European sovereignty is more central to economic and political discourse today than ever before. We made the case two and a half years ago – in our October 2023 CIO Letter – that building a form of sovereignty on the Old Continent would create economic value. Developments in recent weeks have only reinforced that case, making it more compelling than ever.
European integration has often been reinforced during times of crisis. Today is no exception. While some fixate on structural weaknesses of the Old Continent, we continue to see Europe as a very promising investment opportunity.
Latest policy shifts in Germany1 for instance – effectuated faster and with greater amplitude than expected– have changed the game, paving the way for an upsurge in public investment and European-level financing, while grounding the country soundly in Europe’s sovereignty strategy.
Moreover, recent turmoil in transatlantic relations comes at a time when Europe's banking sector has rebuilt solid foundations. Southern European banks are stronger than they have been in decades,2 as illustrated by market capitalisations of Spanish and Italian banks.3 The European banking system thus appears sound, European asset managers are rooted in their local markets and European investors seem increasingly committed to strengthening their role in financing this sovereignty.
Lastly, key players in public and private sectors have moved quickly to restructure industrial priorities, secure financing, and collaborate in order to close the technological and investment gap with the United States. This prompted us to not only get behind these public-private partnerships but alsoto invest significantly in opportunities arising from shifts in strategic areas such as the energy transition, mid-cap corporate financing, cybersecurity, defence, strategic infrastructure (e.g. data centres), regenerative agriculture and real assets.
This is why we are recirculating our October 2023 letter – unchanged – as a reminder of the rationale that led us to prioritise investments aimed at bolstering Europe's resilience and sovereignty through private equity, private debt, listed equities, corporate bonds and real assets.
The growing interest we are seeing from non-European investors only reinforces our belief that this momentum is growing.
We remain convinced that selective, locally-grounded investments in Europe to support the region’s substantial investment needs, the revival of its industrial policies, and the emergence of resilient European champions, will be a powerful driver of both financial and non-financial value creation in the decades ahead.
1 German lawmakers approve massive defense and infrastructure spending plans, Le Monde, 18 March 2025.
2 Source: Bank results publication, as of 31 March 2025.
3 Source: Bloomberg, as of 24 April 2025.
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CIO Letter - Europe, the final countdown: examining the issues surrounding European sovereignty
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