focused on environmental responsibility, particularly in combating climate change. Since October 2020, infrastructure investments constitute an independent asset class within institutional portfolios in accordance with the BVV2 investment guidelines. An increasing number of pension funds are capitalizing on opportunity. However, an examination of the investment portfolios of pension funds collaborating with Picard Angst reveals that many are yet to fully exploit the potential of this asset class.
AVENIRPLUS: Sustainable infrastructure for a future-oriented energy supply
On the provider side, an increasing number of investment groups facilitate access to unlisted infrastructure for investors while diversifying investments across various portfolio companies. AVENIRPLUS's infrastructure investment group, for instance, focuses on transportation and renewable energy in Switzerland and Western Europe, consistently aligning its portfolio with sustainability objectives.
Capital increase AVENIRPLUS
An upcoming capital increase this spring will be utilized, among other initiatives, to invest in a 100 MW battery storage facility in Germany aimed at supporting grid stability. Additionally, plans include investments in a PET recycling plant to advance a sustainable circular economy. The subscription period for the capital increase extends until May 31, 2024.
Cool City: innovative cooling and heating solution for Zurich city center
David Füllemann, project manager of "Cool City," one of Switzerland's largest lake water networks, provided insights into a pivotal municipal energy planning endeavor situated in the heart of Zurich. The project aims to implement an innovative, sustainable heating and cooling solution for buildings in the City area by 2031. This intergenerational initiative presents an opportunity to utilize resources and energy in a more sustainable manner. One of the primary challenges encountered in this densely populated area was identifying adequate space for the installation of large heating and cooling pipes.
Picard Angst offers access to interesting investment solutions in the real asset sector
Innovative strategies for the future remain essential to enhance energy efficiency, promote renewable energies, and meet climate objectives. Real assets like infrastructure serve as crucial pillars and offer promising investment prospects for long-term investors. We are happy to support you with our expertise and our diverse investment solutions in the area of real assets.
Your contact
Christoph Beck
Senior Client Advisor Market Switzerland
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