A bridge suddenly had to be closed and be renovated over several years. For the city, this meant even more through traffic, and constant traffic jams. As soon as the bridge opened again, the next wave of traffic jams followed, even worse than the first. The carriageway surface sank on the traffic axis in front of the main railway station. Traffic had to be diverted – with the inevitable consequences, now also for the city's bus services. And recently, extensive road resurfacing in the city centre led to the evacuation of a central underground car park, because cars were jammed in there, and the running engines were causing carbon monoxide concentrations to rise dangerously.

All of these are signs of a dilapidated infrastructure. This applies not only to the Hessian state capital of Wiesbaden, as in this example. It is representative of the whole of Germany. Dilapidated bridges and roads, inadequate local public transport, which leads to a further increase in car traffic. And things will not get any better in the coming years. The existing infrastructure must not only be modernised, but new infrastructure must also be created as part of the energy transition. This includes an improved power supply, but also alternative energies such as district heating.

All of this costs money, a lot of money. The investment required for public infrastructure over the next ten years is estimated to be at least 600 billion euros. This includes, in particular, roads and schools, the expansion of rail and electricity grids, and social housing construction. Some sources put the investment requirement for transport infrastructure at around 120 billion euros by 2028, and for energy infrastructure at around 270 billion euros by 2037.

The state, i.e. the federal government, federal states and municipalities, will probably not be able to cover these sums alone. In future, more money will come from private investors – and not only from wealthier investors, but also from a broad retail clientele.

For private investors there are closed-ended public infrastructure AIFs (alternative investment funds), European Long-Term Investment Funds (Eltifs) and the infrastructure special funds.

The Scope rating agency lists a total of eleven vehicles as investable closed-end public infrastructure AIFs as of 30 September. Their prospectus-based fund volume totals around 490 million euros. Four funds focus on renewable energies, and two on healthcare properties. The remaining five are infrastructure-related with logistics, local supply and DIY centres. The minimum investment amount is usually 10,000 euros.

The Fund Location Act created the infrastructure special fund in 2021. These are intended to promote private and institutional investments in public infrastructure. These special infrastructure funds can be structured as special or public alternative investment funds (AIF). Specialised funds are only open to professional and semi-professional investors.

Retail investors can also invest in open-ended retail funds. Similar to open-ended mutual property funds, these funds must spread their risks widely. They do not have a fixed term. The redemption of fund units is restricted by certain timelines.

It was not until mid-2023 that the BVI's model investment conditions clarified how they can be structured. However, according to the rating agency Scope, there are only three open-ended infrastructure funds (OIF) to date. The largest fund is „DWS Infrastruktur Europa“, which was launched in 2023. It is aimed at both institutional and retail investors, and invests primarily in renewable energies. Fund assets amounted to 390 million euros as of 5 November 2024.

Another infrastructure special fund is the „KGAL Klimasubstanz“. It also invests in renewable energies. The fund, which was launched at the end of 2023, announced the acquisition of its first asset, the project development of a small wind farm in Schleswig-Holstein, at the beginning of November 2024. Accordingly, the committed fund volume was only 4 million euros as of 5 November.

The „Quadoro Erneuerbare Energien Europa“ was launched this year. In contrast to the first two OIFs mentioned above, it is an Article 9 fund in accordance with the EU Sustainable Finance Disclosure Regulation. The fund therefore pursues explicit sustainability objectives (impact). As of the beginning of November it had a fund volume of 20 million euros.

The European Long-Term Investment Fund (Eltif) is less strict in its investment limits, and has the advantage of a European sales licence. Infrastructure accounts for just under a third of the Eltif fund volume. Union Investment CEO Hans Joachim Reinke recently emphasised the advantages of Eltif 2.0 compared to the regulations that applied until last year. In particular, he cited the elimination of the minimum investment amount of 10,000 euros, and the more flexible investment options, e.g. in funds of funds, AIFs and as open-ended funds.

According to Scope, there are six Eltif 2.0 funds on sale in Germany, with the largest fund by far being „klimaVest Eltif“, which was launched in 2020 by the Luxembourg subsidiary of Commerz Real. All six funds were authorised in the Grand Duchy and are therefore supervised there. The fund volume of „klimaVest“ totalled 1.45 billion euros as of the reporting date.

The other five Eltif funds were only launched this year. With the exception of Union Investment's „UniPrivatmarkt Infrastruktur Eltif“, they can also invest beyond Europe (Asia, OECD countries, North America). This also demonstrates the greater flexibility under Eltif 2.0, as the OIFs are limited to Europe.

In all cases, the investment focus is on renewable energies – in four cases (two Eltifs, two OIFs) exclusively, in all other cases supplemented by social, transport/transport, communications and, with one exception, utilities.

The Fund Market Strengthening Act, which is now available in draft form, is intended to make closed-end special funds accessible to retail investors as well. Until now, it was only possible as a special fund, and was therefore reserved for institutional investors. In addition, service providers of closed-end funds should also be able to offer German citizens investments in the field of renewable energies in future. The explanatory memorandum to the law states that by opening up closed-end funds to retail investors, „fund providers will be able to launch competitive products for European Long Term Investment Funds that primarily invest in infrastructure, for example“.

The legislators are thus combating the loss of importance of the purely German OIF route. Before the Fund Market Strengthening Act, quite a few market observers were of the opinion that the future belonged to the more broadly based Eltifs, and not only in the infrastructure sector. After all, the fund giant Union Investment still relies on this vehicle, and not on OIFs.

Whether this will change with the new law remains to be seen. However, there is still a long way to go before retail investments play a significant role in terms of overall investment requirements. So far, institutional investors have been the much more important players.

The cabinet draft of the Fund Market Strengthening Act still has to be passed by the Bundestag. According to current plans, the Act will essentially come into force on 16 April 2026. However, certain provisions – such as the introduction of closed-end mutual funds and citizen participation – are to apply from 1 July 2025.