These factors contributed to high levels of deal activity in Europe, with more than US$40 billion being invested in European infrastructure in 2022, reaching a five-year high, according to Pitchbook.
Ardian Infrastructure also launched its latest Europe-focused flagship fund—Ardian Infrastructure Fund VI—with a €10 billion target, targeting brownfield transport, environment, renewables and energy assets in Europe.
It should also be noted that the second phase of energy transition (the first phase being the de-risking and scaling up of core renewables technologies like solar and wind), started to become more apparent in 2023 and includes the development of the energy ecosystem to enable the carbon reduction efforts of economies. Together with the effects of the 2022 energy crisis, this means that the pace and scale of the transition have been amplified significantly. This second phase of the energy transition will most probably see investment into a wider array of infrastructure sectors and investment ticket sizes.
A barrier that is gradually being overcome to allow more capital to flow into the transition journey is a more common approach to definitions. Part of this work has been done through the adoption of the EU’s Sustainable Finance Disclosure Regulation (SFDR) for asset managers and other financial markets participants. This was established to facilitate capital flow towards sustainable finance. SFDR requires asset managers and other financial market participants to provide transparency on sustainability and imposes mandatory ESG disclosure obligations.
These regulations and the guidance given around fund objectives (e.g., Articles 6, 8 and 9 Funds) aim to create more transparency into their investment strategies and prevent greenwashing and claims that products are sustainable when they are in reality not.
However, with interest rates expected to peak at the end of 2023 leading to a slowdown in revaluations, it is expected that this may lead to optimism returning to the market in the near future with some investors already taking advantage of improved valuations.
Outlook for 2024
How SS&C Can Help
SS&C offers a suite of comprehensive, modular real asset services to a diverse, global client base and has extensive experience supporting the needs of organizations that invest in and manage a broad range of infrastructure investments across the full spectrum of legal entity structures. We build, own and operate our own proprietary, advanced and scalable technology platforms, and also offer the flexibility to work in our clients’ systems.
The end result is a tailored solution to meet the unique requirements of your business while providing scalability, access to expertise and transparency to your data. As a global firm, SS&C operates with a follow-the-sun processing model to leverage time-zone differences and offer responsive, consistent customer service capabilities in any time zone.
For inquiries or to learn more about our services, please contact us.
1. Gravis Capital Navigating Macroeconomic Volatility in UK Infrastructure Funds, August 2023
2. DWS Infrastructure Strategic Outlook 2023, January 2023
3. White & Case Sector focus: European infrastructure financing flows, January 2023
Written by Justin Knott
Director Private Markets