<\/p>\n
European infrastructure may not scream urgency. Yet in Zurich, at the Private Equity Insights Swiss Conference, Harold d\u2019Hauteville made a quiet but pointed case for why it should be at the top of every private equity investor\u2019s agenda.<\/p>\n
The continent\u2019s roads, grids, ports, data centres, and energy systems, once symbols of legacy, now sit at the heart of a $6tn capital requirement that could redefine Europe\u2019s strategic autonomy.<\/p>\n
\u201cThere is a need for Europe to transform itself and reduce its dependency on US tech, on Asian manufacturing, but also on Russian gas imports,\u201d said d\u2019Hauteville, Head of Infrastructure Equity Europe at DWS, during his opening keynote.<\/p>\n
Of the $6tn needed by 2030, $5tn is allocated to energy transition and $1tn to digital transformation. With a $2.5tn funding gap still to be addressed, he presented private capital not as a contributor, but as a necessity.<\/p>\n
\u201cWhen you invest in energy transition in Europe, of course it has an impact. It\u2019s a decarbonisation investment, but it\u2019s also an energy independence investment.\u201d<\/p>\n
What distinguishes Europe, according to d\u2019Hauteville, is a cohesive and durable policy environment. \u201cEurope is a big vessel, slow to move, but then when it keeps relatively coherent to the strategy\u2026 that stability is key for infrastructure investment.\u201d<\/p>\n
This contrasts with regions like the US, where policy incentives are more volatile. \u201cThere are incentives for renewable energy producers, but there are also commitments and objectives for the consumers in terms of both energy efficiency and share of renewables,\u201d he said, referring to Europe\u2019s dual-pronged approach.<\/p>\n
Macro headwinds \u2013 from tariffs to inflation \u2013 have done little to destabilise the sector, which DWS views as structurally resilient. \u201cIt is quite a resilient asset class, which makes it interesting also in the current environment.\u201d<\/p>\n
At the core of DWS\u2019s strategy is the mid-cap segment: equity tickets between \u20ac200m and \u20ac600m, targeting infrastructure assets valued below \u20ac1bn. \u201cThat really coincides quite nicely with what we see, at least the vast number of opportunities in Europe,\u201d he explained. \u201cThat\u2019s representing close to 90% of all the transactions since 2019.\u201d<\/p>\n
Mid-cap valuations have remained flat over the past decade, while the large-cap segment has been driven upwards by excess capital. \u201cThere is a clear difference in the valuation trends,\u201d he said. \u201cThe mid-cap offers more potential upside versus a large-cap strategy with quite a moderate downside risk.\u201d<\/p>\n
DWS aims to acquire core-plus mid-cap assets and grow them into core assets suited for large-cap exits. \u201cTrying to sell on exit a large-cap asset with a core risk profile, to try to capture this multiple uplift that I mentioned earlier.\u201d<\/p>\n
The firm has taken a pan-European approach, with recent activity in Switzerland (through data centre platform NorthC), France (via energy efficiency developers), and across the Mediterranean (through cruise port terminals and train stations). \u201cWhen it\u2019s going well, we are really able to generate the return and the values with the assets through the whole life cycle, from acquisition to disposal,\u201d he said.<\/p>\n
Typical holding periods are five to six years, targeting a two times multiple. Meanwhile, a complementary small-cap strategy focuses on early-stage sustainable infrastructure with the goal of growing into mid-cap core-plus at exit.<\/p>\n
DWS prioritises sectors aligned with structural trends such as energy transition, digitalisation, and public transport. \u201cPublic transportation actually tends to do better in a time of low economic cycle,\u201d he noted, pointing to its counter-cyclical value.<\/p>\n
\u201cInfrastructure private equity is a subset of private equity,\u201d he concluded. \u201cNot the 20 to 30% target IRR, but providing downside protection on the capital, and resilience through the recent macroeconomic changes.\u201d<\/p>\n
\u201cSo I think investing in European infrastructure can be a very attractive opportunity for investors.\u201d<\/p>\n
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