POLAND - Polish infrastructure is poised for pension fund investment despite investor concerns over Central and Eastern European (CEE) economies, according to Barings fund manager Matthias Siller.
Pointing to per capita motorway mileage at 5% of that in the UK, he said: "Investors will find nice, broadly-based opportunities in Polish infrastructure. To my mind, it all just starting - that's the beauty of it."
He said a requirement that EU infrastructure funding be matched by investment from other sources created an investment opportunity for European pension funds. Infrastructure-specific EU funding within Poland will total between 2-4% of GDP over the next few years.
"The emphasis will be on co-financing and on public—private partnerships," said Siller. "Poland will be looking at infrastructure funds and companies that won't just own but will manage infrastructure assets.
"But you might see the participation of European and global construction companies, Polish ones, and even construction companies from Asia and Eastern Europe looking to gain a foothold in the Polish market."
Financing for pure infrastructure projects could come from partnerships between infrastructure companies and the local banking sector, with the equity component coming from overseas investors, he said.
Siller acknowledged recent investor caution over CEE economies. However, in a note issued this week, he pointed out that Poland alone among EU states had avoided economic contraction in 2009. The market is also significantly less dependent on export driven growth than Hungary and the Czech Republic.
He also pointed to sustainable debt that made Poland "something of a safe haven in that respect", with relatively low government debt at 60% of GDP. "That means the Polish government will increase, rather than decrease, spending - and that there's a good chance it will do so prudently. After Greece, as a government, you're going to play by the rules."
He added: "The opportunity is in a benign environment with fiscal expansion in a sector that needs investment. In terms of infrastructure, there's nothing there, and the market has been constrained by the lack of infrastructure. That benign combination sets it apart from other markets in Europe."
Recent pension fund investment activity in the Polish market is has been minimal, although BVK recently invested in Polish logistics (see earlier IPE Real Estate article: Germany's BVK signalsl fresh interest in Polish real estate).
A spokeswoman for BVK said: "We have no specific focus on Poland. We invest all over the world via our special funds. This was a specific acquisition but it's not especially our intention to invest in Poland."