Austrian severance-pay funds express growing interest in infrastructure
Austria’s Vorsorgekassen, which manage mandatory severance-pay contributions, could help “fill the gap” left by banks withdrawing from infrastructure financing due to stricter capital requirements under Basel III, according to Heinz Behacker, managing director at the VBV Vorsorgekasse.
Speaking at a recent panel discussion, he called on the Austrian government to provide infrastructure investment opportunities for long-term investors such as severance-pay funds with state guarantees.
“Also, the legal framework would have to be changed, and the return must be sufficient,” Behacker added.
He pointed out that Austria’s 10 severance pay funds, which now manage €6.2bn in combined assets, are reporting inflows of €30-35m per month, which “needs to be invested”.
Andreas Csurda, chairman of the association of Vorsorgekassen, confirmed to IPE that Vorsorgekassen had “expressed interest in supporting finance affordable housing” and that this project had been included in the government agreement.
He said he expected the plan to “move forward soon” but added that infrastructure was not part of the negotiations.
“But, of course, infrastructure projects could be included,” he said.
However, Csurda warned that the performance of these government-guaranteed infrastructure or housing investment products must be at least 3.5-4%.
“The return must be above that of Austrian bonds,” he said. “Otherwise, we could invest directly in those.”
Claudio Gligo – head of asset management at Victoria Volksbanken, both for the Pensionskasse as well as the Vorsorgekasse – said: “There is already a certain hype regarding infrastructure, and it is paramount that there be a sufficient return.”
He argued that this was not the case with certain solar power plants in Germany, for example.
Further, Vorsorgekassen must be able to include these long-term investments in their held-to-maturity portfolios, and the maximum lending limit against them should be 60%, Csurda said.
Once these criteria are met, as much as 15% of the assets in the severance-pay funds could be earmarked for infrastructure or housing investments, he said.
Markus Zeilinger, managing director at fair-finance, which runs the newest Vorsorgekasse, confirmed that his fund would “like to invest in certain infrastructure projects, nursing homes or student housing in the region”.
But he said this would be highly unlikely without changes to Austrian legislation, as loan and credit investment were “practically impossible” under the current regulatory framework.
Christian Böhm, managing director at APK, which runs a Pensionskasse and a Vorsorgekasse, warned that infrastructure contained “diverse risks”, including equity or bond-like risks – or, indeed, risks similar to real estate, as well as project risks, especially in clean energy.
“And risk identification is important,” he said.
He also pointed out that it would be difficult under EU regulations to limit such infrastructure investments with state guarantees to Austrian institutions alone.
Böhm added that bonds of state-linked entities such as the federal railways ÖBB or the motorway operator Asfinag already offered infrastructure exposure with a form of state guarantee.