New government — new framework conditions for alternative investments

At this year’s Alter­na­tive Inves­tor Confe­rence (AIC), there was a thoroughly opti­mi­stic outlook from both the indus­try and insti­tu­tio­nal inves­tors. The year 2025 is a turning point in many respects, as the current turbu­lence on the capi­tal markets makes all too clear. It is ther­e­fore not surpri­sing that both private and insti­tu­tio­nal inves­tors are looking for stabi­lity and orien­ta­tion in this environment. 

At the same time, howe­ver, there is also a huge need for finan­cing in many areas, such as infra­struc­ture, rene­wa­ble ener­gies, venture capi­tal, trans­for­ma­tion and — last but not least — defense. And the remar­kable thing is that poli­ti­ci­ans and regu­la­tors have finally reco­gni­zed that private capi­tal is urgen­tly needed and that impro­ved frame­work condi­ti­ons should be expli­citly crea­ted for this. Both the new German govern­ment and the EU Commis­sion have placed this in a promi­nent position. 

At the begin­ning of the year, the EU Commis­sion presen­ted its agenda for the Savings and Invest­ments Union (SIU), follo­wed by the new German government’s coali­tion agree­ment before Easter. Both dossiers address the afore­men­tio­ned problems and contain remar­kable state­ments for insti­tu­tio­nal invest­ments, with a parti­cu­lar focus on alter­na­tive invest­ments and insti­tu­tio­nal inves­tors such as insu­r­ers and pension funds. In a new and welcome open­ness, the EU Commis­sion empha­si­zes that measu­res must be taken to ensure that there are “no inap­pro­priate regu­la­tory barriers to access to these asset clas­ses” for this group of inves­tors and even iden­ti­fies the Solvency II rules for insu­rance compa­nies and the prudent person prin­ci­ple in the context of pension funds as such inap­pro­priate regu­la­tory barriers that need to be removed. 

In the recently adopted coali­tion agree­ment, the new German govern­ment under­ta­kes to create a “legally secure and Euro­pean-compe­ti­tive frame­work for invest­ments by funds in infra­struc­ture and rene­wa­ble ener­gies” in capi­tal market law, in which tax regu­la­ti­ons are also to be adapted in a targe­ted manner. And the avai­la­bi­lity of venture capi­tal, among other things, is to be increased through better parti­ci­pa­tion oppor­tu­ni­ties for insti­tu­tio­nal investors. 

From my point of view, we can — once again — look to the future with opti­mism given the current situa­tion. There are finally clear commit­ments from the poli­ti­cal and regu­la­tory side. 

So far, there have only ever been selec­tive chan­ges and impro­ve­ments for invest­ments via or in alter­na­tive invest­ment funds. Examp­les include the so-called long-term equity module (LTE) under Solvency II, progres­sive regu­la­ti­ons for credit funds (i.e. the private debt asset class), or natio­nal initia­ti­ves such as the intro­duc­tion of the infra­struc­ture ratio and the increase in the risk capi­tal ratio in the Invest­ment Regu­la­tion. A holi­stic approach is now requi­red for future legis­la­tive initiatives. 

Both the EU Commis­sion and the new German govern­ment are now commit­ted to making the Euro­pean capi­tal market and the regu­la­tion of the key play­ers better and more effi­ci­ent so that the immense finan­cial resour­ces that are now urgen­tly needed can also be mobi­li­zed. The EU Commis­sion is curr­ently consul­ting on a compre­hen­sive list of ques­ti­ons speci­fi­cally for the fund and asset manage­ment indus­try; the focus is on how the Euro­pean super­vi­sory archi­tec­ture can be impro­ved and simpli­fied. This gives us hope. And at natio­nal level, there are indi­ca­ti­ons that the so-called AIFMD II imple­men­ta­tion, i.e. in parti­cu­lar the new Euro­pean regu­la­ti­ons for credit funds, will quickly return to the agenda, inclu­ding accom­pany­ing tax regu­la­ti­ons for these funds. We expect the same with regard to the Future Finan­cing Act II, so that infra­struc­ture invest­ments can be boosted. 

Of course, the special infra­struc­ture fund of 500 billion euros passed by the old Bundes­tag has caused quite a stir. Howe­ver, ever­yone invol­ved is aware that at least the same amount of private capi­tal is needed to finance the immense projects in Germany alone. And this is precis­ely why it was so important that the Invest­ment Regu­la­tion was also amen­ded in Febru­ary, which, in addi­tion to the intro­duc­tion of a dedi­ca­ted infra­struc­ture quota of 5% of the secu­rity assets, also conta­ins an increase in the risk capi­tal invest­ment quota from 35% to 40% and also a flexi­bi­liza­tion of the so-called opening clause. 

We now expect clari­fi­ca­ti­ons and simpli­fi­ca­ti­ons, parti­cu­larly on the tax law side, so that insti­tu­tio­nal inves­tors can invest more in rene­wa­ble ener­gies and infra­struc­ture, espe­ci­ally via special AIFs. At the same time, we also need an infra­struc­ture plat­form in Germany, an infra­struc­ture company in Germany, so to speak, in which projects at muni­ci­pal, state or fede­ral level are bund­led, stan­dar­di­zed, scaled and made investa­ble. — We are curr­ently working with part­ner asso­cia­ti­ons, think tanks, members and, of course, inves­tors to prepare concepts and propo­sed solu­ti­ons so that the momen­tum and opti­mus can be successfully used by all parties involved. 

Frank Dorns­ei­fer is Mana­ging Direc­tor of Bundes­ver­band Alter­na­tive Invest­ments e.V., Bonn

He has been active in various func­tions in invest­ment, capi­tal market and corpo­rate law for over 20 years. — The Finance Commit­tee of the German Bundes­tag and the Euro­pean Parlia­ment have repea­tedly appoin­ted him as an expert in legis­la­tive procee­dings on capi­tal market law. Mr. Dorns­ei­fer is a regu­lar spea­ker on invest­ment and regu­la­tory topics at confe­ren­ces in Germany and abroad.
dornseifer@bvai.de