Leveraging Private Capital for German Infrastructure: Expert Insights from Florian Degenhardt
Required Combination of Financial Strategies Necessary to Expand €500 Billion Infrastructure Investment Fund
The German government's plan to allocate €500 billion for infrastructure projects has generated significant interest, both domestically and abroad. One key voice in this conversation is White & Case partner Florian Degenhardt, who specializes in Debt Finance and Project Development and Finance, with a focus on sectors like Power, Aviation, Maritime & Offshore, and Infrastructure, Transportation & Logistics.
According to Degenhardt, effective allocation of private capital is crucial for the success of these ambitious plans. He suggests a smart mix of financing models and a transparent approach to proposals as key strategies.
Smart Mix of Financing Models
Degenhardt recommends using a combination of financing models to accelerate infrastructure investments. This includes Public-Private Partnerships (PPPs), where private companies collaborate with the government to fund, build, and manage infrastructure projects, sharing risks and rewards. Additionally, providing loans or guarantees can enhance the attractiveness of projects to private investors by reducing financial risks.
Transparency and Clarity in Proposals
It is essential that concrete proposals and details about how private capital can be allocated are clearly communicated. This will help ensure that the private sector is fully engaged and that investments are made efficiently.
Effective Allocation Framework
To allocate private capital effectively, the following framework can be considered:
- Identify Priority Projects: Focus on high-impact infrastructure projects that align with national priorities, such as energy transition initiatives, transportation infrastructure, and digital connectivity.
- Engage Private Sector Early: Encourage early involvement of private investors in project planning to ensure alignment with private sector interests and capabilities.
- Structured Investment Vehicles: Utilize structured investment vehicles like infrastructure funds or special purpose vehicles (SPVs) to manage and distribute risks among investors.
- Regulatory Support: Implement supportive regulatory frameworks to facilitate private sector participation. This includes providing incentives, streamlining approval processes, and ensuring legal clarity.
Successful Infrastructure Investments in Germany
Recent transactions in Germany highlight the potential for successful infrastructure investments. For instance, Igneo Infrastructure Partners' acquisition of DAH Group demonstrates the growing interest in renewable energy infrastructure, showing how private capital can be effectively invested in sustainable projects. Similarly, Asterion Industrial Partners' acquisition of STEAG GmbH illustrates the potential for private capital to support the green transformation of traditional energy companies.
By implementing these strategies and learning from successful transactions, Germany can effectively leverage its special fund to attract significant private capital for infrastructure projects. Degenhardt emphasizes that many details remain unclear regarding the allocation of private capital, and he welcomes the special fund as it has made Germany attractive to international investors. Without the involvement of the private sector, necessary investments may not be realized quickly enough, according to Degenhardt.
Florian Degenhardt's service areas extend to Western Europe, with a particular focus on Germany. His insights provide valuable guidance for the effective allocation of private capital in the context of the German government's infrastructure plans.
- Florian Degenhardt, a partner at White & Case with expertise in Debt Finance and Project Development and Finance, advocates for a smart mix of financing models to accelerate infrastructure investments in Germany, including Public-Private Partnerships and loans or guarantees.
- Degenhardt stresses the importance of clear communication of concrete proposals and details about how private capital can be allocated, ensuring that the private sector is fully engaged and investments are made efficiently.
- To effectively allocate private capital, Degenhardt suggests a framework that includes identifying priority projects, engaging private sector early, utilizing structured investment vehicles, and implementing supportive regulatory frameworks.
- Successful infrastructure investments in Germany, such as Igneo Infrastructure Partners' acquisition of DAH Group, showcase the potential of private capital for funding sustainable projects and supporting the green transformation of traditional energy companies.
- By adopting these strategies and leveraging expertise from professionals like Florian Degenhardt, Germany can attract significant international capital and expedite the implementation of its ambitious infrastructure plans in the fields of renewable energy, transportation, and digital connectivity.