The German government’s push to pair private capital with a surge in public infrastructure spending has fuelled excitement of an investment boom, yet some investors are sceptical that it will lead to significant opportunity for private credit funds.

“Everyone has been watching Germany as a near-term significant opportunity throughout my career, but it’s never really materialised,” said Phillip Hyman, co-head of DC Advisory’s Global Infrastructure Group. “Everyone talks about the tailwinds that are going to push it, we just haven’t really seen it. I’m sceptical as to whether local and national government can drive the investment and are happy to lose the control they need in order to do that.”

Part of the challenge is structural. “German deal flow tends to be quite lumpy,” Hyman said. “It has less privatised infrastructure than some other European markets, so you tend to see fewer, larger transactions.”

He also pointed to the fragmentation of capital within German pension and insurance funds, as well as domestically focused banks in the country. The case of Deutsche Glasfaser, the country’s second largest fibre broadband provider that has struggled under a debt load of more than €7bn (£5.9bn), also doesn’t help.

“Developments in Germany are giving investors pause for thought,” Hyman said. “If you look at institutions and bank books, they’ve lost quite a bit in the German market, and there are other sectors which are going through their own challenges at the moment, which adds to the cautious outlook.”

Read more: Macro volatility hits infrastructure credit lenders

But despite the challenges, some are finding opportunity and are not waiting for big government spending plans to materialise.

Edmond de Rothschild’s infrastructure debt platform, which has raised around €7bn across three strategies since launching 11 years ago, counts Germany among its top two fundraising markets. In some years, Germany accounted for as much as half of capital raised, and one of its top three markets by exposure, at close to 20 per cent of the portfolio.

“We’re not waiting for these initiatives,” said Jean-Francis Dusch, chief executive of Edmond de Rothschild asset management UK, global head of infrastructure and structured finance, referring to the government’s spending programme. “We have 12 to 18 months of pipeline visibility. If there are good projects, we will identify them through close relationships with sponsors and public authorities.”

Read more: Private credit could get ‘boost’ from higher rates despite software concerns 

Since its first German deal in 2015, a wind farm financing that innovatively brought a euro bond into the capital structure, the firm has backed renewables, storage, fibre, biogas, transport and decarbonisation projects, writing tickets of €15–200m.

Dusch acknowledged that appetite for Germany brings risks of its own: “There can be a temptation for equity sponsors to bring low-priced investments to market, with credit structures not as strong on covenants and security. We look at these opportunities, but we do not have to invest in them.”

With Europe’s energy transition, digitalisation and decarbonisation needs running into the trillions over the next five years, he argued there is room for banks and institutional lenders alike. The question, as ever with Germany, is whether the deals arrive as fast as the capital.

Read more: Macquarie targets wealth investors with infra credit BDC