Private capital, facilitated by wealth management groups, is increasingly flowing into infrastructure assets as the global energy transition accelerates.

Global infrastructure is undergoing a fundamental transformation, shaped by decarbonisation imperatives, geopolitical shifts and a surge in private capital targeting long-term, inflation-linked returns.

Listed and unlisted infrastructure alike are drawing growing investor interest, with megatrends including the energy transition and digitalisation creating unprecedented demand for power, connectivity and resilient transport.

According to Ocorian’s Global Asset Monitor, the total market value of infrastructure assets globally reached a record $1.22tn at the end of 2024, marking a 12.4 per cent increase year-on-year, the steepest percentage rise across all private markets over the past 15 years.

Infrastructure remains attractive to investors owing to its stable, predictable cash flows and built-in inflation protection, according to consultancy EY. Assets are typically backed by long-term contracts of 20 years or more, delivering essential services and rendering them less sensitive to market cycles.

Power producers and transmission operators as among the clearest beneficiaries of the green transition.

Shifting energy mix

“We’re seeing a lot of traditional thermal power generators shifting the energy mix, closing down coal and developing more renewables,” says Thuy Quynh Dang, portfolio manager for the global listed infrastructure Fund at Cohen & Steers. “Governments are typically very supportive, offering visibility on returns through long-term contracts, often 10 to 20 years.”

Transmission and distribution grids, she adds, are also well-positioned. “Once you generate green energy, you need to transport it to where consumption is. These are regulated businesses, and the higher the capital expenditure, the higher the profits, since allowed returns are typically based on capex.”

Other infrastructure subsectors are also beginning to integrate sustainability goals. These projects range from toll roads deploying EV charging stations, to ports and transport systems using greener construction materials. However, political and macroeconomic risks are complicating investment theses, particularly in the US.

The second Trump presidency could curb progress in renewables, warns Ms Dang. “On day one of his second mandate, he issued an executive order halting offshore development in the US,” she says. “Support for renewables will likely slow down.” In contrast, she sees upside for gas pipeline operators and midstream energy firms, if fossil fuel extraction is fast-tracked under a deregulatory agenda.

Despite potential headwinds for clean energy, she argues that macro volatility and inflation could favour infrastructure assets overall. “Infrastructure tends to outperform in slower-growth, high-inflation environments. These are regulated businesses with pricing power, offering natural inflation protection,” she says.

Portfolio ballast

Commentators agree that infrastructure serves as a ballast in portfolios during economic slowdowns.

“Infrastructure is a diverse asset class, from core services like water and sanitation to data centres and AI-related energy needs,” says Mark Hempstead, executive director at JP Morgan Private Bank. “The demand for power has jumped, while renewable energy is now often the cheapest source. Regardless of headlines, companies are seeking the best economic solution for their customers, and that increasingly means renewables.”

He sees state-level action in the US driving development regardless of political rhetoric. “States are simply looking for the best way to meet demand, whether through distributed generation or modernising the grid,” he adds.

The rise of mid-market infrastructure projects, particularly in power and data, are seen as key areas of growth.

“There is always opportunity in mid-size projects that can grow into platforms for the largest hyperscalers,” says Mr Hempstead. “It’s classic buy-and-build.”

In terms of geography, Ms Dang flags US utilities as especially attractive. “We think we’re at a turning point where power demand will increase materially, from data centres, general electrification and reshoring of manufacturing,” she says. She also sees strong momentum for telecom towers, particularly in Europe, where efforts to expand rural broadband are spurring long-term leasing demand.

Emerging opportunities

Emerging markets are increasingly coming into focus, though risk dynamics differ. “The world needs infrastructure upgrades, whether in western Europe, the US, or low- and middle-income countries,” says Mr Hempstead. “It’s just a matter of matching opportunity with appropriate return expectations.”

One of the structural forces shaping the sector is the volume of undeployed private capital. Ms Dang estimates more than $300bn remains ‘dry-powdered’ in private infrastructure funds, far exceeding the current supply of investable projects.

“We’re starting to see that money flow into the listed space, either by acquiring assets or buying entire companies,” she explains. “These deals happen at much higher multiples than listed valuations, which we believe will eventually pull up the listed market.”

While some question whether the enthusiasm for private infrastructure mirrors past hype cycles around hedge funds, Ms Dang remains pragmatic. “Secular trends like decarbonisation and digitalisation are here to stay,” she says. “The money may not be deployed overnight, but we’re confident it will filter through to both private and listed markets.”

Some see political developments also shaping private capital flows.

“Trump’s rollback of ESG constraints could reduce some of the pressure on public companies,” says Arnab Das, global market strategist at Invesco. For some private players, it is about avoiding the scrutiny of activist investors or regulatory ESG pressures and capturing returns through scale or opportunistic problem-solving, he adds.

Energy infrastructure demand will persist regardless, believes Mr Das. “Electricity demand is growing, for EVs, heating, AI data centres. Nuclear power may become more acceptable in countries like Germany, Poland or South Korea,” he says.

For now, infrastructure remains a favoured destination for investors seeking resilience, cash flows and structural growth, despite political and macroeconomic uncertainty.

“Whether it’s renewables, power grids, telecom towers or gas pipelines, these assets are essential, and in short supply,” says Ms Dang. “That scarcity underpins their long-term investment case.”