Europe, like any other jurisdiction, needs future-proof infrastructure. The continent's high population density, demographics, and investor appetite to supply capital, position the economic bloc as an attractive investment opportunity.
"We look for businesses that are aligned with the four macroeconomic themes that are driving the infrastructure investment of tomorrow. These include decarbonisation - encompassing energy independence and energy transition, digitalisation, demographic change, and climate change," says Tom Maher, Managing Director at PATRIZIA.
Green transport and electrification of the transport network are critical aspects of the drive to decarbonise and mitigate climate change.
"We are now at a tipping point where high penetration levels make the economics viable, leading to various business models for electric vehicle (EV) charging operators and developers," says Maher.
He says there is substantial potential for achieving value in the mid-market space, including entry pricing, where there can be a significant discount, which is a key part of achieving strong returns.
"The next part is active asset management. Being hands-on in the mid-market is critical because it allows us to grow and add value more easily than in large-cap businesses," he says.
While deal flow in the mid-market has been much more robust than in the large-cap space, the other side is that mid-market players typically have less access to capital and the cost of capital has risen.
"That has hit the mid-market harder than the large-cap infrastructure. Companies that might have contemplated debt financing, now see equity as a more attractive alternative," says Maher.
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