July 14, 2025
Exploring Europe’s Infrastructure Evolution: Insights from a Recent Trip
How Europe's infrastructure spending is shaping the future
In the dynamic world of global infrastructure, Europe is undergoing a fascinating transformation. Recent observations by Kevin McSweeney, SVP, Portfolio Manager and Lead – Canadian Equities, during an infrastructure-focused trip across Madrid, Paris, and Rome unearthed compelling insights into the region’s efforts to bolster resilience, redefine energy sources, and catalyze growth.
The power transition in Europe
One of the most striking themes was Europe’s proactive approach to resolving its reliance on foreign energy imports. Spain, for instance, has made significant strides, with nearly 70% of its power now derived from renewables, including hydroelectric sources. Conversations with major utility leaders revealed plans to extend nuclear plant operations, demonstrating a commitment to diversifying energy sources. Italy is tackling its own unique challenge—transporting solar energy generated in the sunny South to the industrial-heavy North—a logistical hurdle that is steadily being resolved.
These changes come in response to geopolitical tensions and economic imperatives, as Europe strives to become more competitive and self-reliant. Infrastructure companies, particularly grid operators, are playing a pivotal role in this transition by embracing innovative strategies and investment opportunities.
Utilities and regulation: A shifting landscape
Regulatory frameworks in Europe are evolving to accommodate the urgent need for infrastructure investment. Historically, regulators imposed low returns on utility investments to keep energy costs affordable. However, this approach led to underinvestment, leaving systems vulnerable, as evidenced by Spain’s recent blackout. Now, countries like Italy and Spain are revising their policies to incentivize greater investment in resilience and modernization.
Such changes offer intriguing prospects for investors. Companies with strong balance sheets and monopolistic positions stand to benefit from increased investment allowances and higher returns, creating a double lift in profitability and expansion.
From defense to growth: Fiscal stimulus and construction
The intersection of defense spending and infrastructure development is another area ripe for exploration. Companies like Vinci, a French firm that operates toll roads and airports, are poised to benefit from fiscal stimuli. Defense budgets often include spending on barracks, roads, and factories, injecting growth into construction sectors. As demand for engineering expertise grows, construction firms are setting favourable contract terms, leading to improved margins—a trend likely to have far-reaching implications for profitability.
Tourism and macroeconomic green shoots
Southern Europe is experiencing a post-COVID renaissance in tourism, with countries like Spain, Greece, and Italy attracting robust visitor numbers. This resurgence is bolstering fiscal capacity and enabling governments to invest in infrastructure. For instance, airports and air traffic control systems are seeing growth, providing fresh opportunities for investors in the sector.
Italy, led by a business-friendly administration, is capitalizing on these green shoots by fostering a conducive environment for economic restructuring. The focus remains on transforming power systems to ensure reliability and sustainability, a shift that could redefine the region’s economic landscape.
Final reflections
The due diligence trip underscored the value of direct engagement with industry leaders, offering nuanced perspectives that go beyond financial reports. Whether exploring Spain’s resilient utilities, Italy’s innovative grid, or France’s construction-led growth, the experience highlighted how infrastructure spending is deeply intertwined with Europe’s broader economic ambitions.
As Europe moves forward, embracing renewable energy, modernizing grids, and leveraging fiscal and defense spending, the region stands at the forefront of a transformative era. For investors and policymakers alike, these developments offer a wealth of opportunities to shape a sustainable and competitive future.
About the Author
Kevin McSweeney is a Senior Vice-President and Portfolio Manager with CI Global Asset Management and is Head of Canadian Equities. He began his professional financial services career in 2000 as a Financial Economist with Finance Canada before joining Scotiabank in a variety of roles, including time in Corporate Credit Risk Management. He has been with CI Investments in a variety of progressively senior roles since August 2008, beginning with the High Yield and Leveraged Loan team as an investment analyst, progressing to Portfolio Manager. In 2016, he joined the equity team as an Infrastructure and Real Estate specialist portfolio manager. He manages assets across a variety of domestic and global mandates, including Canadian Equity and Balanced, Income and Dividend funds, and Infrastructure and Real Assets. Kevin has a BA from St. Mary’s University, an MBA from Dalhousie University and a variety of professional designations, including Futures and Options licensing, and is a CFA Charterholder. He has received a variety of professional honours, including a Lipper Award for best Infrastructure Fund in Canada for each of 2019, 2020, and 2021, and Brendan Wood’s “Top Gun” award as voted by Canadian financial services professionals.
About the Author
Thomas Galikowski, Vice-President, and Institutional Portfolio Manager has more than 20 years of investment management sales experience. Thomas joined CI GAM in 2015, initially working as an ETF Specialist and later joining the broader sales team focusing on the IIROC channel. He progressively moved into the Institutional Portfolio Manager role in 2023 and covers CI GAMs equity product suite. As the IPM for Equities at CI GAM, Thomas acts as a liaison between the equity portfolio managers and the sales team, helping with strategy, sales positioning and support, competitive analytics and providing advisors with a deeper understanding of our equity product solutions. He has extensive sales experience, working previously with leading Canadian Investment Management and Bank investment distribution organizations across an array of investment product structures. Mr. Galikowski is a graduate of the University of Toronto with an Honours degree (HBA) in Economics and Political Science, holds the Chartered Market Technician (CMT) designation, the Canadian Investment Manager (CIM) designation, and is a Fellow of the Canadian Securities Institute (FSCI).
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