Improved Onboarding Builds Investor Confidence in Infrastructure Funds

The way you onboard your investors could be the key to standing out in a tightening market. 

According to the IJGlobal Regional Report​​, investment in European infrastructure projects dropped by $35.8 billion in ²⁰²³ compared to 2022, reflecting a more cautious investor approach and posing challenges for funds in attracting and securing capital.

This challenge is amplified by the dominance of mega-funds like Brookfield Infrastructure V and Macquarie European Infrastructure Fund 7, which together captured nearly half of all global infrastructure investments in 2023. These large, established funds are especially attractive to investors seeking stability in uncertain times.

For example, Macquarie Asset Management recently closed the largest European infrastructure fund in the industry’s history, raising over €8 billion for MEIF7. This fund drew investments from more than 100 pension funds and institutional investors, highlighting the continued trust and confidence in Macquarie’s ability to deliver solid returns in the infrastructure sector.

For smaller or newer funds, this environment makes having a smooth and efficient onboarding process more crucial than ever. A straightforward and efficient onboarding process isn’t just a formality—it’s a way to stand out, build trust with investors, and compete against larger, more established funds. 

By focusing on making the onboarding experience smooth and transparent, you can better position your fund to secure the capital needed for long-term success.

A smoother investor onboarding also makes the subscription process easier for your fund. A streamlined onboarding experience saves your fund valuable time and reduces the back-and-forth communication with investors.

Investor onboarding platforms are seeing significant adoption across Germany and Europe. One of our clients, Capmont, a private market asset management firm, shared their experience transitioning from manual, paper-based methods to a digital platform. 

I was amazed by Vestlanes subscription process. It transformed Capmonts old, paper-based methods into a seamless digital experience, greatly improving our efficiency.

Fabian Langaard

COO at Capmont GmbH

After using Vestlane, Capmont gained real-time visibility into investors' onboarding status and reduced the need for internal communications.

Fabian also provided insight from the perspective of the limited partner. 

Investing is insanely easy. You just log in, select your investor profile, and click finish. Your ID is saved for 24 months, streamlining the entire process.

Not only do digital onboarding platforms meet the expectations of today’s tech-savvy investors, but they also improve the fund's operational efficiency, creating a win-win situation for both sides.

Infrastructure Investments Need Thorough Onboarding 

In Germany, the onboarding process for investors in infrastructure funds is heavily regulated due to these investments' complexity and long-term nature.

1. Regulatory Compliance

Once investors are secured, fund managers and admin need to perform AML and KYC checks, ensuring that all parties involved are legitimate and that the sources of funds are transparent. Investors are required to provide extensive documentation, including:

• KYC Forms
• Proof of Identity
• Proof of Address
• Source of Funds Declaration
• Corporate Documentation for institutional investors (articles of incorporation, company registry extracts, and shareholder agreements)

2. Legal Documentation and Agreement Signing

After compliance checks are completed, legal documentation is prepared. This includes the investment agreements that outline the terms and conditions of the investment, project contracts detailing the specifics of the infrastructure projects, and any other legal obligations the investor must adhere to.

• Subscription Agreement
• Limited Partnership Agreement (LPA)
• Project-Specific Contracts (For PPPs or other projects)
• Confidentiality Agreements

In the case of Public-Private Partnerships (PPPs) or projects involving government entities, additional agreements and regulatory approvals may be required, which are also part of the onboarding process.

3. Project-Specific Disclosures and Communication

Investors are provided with detailed disclosures specific to the infrastructure projects, such as environmental impact assessments for renewable energy projects or logistics and operational plans for transportation projects. 

These disclosures are critical for investors to understand their investment's full scope and potential risks.

4. Finalization and Capital Commitment

The investment is finalized after all documents are signed and compliance is verified. This includes transferring funds into the infrastructure project or fund and allocating shares or interests to the investor.

Ongoing communication protocols are established through shared information portals like data rooms, ensuring that investors receive regular updates on the projects' progress and the performance of their investments.

The onboarding process isn’t inherently complex but becomes tedious and time-consuming when handled manually. 

Relying on wet-ink signatures and manually entering investor information can prolong the process, which can often take months to complete.

Comparing Infrastructure Fund Investors to Other Investors

Infrastructure, PE, and VC investors differ in focus, strategy, and risk tolerance.

Infrastructure investors focus on large-scale physical assets like transportation, energy, and utilities. These investments are typically low-risk and long-term, often backed by stable revenue streams from government contracts. 

Zurich-based Swiss Life Asset Managers has launched its fourth global infrastructure fund, aiming to raise €2.5 billion. This closed-end fund is available to qualified and professional investors, showing the strong interest in infrastructure investments that offer long-term stability and solid returns.

Institutional investors, such as pension and sovereign wealth funds, favor infrastructure for its steady, predictable returns over decades.

Comparatively, PE investors target mature companies with the potential for improvement and growth. They buy businesses, enhance operations, and sell them for a profit within 5 to 10 years. The risk is moderate, focusing on value creation and capital appreciation. 

Institutional funds and high-net-worth individuals (HNWIs) are typical PE investors seeking higher returns than those offered by more stable assets.

VC investors fund early-stage startups with high growth potential, particularly in innovative sectors. These investments carry high risk but offer the possibility of substantial returns. VC investors aim for rapid exits, usually within 3 to 7 years, through acquisitions or IPOs. 

They include institutional investors, corporate venture arms, and HNWIs looking for high-risk, high-reward opportunities.

Infrastructure investors prioritize stability and long-term income, PE investors focus on improving and selling mature companies for profit, and VC investors seek high-risk, high-reward opportunities in early-stage startups. 

Digital Investor Onboarding for Infrastructure Funds Using Vestlane

With Vestlane, onboarding investors for infrastructure funds is easy and efficient.

1. Invite investors to your fund and collect all necessary information through simple, intuitive questionnaires that pull from public registers, minimizing manual data entry.
2. Automatically verify investor documents and automate compliance checks to ensure your fund meets all regulatory requirements.
3. Send subscription agreements directly through the platform, allowing investors to sign using qualified electronic signatures.
4. Keep all communication in one place, providing a single source of truth for both your team and your investors.

Over 279 funds already use Vestlane to support them with investor onboarding and other fund operations. 

Why do funds choose us? 

• We have more than 6000 investors already onboarded onto our platform and accessible by funds using Vestlane. 
• Intelligent data capture allows fund admins to collect relevant investor information through intuitive questionnaires that automatically skip questions unrelated to a particular investor. 
• Our integrations with public directories allow funds to prefill investor data. 
• Electronic identity verification and automated KYC/AML checks expedite the due diligence process for funds and the law firms they work with. 
• Our infrastructure is aligned with data protection laws and is ISO 27001, GDPR, and SOC certified.
• Funds receive personalized support directly from our Founders. With over 15 years of experience in fund legal processes and firsthand knowledge of these procedures, we offer expert guidance tailored to your needs.  

Fund managers can easily track LP subscriptions, keep documents up-to-date, follow up on outstanding documents, send reminders, and offer help when needed for faster closings.

Why do investors choose us?

• Our reusable investor wallet allows investors to subscribe to funds in about 5 minutes using their stored data. 
• Investors today are tech-savvy and expect the same level of convenience in investing that they enjoy in other aspects of their lives. 

Vestlane’s smart workflows and intelligent forms make LP onboarding 50% faster than manual processes.

As an LP, I received a link, clicked a few times, and the entire subscription process was completed online. So, when we launched our new fund, choosing Vestlane was an obvious decision.

Vanessa Brahmi

Managing Director of Finance and Legal at AENU

Handling Investor Exits for Infrastructure Funds

Exits in infrastructure funds are generally more complex and less flexible than those in other investment types, such as private equity or venture capital. Given the long-term nature of infrastructure assets, investors often face limited options for liquidity, making the management of exits, transfers, and redemptions particularly important.

Transfer Process

The transfer process allows an investor to sell or transfer their stake in the fund to another party. This can be an attractive option for investors wishing to exit before the fund matures.

How It Works: The original investor and the new investor agree on the terms of the transfer, which must then be approved by the fund manager. This step ensures the new investor meets all necessary criteria and complies with regulatory requirements. Once approved, the transfer is executed, and the new investor takes over the original stake in the fund.

Redemption Process

Redemption enables investors to withdraw their investment from the fund, usually in exchange for cash. However, due to the illiquid nature of the assets, redemptions in infrastructure funds are often subject to restrictions, such as lock-up periods.

How It Works: An investor submits a redemption request to the fund manager, who reviews it against the fund’s terms and conditions. If approved, the investor’s shares or interests are sold or liquidated, and the proceeds are paid. The entire process is completed once the transaction is settled and the fund’s records are updated to reflect the withdrawal.

How a Digital Platform Like Vestlane Can Help

Vestlane simplifies and streamlines the transfer and redemption processes, making them more efficient and transparent for investors and fund managers. 

Vestlane allows all necessary documents to be managed, signed, and stored digitally, eliminating the delays associated with physical paperwork.

From onboarding to exits, using a digital platform is essential for infrastructure funds. The time to embrace investor onboarding technology is now.  

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