Infrastructure – high demand continues

The importance of infrastructure projects for economic growth, social development, and energy transformation cannot be overstated. Energy production, energy supply, digital networks and transport (roads, bridges, ports) are the backbone of modern economies. However, the investment requirements in these areas are enormous and growing steadily. According to an analysis by McKinsey, global infrastructure investment needs are estimated to reach $94 trillion by 2040, while only around $79 trillion is expected to be financed. This results in an infrastructure gap — the difference between the investment required and the funding currently anticipated — estimated at approximately $15 trillion. Despite the risks involved, this challenge also offers opportunities for investors, especially professional investors.

First, it is important to define what constitutes infrastructure investments. Infrastructure usually refers to essential services such as electricity supply or the rail network. These are mostly tangible assets that are associated with a high degree of durability. Examples include toll roads, pumped storage power plants and wind farms. These investments also feature long-term purchase agreements and exclusivity rights, even extending to a monopoly position, as additional characteristics.

As a result, infrastructure projects in the traditional sense can offer long-term and stable cash flows. Since the underlying contracts with operators largely stipulate price adjustment mechanisms, infrastructure investments are very often considered inflation-proof. The long-term contracts and the essential services provided also offer a certain degree of resilience to economic fluctuations. Last but not least, investors can benefit from potential capital gains if the value of infrastructure projects increases over time, whether through operational improvements, increased demand, or strategic repositioning. Finally, tax advantages and leverage effects from debt financing can further positively influence the overall return. The combination of these factors makes private infrastructure investments an interesting asset class for long-term investors.

Although infrastructure investments are considered relatively low risk due to their characteristics, the risks should be carefully weighed, as with any other investment. Regulatory risks (such as: changes in the administrative behavior of the CSSF or any other competent supervisory authority or the Luxembourg tax authority, risks of adverse international political developments, changes in taxation, government policy and other developments and changes in legal regulations, administrative instructions and tax assessment by courts may affect the tax situation of the Company and its Shareholders) have long been – and continue to be – subject to detailed analysis. Growing interest and market developments are also leading to challenges in some areas in terms of valuation and exit strategies when other sectors prove more attractive again.

The growing importance of infrastructure investments is also reflected in the increasing volume managed by infrastructure funds. Private infrastructure funds offer investors the opportunity to invest in infrastructure projects and benefit from their stable returns. This is precisely where Raiffeisen Capital Management comes in, offering institutional and professional investors, for the first time, a diversified investment opportunity in private infrastructure with "Raiffeisen Capital Private Infrastructure I".

With its multi‑strategy approach, the fund combines investments in infrastructure funds with direct investments in infrastructure projects, thereby creating attractive diversification with a regional and sectoral focus. Raiffeisen Capital Private Infrastructure I invests along megatrends with a geographical focus on Europe. Due to the large investment backlog and the current uncertain market situation, Raiffeisen Capital Management expects very interesting investment opportunities in the coming months and years. The fund aims to influence infrastructure in the core market of Europe while also covering current investment trends such as digitalization and the energy transition. The focus is on achieving an attractive risk/return profile in order to meet investor requirements. In addition, in line with Raiffeisen Capital Management's commitment to sustainability, the fund will be an Article 8 fund.

Channeling capital into sustainable projects is an important concern for Raiffeisen Capital Management and also applies to Raiffeisen Capital Private Infrastructure I. Several interdisciplinary teams in fund management deal with defined future topics, including infrastructure. The results of these in-depth analyses are directly incorporated into the investment process. Raiffeisen Capital Management pursues an integrative sustainability approach based on the three levels of "avoid", "support" and "influence".

Raiffeisen Capital Management has established the Raiffeisen Capital Private Markets Strategy platform in Luxembourg to manage private markets investments. For its first private infrastructure fund, Raiffeisen Capital Management is collaborating with GCM Grosvenor, a global alternative asset manager with more than 20 years of experience in private infrastructure.

Investments in infrastructure projects are not only interesting from a financial perspective but also contribute to the social and economic development of countries and regions. Given the enormous investment needs, the topic of infrastructure will continue to gain importance for investors in the coming years.

This is marketing information from Raiffeisen Kapitalanlage-Gesellschaft m.b.H. in connection with the distribution of Raiffeisen Capital Private Markets Strategy SCA, SICAV-RAIF (the "Company"), Raiffeisen Capital Private Infrastructure I sub-fund (the "Sub-Fund"). Please read the Private Placement Memorandum of the Company and the Sub-Fund (the "Private Placement Memorandum") and the subscription agreement for the Sub-Fund, or, if applicable, for the desired share class of the Sub-Fund, before making a final investment decision.

The binding basis for the purchase of fund shares in the Sub-Fund is the then‑current Private Placement Memorandum, together with the Articles of Association of the Company, the most recently published and audited annual report of the Company and, if applicable, the most recently published unaudited semi‑annual report, which can be obtained free of charge in German and English from IPConcept (Luxembourg) S.A. (société anonyme), 4, rue Thomas Edison, L‑1445 Strassen, Luxembourg. Risks can be found in the general part and the sub‑fund‑specific special part of the Private Placement Memorandum.

The Private Placement Memorandum and the subscription agreement must be made available to the investor before purchase and can be requested from Raiffeisen Kapitalanlage-Gesellschaft m.b.H. in German and English.