An international fund manager expects Europe to provide the best investment opportunities with regard to infrastructure in the coming years as it is set to be the biggest beneficiary from secular megatrends, including decarbonisation and the energy transition, digitalisation and the growth in data and artificial intelligence.
Access Capital Partners infrastructure partner Tomas Wegelius noted Europe is well positioned to offer opportunities in the asset class as it remains the largest market globally by annual number of transactions, with mature regulatory and legal frameworks.
“The market remains a healthy ecosystem, with around 150-plus established general partners (GP), alongside the emergence of smaller, newer GPs each year with more specialised, niche strategies,” Wegelius said.
Further, he identified the diversity of the geographic region as another strength.
“Comprising of over 30 countries with different infrastructure frameworks and different investment needs across key sectors such as fibre networks, road networks, waste and water solutions, Europe provides a very large mid-market opportunity, with market fragmentation creating compelling consolidation opportunities,” he explained.
“The European market benefits from mature regulatory and contractual frameworks, with the increasing integration of the EU market and reduction of unjustified monopolies.
“Currently, the market is witnessing strong growth, from both the requirement to upgrade existing systems and the development of new projects, with high public deficits creating a need for more private financing of infrastructure assets.”
According to Wegelius, secular megatrends are also playing a part in providing strong infrastructure investment openings. Here he highlighted developments in the digital infrastructure sub-sector as playing a significant role.
“The digital infrastructure sector has witnessed rapidly increasing demand for bandwidth and telecommunications, 5G and fibre network deployment and data centres in recent years. In 2024 alone, the world is expected to have generated 1.5 times the amount of digital data it did just two years ago and this strong growth trend is expected to continue, underpinning demand for digital assets,” he said.
The energy, utilities, and transport and mobility sectors were identified as other areas providing great investment prospects within the asset class.
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