NWF sets sights on new infra and beyond

The UK’s National Wealth Fund (NWF) is set to explore opportunities in new sectors after its remit under the Labour government was expanded beyond infrastructure. Speaking at the Infralogic Investors Forum 2025, Steve Lomas, managing director of banking and investments at NWF, said the fund has been tasked with supporting the government’s wider industrial strategy — expanding into sectors such as life sciences, creative industries, and defence, while maintaining a strong emphasis on Clean Energy.

Within energy and infrastructure meanwhile, new sectors it could target include floating offshore wind and sustainable aviation fuel.

Lomas explained that the NWF will get involved in the more difficult transactions that need some support, taking a bit more of that risk from the private sector to enable it to invest or lend alongside the NWF.

Since its establishment in 2021, then known as the UK Infrastructure Bank, the NWF has closed around 65 transactions, representing GBP 7.5bn invested across a diverse range of sectors. The evolution positions the NWF as a more flexible instrument for mobilising private capital and delivering the government’s long-term growth and industrial transformation objectives.

Infra investors’ focus shifts to Europe

The Trump administration’s actions in areas such as renewables and tariffs have prompted infrastructure investors to turn their attention more to Europe, according to panellists.

On top of US concerns, actions by European governments including big spending programmes announced by the UK and Germany are also helping shift the focus to Europe.

As a Europe-focused investor, Ardian is well-placed to be part of this trend given at least 80% of transactions are targeted on Europe, noted Will Briggs, a managing director at the French manager.

Pointing to Ardian’s recent USD 13.5bn (EUR 11.5bn) final close of its sixth flagship infrastructure fund, with co-investments taking the total to USD 20bn, Briggs said that more than half of the funds came from LPs from outside Europe. The US was the biggest single-country backer of the fund.

Turning to specific sectors, data centres have been on the rise globally, but DWS’s head of infrastructure research Richard Marshall thinks that long-term factors, such as governments wanting to invest in data sovereignty in Europe, should shield the sector from concerns over an AI bubble. By contrast, in the US, a big cut in capex plans by one of the big tech companies would have a massive impact on the market, he notes.

AI boom is not a bubble

The AI boom across Europe shows no sign of slowing down. Speaking on a panel on digital infrastructure, JPMorgan global co-head of infrastructure Francisco Abularach said: “So long as demand [for AI and cloud compute] continues in line with current expectations, the hype around data centre investment doesn’t seem to be a bubble.”

DigitalBridge managing director Manjari Govada explained that investors pursuing greenfield opportunities or developing data centre platforms will “need to build where the demand is” in order to be successful in the space.

Abularach added that the continued competition for data centre assets, led by the AI boom, means that “valuations should not experience a significant correction” at least in the medium-term.

Panellists compared the current attention on data centre assets with the wave of investment in fibre companies a few years ago. However, “compared with other ‘booms’ in telecoms subsectors, much of the data centre investment is backed by medium to long-term contracts with strong counterparties,” Abularach said. This, in turn, is what makes these investment opportunities particularly interesting to infrastructure managers, panellists agreed.

In terms of where the opportunities are for data centres today, Govada and Abularach agreed that there has been a move toward tier 2 markets due to the increasing lack of capacity and power in the FLAP-D (Frankfurt, London, Amsterdam, Paris and Dublin) primary region.

“It is impressive how quickly demand keeps growing for data centres that are yet to be built but have access to power. Hundreds of MWs are being contracted to hyperscalers and neoclouds!” Abularach said.

Evergreen infra fund demand on the rise

There is growing demand for evergreen “semi-liquid” infrastructure funds with capital from wealth and institutional investors, although some managers will struggle to set up such structures.

Anish Butani, managing director, private markets, at bfinance said that “2025 is the year of the semi liquid fund – we saw five or six options last year, this year we see 25 options of these semi liquid vehicles”.

Partners Group has seen strong interest from investors for its open ended evergreen infrastructure vehicle that it launched last year, said managing director Robert-Jan Bakker.

“It’s a massive opportunity and the amount raised so far for our fund has surpassed expectations,” said Bakker.

The fund makes both direct and secondary investments and this is a “critical component to the design of the fund and allows investment flow.”

Other managers have an eye on different strategies meanwhile.

Alex Anderson, investment director at Aberdeen said that family offices are somewhat of a middle ground. “While they tend to have return expectations closer aligned to a PE strategy, some are more receptive to our proposition, and we see opportunity to expand our relationships there,” he said.

Mid-market infra still attractive despite crowds

Investors are bullish around the future of mid-market infrastructure investing, although it has become a crowded space.

USS has increased focus on the mid-market space where “there are a lot more opportunities, including “scaling platforms,” said Robert Horsnall, head of direct equity, private markets group at USS.

“When looking at volatility of returns over the long-term, there’s not a big difference between large cap and mid market deals,” Horsnall added.

Limited partners are increasingly attracted to mid-market funds as they offer “greater diversification to their infrastructure portfolios”, said Spence Clunie, managing partner at Ancala.

“Mid-market offers differentiated risk-adjusted returns and, with the right approach, greater opportunities to create value and build platforms,” Clunie added.

Equally there are a lot of mid-market managers and LPs “need to sift through them all to find the right portfolio for them,” said Robert-Jan Bakker, managing director at Partners Group.

Aberdeen’s Anderson said there is “clearly an expectation of higher returns than historically [in relation to the mid-market sector]” and “a genuine need to be able to articulate how you’re going to create value across the portfolio, throughout the investment cycle.”

The mid-market, he added, “sees less competition for assets” and provides “an ability to create genuinely bilateral and proprietary deal flow,” typically by dealing with “family owners” and “local municipalities, where relationships and reputation play a big part in the acquisition phase”.

Bakker added LPs are “shifting their focus from beta to alpha” and that the mid-market’s future lies “at the intersection of sectors,” such as energy and digital infrastructure, rather than within single-sector strategies.

Renewables investors navigate growing risks and falling returns

Amid ambitious targets for net zero by 2030 across Europe, energy transition investors are concerned about growing risks and falling returns for the renewable power generation sectors.

The challenges include concentration of supply chain outside Europe – mainly China –  coupled with a long duration for transport, grid connection constraints for developers and grid operators and geopolitical risks, panellists said.

Noting that grid connections have been a challenge in the UK with aging grids and long connection dates for new projects, the problem is present across Europe, said Edward Randolph, investment director at Amber Infrastructure.

To combat the risks, Randolph suggested a focus on markets such as central and eastern Europe, which has “attractive features” amid opportunities for large projects. Another option is to concentrate on large scale projects to minimize the risks, he added.

For battery energy storage systems (BESS), which have become very attractive to investors in Europe over the years, co-located BESS attached to a solar or wind power project presents a lower risk than a standalone project, he noted.

New decarbonisation and energy technologies at crossroads

Discussing the newer, niche technologies in the clean energy segment, the panel had mixed views on the nuclear power sector and more specifically small and medium reactors (SMR).

Joe Rippon, head of financial structuring at the UK’s 3.2 GW Sizewell C nuclear project, noted that apart from meeting the UK’s need for cleaner energy, there are further opportunities for the project such as waste heat use and production and use of hydrogen. “The project has a capacity to generate 400 MW of thermal power from the waste heat,” Rippon said.

Nevertheless various investment managers and their LPs are still averse to nuclear power, as noted by Christoph de Carmoy, partner and executive director UK and Ireland at Meridiam. “Investors may be encouraged by having sufficient examples of (nuclear) technology to prove reliable and bringing the cost down as currently it is not as competitive as other technologies,” Carmoy said.

Meridiam is currently looking at pumped hydro projects which are relatively large, correspond to the need of the market and in the UK benefit from the cap and floor regime for revenue certainty, Carmoy noted.

An additional area of focus in the net zero journey, also discussed at the panel, was carbon capture use and storage (CCUS) which can be used to decarbonize nuclear power, energy from waste, bioenergy, and various other industries. Pointing to the nascent phase of the CCUS, Colin Laing, CCUS advisory lead at Xodus Group, said: “CCUS needs reliance on government subsidy and there are challenges such as various parties, relying on each other for a project to take off.”

Investors eye European HSR market despite hurdles

New investors remain keen to enter the European high-speed rail (HSR) sector, but they continue to face challenges, delegates heard.

These challenges comprise operating across multiple geographies, having access to depots for maintaining the assets, finding ways of addressing bottlenecks and working with different infrastructure managers and regulators.

They also have to counter the “ambitions” from existing players, which are not “sitting on their hands” but responding to competition within the allowed frameworks – such as Eurostar’s recent announcement of a new train order.

Another difficulty is the capex component, with trains needing to be certified in multiple environments, having safety specifications and so on, “so trains will not be cheap.”

Different models were discussed, but panellists agreed that the Spanish model – with intervention by the public sector which has tendered several bundles and allocated capacity – and especially the Italian HSR model with pure open access can be profitable.

From a financing perspective, the recent example of Antin’s Proxima raising debt in France shows that there is appetite from lenders for bankable projects. This also applies to the Italian and Spanish markets, showing that with the right sponsors the projects become bankable, even though finance doesn’t come cheap.

European private credit can help fill the gaps

Despite lagging behind the US particularly in financing of greenfield projects, private credit in European infrastructure has a lot of potential growth that lies ahead, delegates heard.

One of Rivage Investment’s main innovations has been to support the capex growth of IPPs that provide demand-matching PPAs at holdco level with “the introduction of innovative credit structuring features to mitigate energy management risk”, said Gaetane Tracz, head of infrastructure debt at Rivage Investment.

Tracz also noted that the market is witnessing an increase in opportunities for mid-market transactions in the high yield space, with many LPs willing to allocate more resources to this area “given the attractive relative value and disciplined credit structures”.

Credit teams can also bring different mindsets, which part of the added value they they take to the table, often being complementary with banks, she added.

Equity investors have been increasingly looking for private credit in recent transactions, delegates heard. “Borrowers want to diversify their pool of capital, so they welcome private credit support” alongside bank finance and capital markets, said Vijay Peruri, European head of capital markets at Brookfield Renewable Power & Transition Group.

One underserved section of the market where Peruri sees potential opportunities for private credit is the “middle space” between the low investment grade and high non-investment grade” – the 300/ high 200bps area: “That’s where more demand will come,” he predicted. “Everyone, from banks, to capital markets and private credit – has a role to play in the infrastructure financing ecosystem, including private credit filling gaps, for instance in the data centre and renewable space,” he concluded.