[LONDON] Europe needs to come up with more government money and more details if its grand plan to spur growth via new infrastructure projects is to get off the ground, according to the investors being asked to stump up most of the cash.
There is no shortage of interest in putting money into public projects from insurers and pension funds hungry for stable, long-term returns that match their liabilities better than bombed-out government bond yields.
But, three months after the new European Commission unveiled its plans for 315 billion euros (US$365 billion) of loans for infrastructure and small business, investors are frustrated they have heard little more about specific proposals, costs, financing, and when the projects might get under way.
"Just because capital becomes more active, it does not mean to say infrastructure comes out of the woodwork - governments have not yet twigged this," said Bob Dewing, who runs the infrastructure debt strategy at JP Morgan Asset Management.
With a dearth of projects worldwide, competition for infrastructure deals among investors is ramping up, driving down the returns they need to cover insurance policies, savings and pension plans.
The European plan was the brainchild of European Commission President Jean-Claude Juncker, who announced to great fanfare in November a wishlist of 2,000 projects ranging from retirement homes in Belgium to canals in Poland to help kick-start the region's anaemic growth.
It seemed like a marriage made in heaven - cash-strapped European governments want the private sector to help them build roads, bridges and hospitals, and investors like long-term fixed-rate assets with plenty of yield.
But there were criticisms from the outset - not least that the plan did not include any new public money, just 21 billion euros of existing funds.
That does not inspire confidence among investors who want to make sure governments are committed to major projects.
Austerity-hit governments, however, seem unlikely to free up more funding any time soon.
And investors are worried that governments are so focused on day-to-day problems that they are not doing the legwork to turn project ideas, such as a suspension bridge across the Messina Straits to connect Sicily with mainland Italy, into reality.
The inaction is unnerving investors because, while policymakers dither, infrastructure funds are busy raising money, potentially creating a pot of billions of euros with little to invest in.
Eight Europe-focused infrastructure debt funds are currently being marketed, totalling 5.8 billion euros, nearly four times the amount closed in similar funds in the past three years, according to data provider Preqin.
Banks, which reined in lending during the financial crisis, are also showed renewed interest in infrastructure.
"Two and a half years ago there was a funding shortfall - today it's a supply shortfall," said Deborah Zurkow, chief investment officer for infrastructure debt at Allianz Global Investors.
"We have seen a tightening in pricing," she added, referring to the squeeze on returns from too much money chasing too few deals.
Pricing is hard to see in this opaque market with bespoke deals that have little secondary trading, but JP Morgan's Dewing said the premium for infrastructure investments over high-rated corporate debt had already almost halved in the past few years to 75-85 basis points.
This is not the same across the board, others said, with certain projects being less popular. So-called "greenfield" projects in early-stage development - which tend to be favoured by governments - offer higher yields than up-and-running "brownfield" deals, for example, but also carry construction risks, a deterrent for some investors.
Investors are enthusiastic about renewable energy deals in wind or solar, but less so about projects such as toll roads, where forecasts for the volume of traffic may not be reliable.
That risks a potential mismatch between what governments want built and what investors want to fund.
Even if the European Union fails to hit its 315-billion-euro investment target, infrastructure specialists have been attracting funds on the basis there will be more opportunities worldwide.
Consultancy McKinsey said in a 2013 report that just keeping pace with projected global GDP growth would require an estimated US$57 trillion in infrastructure investment until 2030, 60 per cent more than the amount spent in the previous 18 years.
But the EU's ability to turn aspiration into reality is an important test case.
Mr Juncker has asked the bloc's 28 countries to come up with ideas for his plan and the EU this week promised a more concrete pipeline of infrastructure projects.
Investors are waiting with baited breath. "It's a really good initiative," said Allianz's Zurkow.
"There needs to be better visibility on the pipeline."