Germany’s Social Democratic Party (SPD) has proposed a state fund called Deutschlandfonds (Germany Fund) that would be open to institutional investors’ capital to support the green and digital transition.
Capital to the fund would flow from borrowings on the capital market and from private investors, with investments based on “clearly defined criteria”, in “compliance with public requirements”, and dividends from public investments paid back to the fund, the social democrats said in the proposal approved last weekend during the party’s conference.
The fund would rely on existing capacities for asset management of, for example, the state-owned development bank KfW or the nuclear waste management fund KENFO, it added.
According to SPD, the new fund will drive the green transition forward with investments for example in networks, climate-friendly production facilities and new technologies that often face regulatory hurdles, risks and are depended on decisions made by public actors.
The fund would invest in companies in the midst of transitioning to a more sustainable business model, and in strategically important start-ups whose capital requirements exceed the capacity of the Future Fund (Zukunftsfonds) to scale-up the business, according to the proposal.
Asked about a target amount for raised capital by the Germany Fund, a spokesperson for the SPD told IPE that the party had not yet defined in detail the different aspects of the fund.
“It can be assumed that [capital contributions] from the private side will probably primarily come from institutional investors, that [would] consider the model attractive and have sufficient capital [at their disposal],” the spokesperson added.
According to the SPD, Germany needs €100bn investments per year by 2030, a large part coming from the private sector, in order to move fast enough towards a greener economy, with the aim to create at least one million new, well-paid jobs.
Germany needs more than €220bn additional investments by 2030 alone to reinforce infrastructure, giving access to high-speed, mobile communications and fibre-optic networks, supporting intelligent power grids, and cross-border rail transport or changing the infrastructure for emission-free transport, it said.
The government is trying to channel private capital for much needed investments in different ways, through for example the €10bn deployed through the Future Fund to invest in start-ups to scale-up their business especially during capital-intensive phases of growth.
The Wachstumsfonds (Growth Fund), created to mobilise venture capital from German and European institutional investors in IT, life sciences and climate and food tech sectors, has recently reached its €1bn target.
Reinforcing the Capital Market Union is a further way to mobilise private capital both from institutional investors and savers, the SPD said.
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