The infrastructure investment platform IST3 Global Infrastruktur, set up by Swiss Pensionskassen, aims to become the “vehicle people in the Swiss infrastructure segment turn to for financing”, according to Martin Roth, managing director at the CHF1.7bn (€1.6bn) Manor Pensionskasse.
Speaking at the Swiss Pensions Conference, Roth said the platform had been set up in 2013 because “pension funds could not find a suitable offer on the market”.
In mid-March, it made its first major investment by taking over the Alpiq Swissgrid energy net provider.
Roth, whose pension fund is one of the founding members of the platform, also confirmed it would be re-opened for new members and said he was convinced it would work as a secondary market.
“If a member wants out, the others will have interest to buy the share because the due diligence, etcetera, have already been made,” he said.
“This also ensures an evergreen effect for the investments.”
Last year, the first closing of the vehicle was made at CHF300m in committed assets by the initial members Migros, Roche, Manor, PKE, GastroSocial and the pension fund of the city of Lucerne.
“Both the due diligence and asset management for direct investments turned out to need much more effort and time than expected,” Roth said.
He added that “one or two projects are in the pipeline”, among them “a possible joint venture in the UK”.
Roth pointed out there were “not many infrastructure projects available in Switzerland”, the focus region for the platform, which can diversify into other OECD countries.
A political initiative in Switzerland to set up so-called Zukunftsfonds for infrastructure investments has so far met with a lukewarm reception from Pensionskassen.
They fear they might be forced to invest in projects with a risk/return profile that does not match their main aim to generate sufficient returns for their future pensioners.
At Manor Pensionskasse, the share of alternative assets in the portfolio is currently 15%, consisting of 10% hedge funds, 3% private equity and 2% infrastructure, which is CHF hedged.
“We started slow at the beginning so as not to run out of ammunition too soon, but, eventually, we are aiming for 4-5%,” Roth said.
He warned that the low correlation of infrastructure with other asset classes was “mostly theoretical, as the financial crisis proved infrastructure too is linked to credit and interest rate risk”.
Apart from its exposure to the IST3 infrastructure platform, Manor is also invested in the UBS Clean Energy Infrastructure fund Switzerland.