European infrastructure may not scream urgency. Yet in Zurich, at the Private Equity Insights Swiss Conference, Harold d’Hauteville made a quiet but pointed case for why it should be at the top of every private equity investor’s agenda.

The continent’s 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’s strategic autonomy.

“There is a need for Europe to transform itself and reduce its dependency on US tech, on Asian manufacturing, but also on Russian gas imports,” said d’Hauteville, Head of Infrastructure Equity Europe at DWS, during his opening keynote.

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.

“When you invest in energy transition in Europe, of course it has an impact. It’s a decarbonisation investment, but it’s also an energy independence investment.”

What distinguishes Europe, according to d’Hauteville, is a cohesive and durable policy environment. “Europe is a big vessel, slow to move, but then when it keeps relatively coherent to the strategy… that stability is key for infrastructure investment.”

This contrasts with regions like the US, where policy incentives are more volatile. “There 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,” he said, referring to Europe’s dual-pronged approach.

Macro headwinds – from tariffs to inflation – have done little to destabilise the sector, which DWS views as structurally resilient. “It is quite a resilient asset class, which makes it interesting also in the current environment.”

At the core of DWS’s strategy is the mid-cap segment: equity tickets between €200m and €600m, targeting infrastructure assets valued below €1bn. “That really coincides quite nicely with what we see, at least the vast number of opportunities in Europe,” he explained. “That’s representing close to 90% of all the transactions since 2019.”

Mid-cap valuations have remained flat over the past decade, while the large-cap segment has been driven upwards by excess capital. “There is a clear difference in the valuation trends,” he said. “The mid-cap offers more potential upside versus a large-cap strategy with quite a moderate downside risk.”

DWS aims to acquire core-plus mid-cap assets and grow them into core assets suited for large-cap exits. “Trying to sell on exit a large-cap asset with a core risk profile, to try to capture this multiple uplift that I mentioned earlier.”

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). “When it’s 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,” he said.

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.

DWS prioritises sectors aligned with structural trends such as energy transition, digitalisation, and public transport. “Public transportation actually tends to do better in a time of low economic cycle,” he noted, pointing to its counter-cyclical value.

“Infrastructure private equity is a subset of private equity,” he concluded. “Not the 20 to 30% target IRR, but providing downside protection on the capital, and resilience through the recent macroeconomic changes.”

“So I think investing in European infrastructure can be a very attractive opportunity for investors.”

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