Private debt, real assets, asset allocation, regulation – in conversation with Markus Hill, FINANZPLATZ FRANKFURT, Sebastian Thürmer, managing partner of artis Institutional Capital Management GmbH, discusses market shifts, growth segments, and the question of how institutional investors should strategically position themselves between private debt, infrastructure, and traditional bond investments.
Hill: Many market participants perceive private debt as being overshadowed by the booming asset class of infrastructure equity. Do you see any potential for a reversal of this trend?
Thürmer: Both asset classes are very popular, but they are fundamentally not comparable. With infrastructure equity, institutional investors invest equity with a long-term strategic focus. Issues such as sustainability, energy transition, public transport, and affordable housing are at the forefront. Private debt, on the other hand, comprises short- to long-term debt financing with the potential to generate above-average returns. A key driver is regulatory changes such as Basel III and Basel IV. These increase the pressure on banks to maintain higher capital ratios, which reduces margins and makes traditional lending more difficult. The result is a decline in the availability of credit from banks and savings banks – and this is precisely where opportunities arise for alternative lenders to offer competitive terms. For institutional investors, this creates attractive investment opportunities in the debt financing of real estate, companies, and infrastructure projects.
Hill: To what extent do you see a risk that banks will withdraw partially or even completely from the financing sector?
Thürmer: Banks and savings banks will remain the main point of contact for credit financing, especially in Germany. However, it is to be expected that credit institutions will focus more on retaining existing customers – often at the expense of new customer business. This presents a clear opportunity for private debt funds. The concept of a “house bank” is traditionally more pronounced in Germany than in the US, the UK, or the Benelux countries, for example. In those countries, a significantly higher proportion of companies already finance themselves through private debt structures.
Hill: Do you therefore expect strong market growth to continue in the coming years?
Thürmer: Yes, definitely. In a study conducted in 2025, asset manager BlackRock concluded that the global volume of private debt investments could grow from the current level of around USD 1.4 trillion to as much as USD 3.5 trillion. This growth will also affect Germany and Europe, even though the markets here are traditionally more down-to-earth than in the US. Insurance companies in Germany, in particular, are already investing heavily in private debt and are planning further increases. One key factor is the regulatory treatment under Solvency II: under this framework, the capital requirements for debt are significantly lower than for equity investments. In addition, the newly created infrastructure quota now also opens up additional scope for debt investments for pension funds and other VAG-regulated investors.
Hill: How likely do you think it is that institutional investors will shift funds from traditional bonds to private debt to optimize returns?
Thürmer: Return optimization alone cannot be the sole criterion – the key factor is always the risk/return ratio. In recent years, some investors, particularly in certain sub-segments, have maneuvered themselves into difficult situations due to rising interest rates and declining real estate valuations. However, it is conceivable that liquid high-yield bonds with weak credit ratings will be shifted into private debt investments. This can improve credit quality, as comparable returns in the private debt sector can often be achieved with investment-grade structures – not least because of the illiquidity premium.
Hill: How do you see the corporate debt, infrastructure debt, and real estate debt segments positioning themselves in the coming years?
Thürmer: In the real estate debt sector, write-offs and value adjustments have largely been processed. The real estate markets have stabilized and are likely to pick up again in the future. New investments should focus more on residential real estate financing and less on commercial properties. Corporate debt is becoming increasingly important, especially in the area of SME financing. Some major banks are selectively withdrawing from this area, which is strengthening alternative lenders. Infrastructure debt remains dominated by the financing of wind and solar parks. At the same time, the investment universe will continue to grow as new infrastructure themes emerge. The majority of investors prefer senior loans as an established financing instrument, supplemented by junior loans for targeted yield optimization.
Hill: Your annual study “Preferences of institutional investors in real estate and alternative investments” showed at the beginning of 2025 that 36% of respondents want to expand their private debt allocation. What trend do you expect in the 2026 study?
Thürmer: We will conduct the study for the sixth time in February/March 2026. We deliberately avoid making forecasts, but the market environment appears to remain stable. The structural drivers—regulation, financing requirements, and demand for predictable returns—remain intact.
Hill: Thank you very much for the interview.
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Source: www.institutional-investment.de