Europe’s push for self-reliance is driving demand for mid-market infrastructure

Europe’s renewed focus on self-reliance is increasing the need for infrastructure investment. What began as a response to geopolitical instability is now driving sustained demand across energy and broader infrastructure subsectors.

For investors, this is translating into a growing pipeline of opportunities – particularly in the mid-market, where smaller infrastructure companies can be scaled into larger organisations to help alleviate energy security concerns. Mid-market infrastructure companies can play a key role in putting countries on a firmer footing in an increasingly volatile world while offering investors attractive risk-adjusted returns.

Energy security creates investable opportunities

Energy is the most pressing and visible area of this opportunity.

Recent geopolitical instability has brought energy security sharply back into focus. Europe has already taken steps to reduce its reliance on imported fossil fuels, most notably through REPowerEU, launched in response to the war in Ukraine. However, this has not resulted in full energy independence, nor a complete transition to domestically generated renewables¹.

Today, Europe remains exposed to global energy markets. The Iran War has underlined the severity of this exposure. The continent continues to feel the impact of rising oil and gas prices.

Governments are expected to reinforce their focus on energy security, with early signs already emerging. The EU recently announced a €30bn programme to support additional renewable energy investment, particularly in lower-income member states².

This policy momentum is transferring directly into demand for new and upgraded energy infrastructure.

The mid-market opportunity

Mid-market infrastructure – typically companies valued between €50m and €1bn – will have a key role to play towards any push by governments to improve energy self-sufficiency. There are often a broader range of levers available within the mid-market which are otherwise not available in scaled up, efficient platforms, which can have disproportionate impact on enhancing energy security.

Part of this push will involve investment into energy-generating assets themselves. This includes smaller, often renewable-focused, companies that can make a meaningful contribution to many countries’ energy transition plans.

This is an opportunity for investors to help build new assets and grow the footprint and enhance the operational performance of existing assets, creating value for investors, as well as the communities and customers these assets serve.

For example, we’ve been building out a biomass platform in Croatia which produces renewable energy from low-grade forestry biomass. From an initial investment in one plant, we’ve added a further four plants to the platform and have driven operational improvements to optimise generation. The platform’s generation capacity has increased five-fold since we first invested, in turn becoming the largest biomass platform in Croatia and directly supporting the nation’s energy transition objectives. The mid-market offers opportunities like these to build scale which in turn supports better exit valuations through attracting the attention of large corporates and investment managers.

Similarly, our investment in UK anaerobic digestion plant operator Biogen has helped the business expand through bolt-on acquisitions and optimise the performance of acquired sites, nearly tripling its generation capacity since 2017. It now produces enough energy to power over 120,000 homes every year.

Beyond generation, energy independence will also require investment in the systems that underpin national grids. Our portfolio company Hausheld Group – Germany’s largest independent smart metering platform – is a good example of a mid-market business at the forefront of this. It delivers digital infrastructure that makes grids smarter and hence more energy efficient. The Group is helping Germany optimise its grid usage as it progresses through the energy transition.

Enhancing climate resilience

Alongside energy, climate resilience is emerging as a second major opportunity.

Extreme weather events seen across the continent last summer alone caused short-term economic losses of at least €43bn – with Cyprus, Greece, Malta and Bulgaria suffering an impact of more than 1% of their 2024 GVA³.

Against this backdrop, governments are placing greater focus on climate adaptation, requiring additional infrastructure investment.

For example, our portfolio company Portsmouth Water is constructing the Havant Thicket reservoir in the UK. This is the first major water reservoir to be built in the country since the 1980s. The project will reduce the need to extract water from local rivers during dry periods, protecting ecosystems while improving long-term water resilience.

The opportunity extends into adjacent infrastructure areas that have become increasingly important at times of climate change.

Emergency aerial services, for example, play a direct role in climate-related response, including firefighting and evacuation. Our portfolio company Avincis, Europe’s largest emergency aerial services operator, experienced one of its longest and most demanding firefighting seasons this year, reflecting the growing need for these capabilities.

Turning potential into performance

Increasing focus from European governments on resilience and self-reliance is increasing the opportunity set for investors in infrastructure, in particular in the mid-market. Mid-market infrastructure companies have an important role to play in supporting both energy independence and broader climate-resilience objectives.

For LPs, capturing this mid-market opportunity requires partnering with managers who can identify the right assets and actively drive growth through disciplined investment and proactive value creation.

Done well, this can deliver a double benefit, strengthening energy security, resilience and ultimately the essential services that communities rely on, while generating enhanced, risk-adjusted returns for investors.

Interested to find out more about Ancala’s approach to investing in infrastructure? Register your interest, here.

References

1. https://www.bbc.co.uk/news/articles/c24de9e97vno

2. https://www.ft.com/content/34cc13d5-df6e-4621-a459-0f63f79f2070?syn-25a6b1a6=1

3. https://www.theguardian.com/world/2025/sep/15/europes-summer-of-extreme-weather-caused-43bn-of-short-term-losses-analysis-finds