Fri, Mar 29, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Industry Updates

Survey: North American institutions eye European infrastructure investments

Tuesday, May 19, 2015
Opalesque Industry Update - North American institutions are planning long-term investments in foreign infrastructure and are pumping billions of pounds into Europe, a report from Armstrong International reveals today.

Based on a survey of 305 North American institutional investors in the first quarter 2015, it indicates that managing liabilities in a low interest rate environment is proving particularly tough. Now, in a search for yield, they are looking for fresh opportunities in foreign markets, increasing their allocations to private equity, real estate, infrastructure and, to a lesser extent, hedge funds.

With interest rates at historically low levels, U.S. equities hitting record highs and a strong US dollar, these investors are embarking on what some economic commentators are describing as ‘a 21st Century land-grab’ across Europe in an attempt to add value to their portfolios.

Four in five (78%) respondents said that they are actively investing or planning to increase their allocations in Europe. Of the remainder, three quarters said that they are actively considering European investments.

“This is a pivot point for Europe,” said Martin Armstrong, Chairman of Armstrong International. “We’ve never detected this level of positive sentiment on the part of North American institutional investors. It feels very much like a land grab. After a tepid decade, this level of investment enthusiasm implies that Europe is a re-emerging economy.”

The report finds that institutional investors have concluded that even though the assets are illiquid, they deliver a high income at a time when other traditional fixed income yields are at historic lows.

The government of China has been a substantial investor in infrastructure beyond its borders for a decade now, with some experts estimating that it is responsible for funding up to half the world’s infrastructure projects. The Armstrong study suggests that by increasing their exposure to this sector, North American investors active overseas will add interesting competition to the marketplace. ‘Could this be a harbinger of future international bidding wars between the two trading superpowers?’ speculated one financial commentator.

Armstrong’s survey of investment bodies encompassed public pension funds, public universities, private foundations and endowments in the U.S. and Canada with assets under management ranging from $1billion to $200+ billion.

Among its key findings were that alternative investments – especially private equity, real estate and infrastructure – are becoming increasingly attractive to North American investors, with European investment opportunities high on the shopping list.

Second and third place destinations for foreign investment are Asia and Sub-Saharan Africa respectively, Armstrong International’s survey reveals. Two thirds of those investing in Asia are planning to add to their portfolios. Only 22% currently invest in Africa, however 37% of the respondents are planning to increase their allocations to this region over the coming 36 months.

Foreign investment in the UK reached its highest level for more than a quarter of a century last year, with nearly 1,800 projects creating almost 67,000 new jobs, and Armstrong International’s survey shows that more long-term jobs could be on the way.

Increasing direct investment and having boots on the ground are two of the themes that come out of the report. There is an interesting positive correlation: investors who are increasing their allocations to foreign alternative investments also indicated that they would in all likelihood need to build a talent base in London and Europe’s other major financial centres.

‘Against the backdrop of a fast-recovering economy here in Britain, these findings can only be seen as an encouraging sign of future growth in the financial jobs sector,’ said Martin Armstrong.

Press Release

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1