Europe to account for 45% of unlisted infrastructure AUM by 2026 – Reach Capital

November 21, 2024 (Preqin News) – Infrastructure managers are tilting towards opportunities in Europe, with the proportion of AUM held by funds focused on Europe rising from 31% in 2015 to 37% in 2023. Reach Capital’s ‘Infrastructure Equity Study 2024’ expects that this will grow to 45% and surpass the total value of North America-focused funds by 2026.

The appetite for infrastructure opportunities in Europe can be seen in the fundraising market, with three of the largest five fund closes in 2023 focused on the region. Funds managed by Pantheon, DIF Capital Partners (which was acquired by CVC in 2024), and Igneo Infrastructure Partners, are among the six largest closes in 2024 YTD, according to Preqin data.

‘Globally, $15tn of further investment is required by 2040 to meet infrastructure demands and we expect private markets players to play an essential role in bridging this gap,’ William Barrett, Managing Partner at Reach Capital, said on the report's release.

‘This gap offers significant investment opportunities to both experienced and emerging managers as public actors turn to unlisted funds capable of providing much-needed capital to support new and existing infrastructure projects.’

Amended regulatory frameworks are also making Europe more attractive for infrastructure managers. Renewable energy currently constitutes 23% of energy production, according to a paper published by the European Union last year. The revised Renewable Energy Directive, adopted in 2023, has raised the EU’s binding renewable energy target for 2030 from 32% to 42.5%.

A global drive towards renewable energy production and consumption has ignited fresh infrastructure investment prospects across the globe. According to the UN’s ‘The New Collective Quantified Goal’ group – the energy transition requires the ‘mobilization and reorientation of public and private financial flows towards climate action.’

The Reach report said that the energy and transportation sectors have accounted for over 65% of all infrastructure investments since 2018. The energy sector, where the largest number of deals are in renewables, topped 60% of infrastructure deal volume last year.

_{The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.}