Handelsblatt Interview Allianz Investment Chief: Germany Needs PPP Expansion

The head of one of Germany’s biggest investment portfolios, Allianz's Günther Thallinger, warns the country must overcome misgivings about public-private infrastructure partnerships to spur growth. He points to Trump's United States.
Quelle: dpa
Private investment rarely features in German infrastructure projects.
(Source: dpa)

Germany needs to follow the example of other countries and start embracing public-private partnerships in infrastructure investments, Günther Thallinger, the head of investment management at insurance giant Allianz has told Handelsblatt.

The 44-year-old said he was disappointed at the strength of political resistance to a recent suggestion by German Finance Minister Wolfgang Schäuble that private investors should become more involved in the funding of motorway construction.

“I think there are a number of countries in Europe that are more open than Germany on this issue,” he said.

German investors, like Allianz, are far more active abroad than they are at home as a result. “We do such projects in various countries, for example we’re among the private investors who are building a new sewer system in London for £4.2 billion (€5 billion) — in Germany by contrast we hardly find any such projects.”

That is a problem for Europe's largest economy, which has long had a booming export scene but suffers a chronic lack of investment in things like infrastructure back home. That lack of investment poses a risk for growth.

We believe that the government is missing an opportunity. Günther Thallinger, head of investment management, Allianz

Mr. Schäuble has complained that part of the problem lies with local states and communities, who have tight control over infrastructure and the approval process. Mr. Thallinger says many Germans still fundamentally believe that public infrastructure must be funded solely with tax money, he said.

“But we believe that the government is missing an opportunity to obtain a rounded assessment of risks and to let private knowhow and cost management flow into its own projects.”

Mr. Thallinger, an Austrian, took over responsibility for investment management as well as the Global Life and Health business of Europe’s biggest insurer on January 1. That puts him in charge of managing investments totaling €653 billion, or $695 billion, twice the size of Germany’s federal budget.

Instead of Germany, Mr. Thallinger is looking across the Atlantic. He said Allianz was interested in US President Donald Trump’s pledge to invest up to $1 trillion in infrastructure projects, with a large chunk of that money likely coming from private sources. “What’s important is that the government now wants to expand cooperation in so-called public private partnership on a large scale,” he said.

He added that he would welcome rising interest rates in the US and criticized the European Central Bank for sticking to its zero-interest rate policy and asset-buying program launched in March 2015. The program is set to hit €2.3 trillion by the end of the year and only be wound down in 2018. The ECB says is still needed to prop up the euro zone economy, but many German bankers and economists have pushed for an earlier end.

“We have pointed out frequently that we think the time has come to think about the size of this program and of ending it,” said Mr. Thallinger. “The simple fact is that people who save money are being asked to pay a lot right now.”

He added that political risks in Europe with the first round of the presidential election in France on April 23 and the general election in Germany in September could result in strong market volatility, which could present opportunities for investors.

“We’re watching it very, very closely,” he said. “But we’re a European insurer and must and want to be present in the European markets. The coming developments don’t all have to be bad for a major investor.”


Carsten Herz leads Handelsblatt's asset management and insurance coverage and is based in Frankfurt. Christian Schnell covers the auto industry in Germany. To contact the authors: [email protected], [email protected]