The German Federal and State Pension Fund (VBL) has awarded two European infrastructure debt mandates worth a combined €1.5bn to Allianz Global Investors and Global Infrastructure Partners.

Each manager will oversee €750m, with the mandates designed to actively and sustainably support European transformation and growth sectors by financing the expansion, diversification, and modernisation of infrastructure.

VBL explained that the selection process focused on in-depth expertise in infrastructure lending, environmental, social and governance (ESG) integration, transparency standards, and a proven track record in implementing sustainable investment strategies

VBL said that sustainability considerations are an integral part of its investment policy.

The portfolios for these mandates are currently being developed, but VBL said that Allianz Global Investors will build a broadly diversified loan portfolio focused on future-oriented themes such as the energy transition, digital transformation, communications, and transportation, primarily targeting investment-grade projects.

Meanwhile, the mandate with Global Infrastructure Partners, which is a part of BlackRock, is also focused on investment-grade projects but across the European energy and power, digitalisation, transportation, water, and waste management sectors.

VBL head of fixed income & private debt, Stefan Schütte, said that through these mandates, VBL is strengthening its role as a "responsible, long-term" investor in the European infrastructure market and is expanding its portfolio with an additional asset class offering an "attractive" risk-return profile.

"With Allianz Global Investors and Global Infrastructure Partners, we have two strong partners with extensive expertise and global reach at our side," Schütte added.

These investments reflect a broader trend of European institutional investors increasing their commitments to infrastructure debt.

France’s Fonds de Réserve pour les Retraites announced earlier this week that it would expand its private debt programme with an allocation of between €600m and €800m, while Dutch pension asset manager APG has recently awarded a €425m infrastructure debt mandate to Schroders Capital.

Meanwhile, in the UK, pension schemes aim to raise private market exposure to as much as 30 per cent of assets, including credit, following the Mansion House Accord, with Nest’s 10 per cent stake in IFM Investors to boost UK private market investments reflecting this shift.

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