The need to close Europe’s digital infrastructure deficit is urgent, driving significant long-term demand for investment in data centers that private sector dealmakers are eager meet.

In June, French-based private equity firm Ardian announced a €5 billion investment in a 500MW AI data center hub that will be built on a campus outside Paris. A few weeks earlier, Japanese investment group SoftBank pledged to invest €75 billion in the construction of a network of AI systems, also in France.

The investment in European infrastructure can’t come fast enough. Europe is heavily reliant on imports of digital technology, ranging from chips to cloud computing capacity. The 2024 Draghi report on the future of European competitiveness warned that Europe is falling behind in the provision of digital infrastructure necessary to support innovation and the digitalization of the region’s economy.

Policymakers open the door for deals

The risk to European growth and global competitiveness is not lost on policymakers, and the European Union (EU) has put a €20 billion public-private funding program in place to support the construction of an “AI Gigafactories” to train, fine tune, and deploy AI technology, at scale, across the continent.

The AI Gigafactory financing initiative is a cornerstone of the EU’s AI Continent Action Plan, the bloc’s strategy to ensure that Europe stays at the forefront of global AI development, and harnesses AI to drive economic growth.

These policy plays have encouraged deal activity. In addition to the Ardian and SoftBank announcements, Deutsche Telekom has partnered with chipmaker Nvidia and private markets group Brookfield to bid to build an AI gigafactory in Germany, and Nokia has thrown its weight behind an initiative to construct a giant AI data center in Finland.

These partnerships highlight how companies and investment managers are joining forces to combine resources and capital to deliver financing and expertise at the scale required to execute these massive data center build outs.

M&A opportunity extends into adjacent areas

The strategic imperative for Europe to increase data center capacity isn’t only driving dealmaking in digital infrastructure, but also in power generation and grid capacity.

The computer power AI relies on to operate is highly energy-intensive, and dealmakers have moved to deploy capital in companies positioned to benefit from AI-driven power demand.

French utility Engie, for example, acquired UK Power Networks, the UK’s biggest electricity distribution company, in a £10.5 billion deal in February. UK Power Networks is the first distribution network operator to partner with the Data Centre Alliance, an initiative to expedite and simplify data center grid connections. As demand for grid connections from data centres accelerates, distribution network operators are becoming increasingly strategic infrastructure assets.

M&A for nuclear power generation assets, meanwhile, is soaring, as utilities and hyperscalers look to meet accelerating power demand from data centers without increasing hydrocarbon consumption. M&A in Europe’s nuclear sector climbed to a seven-year high in 2025, with deal value of US$1.5 billion from 25 transactions, according to law firm White & Case.

Data center dealmakers themselves are deploying capital into power generation. Ardian, for example, will invest in power generation in parallel with deployment in gigafactory projects, developing energy capacity that matches what the data center will consume.

Capital flowing into digital infrastructure isn’t just boosting data center transaction flow. Deal activity in other sectors is benefitting, too.