Sidley European Real Assets Update

2026 has so far been another year of contrasts. The first half of the year has been shaped by geopolitical and macroeconomic uncertainty, including escalating tensions in the Middle East and continued concerns over potential disruption to energy supplies through the Strait of Hormuz. Combined with persistent inflationary pressures, higher cost of debt, and the prospect of interest rates remaining higher for longer, this has led to a cautious M&A environment across Europe and the U.S. In the UK, we have also, of course, had a change of Prime Minister, the impact of which will become clearer in the coming weeks.

Despite these headwinds, deal activity has remained resilient in sectors supported by long-term structural trends. Data centres continue to be a key investment theme, while energy transition, storage, and grid infrastructure assets have also attracted significant investor interest. It will be interesting to see if the new Prime Minister in the UK will change the UK Government’s approach to energy transition and the North Sea. Fundraising across the infrastructure sector has remained relatively strong, with a number of successful closes during the year.

On the debt side, the slower M&A market has resulted in fewer acquisition-related financings, but sponsors and lenders have remained active through refinancings, repricings, and dividend recapitalisations, as well as financings for development projects. Demand for capital has been particularly strong in the digital infrastructure and energy sectors, reflecting the continued focus on energy security and increasing power requirements.

Looking ahead, while uncertainty remains, there is cautious optimism that M&A activity and related financings will continue to gain momentum through the remainder of 2026.

At Sidley, we have continued to strengthen our European and global infrastructure and real assets platform, having been joined by real estate finance partner Jeremy Trinder in London, who arrives with more than 30 years’ experience in the real estate financing market, and Simon Barrett and Olivia Matsushita in Tokyo, who both focus on projects and energy. In the U.S. we continue to strengthen our U.S. projects capabilities with the recent addition of a four-partner team. Our wider European platform has also been strengthened by the recent additions of market-leading restructuring partners Melissa Coakley and Philip Hertz.

In this Sidley European Real Assets Update, we look at EU Foreign Subsidies Regulation, English Law of Privilege, The Building Safety Act, and Corporate Criminal Liability. Please do not hesitate to reach out to your Sidley contact to discuss any of the matters raised here.