Investment of $6 trillion in European infrastructure is outlined by DWS, emphasizing mid-cap strategy as essential for long-term durability
Europe's infrastructure requires a substantial capital investment of $6 trillion by 2030, with a significant focus on energy transition and digital transformation. This investment, amounting to $5 trillion and $1 trillion respectively, is set to modernise and digitalise Europe's infrastructure, accelerating green energy integration and supporting innovative technologies aligned with EU sustainability goals.
In the realm of infrastructure investment, DWS, a global investment firm, has taken a strategic approach. Their strategy includes infrastructure private equity, which provides downside protection on capital and resilience through recent macroeconomic changes. DWS also focuses on a complementary small-cap strategy, targeting early-stage sustainable infrastructure.
The firm's primary goal is to grow small-cap investments into mid-cap core-plus assets at exit, and then further into core assets suitable for large-cap exits. This strategy is particularly relevant in the mid-cap segment, which has remained relatively stable over the past decade, while large-cap valuations have been driven upwards by excess capital.
Since 2019, the mid-cap segment has accounted for close to 90% of all transactions in Europe. DWS's strategy targets infrastructure assets valued below €1bn, with equity tickets between €200m and €600m. Typical holding periods are five to six years, targeting a two times multiple.
Mid-cap infrastructure assets play a vital role in this context, often involving strategic projects such as power grid modernisation, energy storage, and digital infrastructure expansion. These assets require substantial but manageable investments, attracting private capital, including from institutional investors seeking stable, long-term returns.
Investing in European infrastructure can be a very attractive opportunity for investors. DWS has taken a pan-European approach, with recent activity in Switzerland, France, and across the Mediterranean. The firm views the infrastructure sector as structurally resilient, even in the face of macro headwinds such as tariffs and inflation.
Moreover, policy frameworks such as the Defence Readiness Omnibus facilitate private investment by streamlining regulatory processes and aligning investment standards with sustainability and security goals. This extends these benefits to sectors adjacent to energy and digital transformation, such as AI and cybersecurity.
Harold d'Hauteville, Head of Infrastructure Equity Europe at DWS, emphasised the need for Europe to reduce its dependency on US tech, Asian manufacturing, and Russian gas imports. By investing in private capital, Europe can contribute to its strategic autonomy in energy transition and digital transformation, providing crucial investments that modernise and digitalise infrastructure, accelerate green energy integration, and support innovative technologies. This capital mobilisation helps build resilient, secure, and autonomous energy systems and digital ecosystems critical for the EU's long-term competitiveness and independence from external supply chains or technologies.
- DWS, a global investment firm, has strategically invested in infrastructure private equity, focusing on the mid-cap segment, to provide downside protection and resilience.
- The mid-cap segment, which accounts for nearly 90% of all transactions in Europe since 2019, offers growth potential for DWS, aiming to convert small-cap investments into mid-cap, then core assets, suitable for larger exits.
- DWS targets infrastructure assets valued below €1bn, with equity tickets between €200m and €600m, characterised by strategic projects like power grid modernisation, energy storage, and digital infrastructure expansion.
- Investing in European infrastructure through private equity can provide stable, long-term returns, attracting institutional investors, as substantial but manageable investments are required.
- By investing in private capital, Europe can contribute to its strategic autonomy in energy transition and digital transformation, reducing dependency on external sources such as US tech, Asian manufacturing, and Russian gas imports.
- Policy frameworks like the Defence Readiness Omnibus facilitate private investment by streamlining regulatory processes and aligning investment standards with sustainability and security goals, extending benefits to sectors like AI and cybersecurity.
- Harold d'Hauteville, Head of Infrastructure Equity Europe at DWS, underscores the importance of these investments in modernising and digitalising Europe's infrastructure, accelerating green energy integration, and supporting innovative technologies, essential for the EU's long-term competitiveness and independence.
