US investors target infrastructure in Europe

US investors embark on a ‘21st-century land grab’

European infrastructure projects are set to be a target for US institutional investors searching for yield in a low-interest-rate environment, according to Armstrong International.

A study conducted by the specialist executive search firm, which focuses on financial services, has revealed that Europe is now the top foreign investment target, followed by Asia and sub-Saharan Africa.

With interest rates at historically low levels, US equities hitting record highs and a strong US dollar, investors are embarking on what has been described as ‘a 21st-century land grab’ across Europe in an attempt to add value to their portfolios.

The report found that institutional investors are prepared to invest in alternative, illiquid assets that deliver a high income at a time when other traditional fixed income yields are at historic lows.

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 they are actively considering European investments.

Based on a survey of 305 North American institutional investors in the first quarter of 2015, managing liabilities in a low-interest-rate environment is proving particularly tough, according to Armstrong International. As a result investors are looking for fresh opportunities in foreign markets, increasing allocations to private equity, real estate, infrastructure and, to a lesser extent, hedge funds.

“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.”

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