Infrastructure Archives

For infrastructure CFOs, liquidity once felt relatively straightforward.

Stable assets generated predictable cash, and planning focused on ensuring obligations could be met with confidence. That foundation still exists. But the reality CFOs are managing today looks very different.

Infrastructure portfolios are no longer defined solely by steady income streams. They are shaped by overlapping capital demands, including expansion programmes, refinancing cycles, energy transition investment, digital infrastructure growth, evolving regulation, and rising capital expenditure. Cash flows may remain stable at the asset level, but the demands placed on that cash are becoming more varied, more interconnected, and harder to forecast.

This shift has fundamentally changed the nature of liquidity planning. It is no longer enough to confirm that current obligations are covered. CFOs now need to anticipate future demands, understand how those demands interact across the portfolio, and assess how they affect flexibility in capital allocation over time.

As portfolios grow in both size and complexity, liquidity planning is becoming a strategic discipline that sits at the center of portfolio management rather than within treasury alone. Liquidity pressure is rarely created by one decision. It is created by many decisions arriving at the same time. The ability to recognize those competing demands before they converge is becoming one of the defining capabilities of infrastructure finance teams.

Stable Assets Can Still Create Liquidity Pressure

Strong operating performance does not automatically translate into predictable liquidity.

A data centre platform may be generating robust revenues while simultaneously requiring significant investment to expand power capacity. A renewable energy portfolio could be producing steady cash flows but entering a phase where maintenance costs increase. Transportation assets may continue to perform well operationally while facing substantial regulatory or expansion-related capital requirements.

Individually, each of these assets may be financially healthy.

The real challenge emerges when these demands begin to accumulate across the portfolio.

Infrastructure managers are often balancing maintenance spending, growth capital, refinancing activity, debt servicing, distributions, acquisitions, and new investment opportunities at the same time. Each of these demands may be manageable on its own, but together they create a far more dynamic liquidity profile than infrastructure has traditionally been associated with.

The Demands Rarely Arrive One at a Time

Liquidity pressure rarely develops because of a single event. More often, it builds gradually as multiple funding requirements begin to overlap.

Capital expenditure programmes coincide with refinancing cycles. Distribution expectations increase while new investment opportunities emerge. Operating companies require additional funding just as debt facilities approach maturity. Regulatory changes accelerate investment programmes across several assets simultaneously. None of these situations is unusual.

The challenge lies in understanding how they interact. A portfolio may appear well funded when each asset is assessed individually, yet still face meaningful liquidity pressure when future commitments are viewed collectively.

Liquidity pressure is rarely created by one decision. It is created by many decisions arriving at the same time. Understanding how those decisions interact has become just as important as understanding the cash position itself.

Seeing Funding Pressure Before It Becomes A Problem

One of the most valuable capabilities for infrastructure CFOs is identifying future liquidity requirements before they become urgent. Achieving this requires visibility that extends well beyond cash balances.

Management teams need insight into capital expenditure pipelines, refinancing schedules, debt maturities, operating cash generation, distribution commitments, acquisition activity, covenant obligations, and funding requirements across multiple businesses and jurisdictions.

The objective is not simply producing more forecasts. It is understanding how future funding demands interact. A refinancing program may influence the timing of planned investments. Maintenance requirements may affect distribution capacity. An acquisition opportunity may compete with expansion projects already under way.

The earlier these relationships become visible, the more flexibility management teams have to respond.

Why Liquidity Decisions Shape Portfolio Strategy

Few executives have a broader perspective on competing capital demands than the CFO. They operate at the intersection of financing, operations, portfolio performance, investor communication, and capital allocation.

Boards expect confidence that future commitments can be funded without compromising portfolio resilience. Investors want reassurance that liquidity is being managed proactively rather than reactively. Management teams need confidence that capital can be deployed where it creates the greatest long-term value.

Liquidity planning therefore extends well beyond treasury. It becomes a portfolio-wide strategic exercise. The challenge is rarely identifying individual funding requirements. It is understanding how those requirements compete with one another as the portfolio evolves and ensuring today’s decisions do not unnecessarily restrict tomorrow’s opportunities.

Looking Across the Entire Portfolio

Leading infrastructure managers recognise that effective liquidity planning depends on connecting information across the portfolio rather than relying on isolated forecasts.

Cash positions, debt obligations, capital projects, operating performance, refinancing activity, distribution commitments, covenant headroom, and financing requirements all contribute to a more complete understanding of future liquidity.

Bringing these perspectives together becomes increasingly important as portfolios expand across renewable energy, digital infrastructure, transportation, utilities, logistics infrastructure, and social infrastructure. The objective is not simply improving reporting.

It is creating enough operational insight to adjust financing strategies, capital allocation priorities, or investment decisions before liquidity becomes a constraint. The strongest managers recognize that liquidity is not simply about cash. It is about optionality.

The more clearly management teams understand future funding demands, the more flexibility they retain when market conditions change, investment opportunities emerge, or unexpected challenges arise.

Reading The Signals Before They Become Spending

Leading infrastructure managers recognise that capital planning begins long before investment approvals are required. It starts with understanding the operational trends developing across the portfolio.

Changes in asset performance, maintenance requirements, customer demand, utilisation levels, regulatory expectations, expansion plans, financing conditions, and asset lifecycles all provide early indicators of future capital needs.

These signals rarely appear together in one report. They emerge across operating companies, engineering teams, finance functions, asset managers, lenders, and external service providers. The firms best positioned to manage future investment requirements are those capable of connecting these signals before they become urgent funding decisions.

The objective is not simply forecasting expenditure. It is creating enough operational insight to make better capital allocation decisions while multiple options remain available. That allows management teams to balance growth initiatives with maintenance programmes, prioritize investment across competing assets, and respond to changing market conditions before future capital requirements begin to constrain strategic decisions.

Why Investors Look Beyond Cash Balances

Investors rarely evaluate liquidity in isolation.

They are assessing whether managers understand how future funding requirements may influence portfolio performance. Confidence comes from knowing that refinancing obligations, capital programmes, distributions, acquisitions, and financing decisions are being considered together rather than managed independently.

A manager that can clearly explain how future liquidity demands influence portfolio strategy demonstrates more than financial discipline. They demonstrate operational foresight.

That distinction matters because infrastructure investors increasingly evaluate managers not only on their ability to generate returns, but on their ability to continue funding growth, maintaining assets, and adapting to changing market conditions without creating unnecessary financial pressure. Investors recognize that liquidity flexibility rarely depends on holding more cash.

It depends on understanding future demands before they compete with one another. In many respects, confidence in liquidity planning increasingly reflects confidence in the manager.

Turning Liquidity Insight into Portfolio Flexibility

Understanding future liquidity requirements is only part of the challenge. The real advantage comes from connecting financing activity, operating performance, capital programmes, and portfolio priorities into a single view of future funding requirements.

Domus helps infrastructure managers bring together cash visibility, debt management, capital planning, covenant monitoring, and portfolio-level insight, enabling CFOs to understand how liquidity evolves across the portfolio rather than within individual assets alone.

That creates far more than better reporting. It enables management teams to identify emerging funding pressures earlier, evaluate different financing scenarios with greater confidence, strengthen governance discussions, and make more informed capital allocation decisions before liquidity becomes a constraint.

The result is greater flexibility in capital deployment, stronger resilience during periods of market uncertainty, clearer communication with investors, and increased confidence that growth initiatives, maintenance programmes, refinancing activity, and new investment opportunities can all be funded without compromising long-term portfolio performance.

As digital infrastructure expands, energy transition investment accelerates, and infrastructure assets become increasingly capital intensive, the firms that succeed will not necessarily be those with the largest cash reserves. They will be the firms with the clearest understanding of future liquidity demands and the flexibility to respond before those demands affect performance.

In an increasingly complex infrastructure market, liquidity flexibility is becoming a reflection of operational maturity. And for infrastructure managers seeking to scale with confidence, it is becoming one of the clearest indicators of manager quality.

Infrastructure managers have always operated in complex environments. Capital is often raised in one jurisdiction, deployed through another, and invested across multiple markets. Holding companies, co-investment vehicles, acquisition structures, financing entities, and local operating businesses have long been part of the infrastructure landscape. Most managers are accustomed to operating within these environments and understand the reasons such structures exist.

What has changed is not the existence of complexity. It is the scale at which firms are now expected to manage it.

As infrastructure portfolios become larger, more global, and more diverse, organizations are being asked to maintain oversight across an increasing number of entities, jurisdictions, stakeholders, and reporting requirements. Renewable energy platforms may span multiple countries. Data center portfolios often support customers across regions. Fiber networks, transportation assets, utilities, logistics infrastructure, and social infrastructure businesses can all operate within different regulatory and governance environments despite sitting within the same investment strategy.

For infrastructure CFOs, the challenge is no longer simply understanding complex structures. The challenge is ensuring important information reaches the right people early enough to act.

That distinction is becoming increasingly important because the consequences of delayed visibility are rarely theoretical. A covenant issue identified months before a reporting deadline creates flexibility. The same issue identified weeks before an investor update creates pressure. A liquidity concern identified early can often be managed proactively. The same concern identified late may limit available responses.

In increasingly complex infrastructure portfolios, visibility is not simply about oversight. It is about time.

When Complexity Starts to Slow Information Flow

Infrastructure professionals are accustomed to complexity. Many of the industry’s most successful managers oversee sophisticated structures designed to support growth, fundraising, governance, and investment execution. A new jurisdiction, a co-investment vehicle, or an additional holding company rarely creates concern on its own. These structures generally exist for sound commercial reasons and often support flexibility, efficiency, and investor requirements.

The challenge emerges when organisations attempt to maintain a clear line of sight across all of them. Every new entity creates another source of information. Every new jurisdiction introduces additional reporting considerations. Every new stakeholder brings different expectations around oversight and transparency.

Viewed individually, each component remains manageable. Viewed collectively, they can create an operating environment where critical information becomes harder to surface, harder to validate, and harder to escalate. Complexity begins to create risk not because information is unavailable, but because information moves more slowly through the organisation than the business requires.

For leadership teams, that distinction matters. The issue is rarely whether information exists somewhere within the portfolio. The issue is whether it reaches decision-makers while there is still time to respond.

Why Diverse Infrastructure Portfolios Create Information Gaps

Infrastructure is often discussed as though it were a single asset class. Operationally, it increasingly behaves like a collection of different industries.

A utility business, a battery storage platform, a fibre network operator, a data centre portfolio, and a transportation asset may all sit within the same fund while operating under very different commercial, regulatory, and governance frameworks. Each generates different information, faces different risks, and requires different forms of oversight.

This diversity is one of infrastructure’s strengths. It is also one of the reasons portfolio-wide visibility becomes more difficult as firms scale.

The challenge is not simply understanding what is happening within individual assets. The challenge is understanding what is happening across the portfolio as a whole. A regulatory development affecting a utility business may have little relevance to a fibre network operator. A covenant issue within one structure may not immediately appear material at portfolio level. A reporting delay within a single operating company may initially seem insignificant.

Yet each can become increasingly important if visibility is delayed.

This challenge is becoming particularly relevant within digital infrastructure and energy transition portfolios. Data centre platforms often operate across multiple jurisdictions while managing significant customer, operational, and power-related dependencies. Renewable energy strategies may encompass hundreds of underlying assets operating across different regulatory environments. As these portfolios scale, maintaining timely insight becomes both more difficult and more important.

The Cost of Finding Out too Late

As portfolios expand, information often travels through multiple layers of the organization before reaching management teams, boards, or investors. Portfolio companies gather information. Local management teams review it. Service providers process it. Governance frameworks require oversight. Finance teams validate and consolidate it before it contributes to a broader view of portfolio performance.

This process is entirely normal – the challenge is that every additional layer creates the potential for delay.

When information arrives later than expected, organisations lose valuable time to assess risks, evaluate options, and respond effectively. A covenant issue identified months before a reporting deadline creates flexibility. The same issue identified weeks before an investor update creates pressure. A liquidity concern identified early can often be managed proactively, while the same concern identified late may restrict available responses. A governance issue surfaced quickly can often be resolved before it escalates, while the same issue discovered after it becomes material can undermine investor confidence.

This is why visibility should not be viewed solely as a reporting issue. It is a timing issue with operational, governance, and investor-relations consequences.

Where Visibility Matter Most

Few roles sit closer to the intersection of reporting, governance, liquidity management, and investor communication than the CFO.

As infrastructure portfolios become more complex, CFOs increasingly depend on timely information to maintain effective oversight. They need visibility into covenant compliance across financing structures, cash positions across operating entities, regulatory obligations across jurisdictions, reporting risks that may affect investors, and operational issues that could influence asset performance.

The challenge is rarely that these issues cannot be identified. It is ensuring they are identified early enough to matter.

For many CFOs, the difference between effective oversight and reactive management comes down to timing. The earlier an issue is identified, the more options exist to address it and the greater the opportunity to respond before it affects investors, governance processes, or portfolio performance. Once an issue becomes visible to external stakeholders, the conversation often shifts from prevention to remediation.

Building an Early Warning System for the Portfolio

The strongest infrastructure managers recognise that complexity itself is unlikely to decrease. Infrastructure portfolios will continue to become more global. New sectors will continue to emerge. Investor expectations will continue to evolve. Regulatory requirements will continue to increase.

As a result, their focus is not on simplifying every aspect of the portfolio. Their focus is on ensuring information moves efficiently across it.

This often means investing in information governance, reporting consistency, oversight frameworks, and operating models capable of surfacing issues before they become material. The objective is not simply creating transparency. It is creating enough transparency that management teams, boards, and investors have time to respond when conditions change.

The firms that do this successfully are often able to maintain stronger oversight without creating additional operational friction as portfolios grow.

The Value of Time

For many infrastructure firms, visibility is still viewed primarily through a reporting lens.

Increasingly, it is becoming something much broader. Early visibility creates optionality. It provides time to respond to emerging risks, address governance concerns, manage liquidity pressures, engage stakeholders, and adjust plans before issues become more difficult to resolve.

Investors recognise this. A manager capable of maintaining visibility across renewable energy assets, fibre networks, transportation businesses, utilities, logistics infrastructure, and data centres operating across multiple jurisdictions demonstrates more than reporting capability. They demonstrate an ability to identify issues while there is still time to act.

As infrastructure portfolios continue to grow in complexity, that capability becomes increasingly valuable. Timing influences how effectively firms manage risk, communicate with investors, and preserve confidence across the organization.

When Timing Becomes Performance

Infrastructure portfolios are becoming more interconnected, more global, and more operationally sophisticated. At the same time, investor expectations around transparency, governance, and oversight continue to rise.

Against that backdrop, the firms that succeed will not necessarily be those with the simplest structures.

They will be the firms that can surface risks, dependencies, reporting issues, and operational challenges while there is still time to act. Because ultimately, complexity becomes dangerous when it delays awareness.

The firms that maintain timely visibility across their portfolios are often better positioned to manage liquidity, strengthen governance, maintain investor confidence, support fundraising, and scale without sacrificing oversight as portfolios become more diverse.

In an increasingly complex infrastructure market, the ability to identify issues before they become material may become one of the clearest indicators of operational maturity. Investors do not judge managers solely on how they respond to problems. They judge them on how effectively they prevent small issues from becoming larger ones.

This version is significantly more readable. It has fewer fragmented paragraphs, more natural transitions, and the core thesis, visibility creates time, and time creates options, now runs consistently through the entire article. That gives it a stronger executive narrative while remaining highly specific to infrastructure operations, governance, liquidity, reporting, and fund management.

Private Equity:
2025 Year in Review

Private equity highlights from 2025

Private equity dealmakers endured a volatile year, as tariff changes put the brakes on an encouraging start to 2025.
With hopes that 2025 would herald an M&A revival put on ice, pressure on GPs to clear portfolio backlogs and make realizations remained unrelenting.
Continuation vehicle volumes continued to climb as managers made full use of the alternative exits routes available to them.
Fundraising remained challenging, as LPs held off from backing new funds liquidity and program cash flows improved.
Positive sentiment did begin to build in the second half of the year, with banner deals in Q3 2025 boosting year-on-year deal value comparisons.

Elliott Brown

Global Head of Private Equity

A Year Defined by Resetting Expectations

The private equity market entered 2025 with optimism that early signs of deal momentum, stabilizing valuations, and modest improvements in liquidity would translate into a sustained recovery. But as the year unfolded, shifting macro conditions, uneven policy signals, and persistent portfolio pressures forced managers to recalibrate those expectations. While pockets of activity strengthened − particularly in later quarters − the broader environment remained characterized by caution, selective dealmaking, and a continued focus on managing through legacy backlogs. This backdrop frames the dynamics that shaped GP sentiment and market behavior across the remainder of the year.

A Slower Than Expected Deal Recovery

GPs’ hopes that 2025 would finally be the year that private equity M&A activity rallied, never quite materialized, as shifts in US trade policy and volatile stock markets put the deal recovery on hold.

Despite the DOW reaching all time highs, the last 12 months have not been easy for private equity managers, who started 2025 with the expectation that flattening inflation and interest rate cuts in key markets would signal a turn in deal activity figures following a 36-month period of declining buyout transaction flows.

US tariff announcements in April, and the subsequent market dislocation, dashed any hopes of a deal revival in 2025, but in the final two quarters of the year, once dealmakers had assessed the impact of tariff shifts on earnings and portfolio companies, buyout activity did show signs of improvement.

Global buyout deal value for Q3 2025 hit US$377.34 billion, according to Dealogic figures analyzed by law firm White & Case – the best quarterly figures recorded since the market peak of 2021 and 59 percent above Q2 2025 totals. This lifted the buyout deal value for the first nine months of 2025 to US$911.04 billion, bringing it in line with full-year figures for 2024 and putting the buyout market on track to exceed US$1 trillion in annual deal value for the first time since 2022.

Landmark deals – most notably the $55 billion take-private of video game developer Electronic Arts in the biggest leveraged buyout in history – also pointed to an improving backdrop for buyout deals.

Crucially, momentum on the new buyout front was mirrored when it came to exits, with global exit value for the 9M 2025 coming in at US$468.02 billion – 84 percent up on the same period in 2024 and already ahead of the full-year exit value totals for 2023 and 2024.

After the initial tariff announcement shock, dealmakers gradually returned to business as the global economy rode out tariff disruption and interest rate cuts in the US, UK and Europe filtered through capital markets and brought down debt costs, facilitating more affordable deal financing.

Fundraising lagged deal rebound

The uptick in exit activity, while encouraging, was not large enough to put a meaningful dent in the backlog of unsold assets that had built up since 2022 and constrained the ability of managers to make distributions to their LPs.

According to PwC, the private equity industry still held an estimated US$1 trillion of unrealized assets halfway through 2025. Bain & Co.’s analysis, meanwhile, highlighted that while current exit volumes were broadly in line with 2019 levels, buyout managers were holding twice as many assets in their portfolios now as they were then.

With limited cash returns coming back to them, LPs had limited wiggle room to make commitments to new funds.

Fundraising through the first three quarters of 2025 fell to US$569.5 billion, according to PEI figures – the lowest fundraising total for a Q1-Q3 period in five years and around 22% down on the fundraising for the corresponding period in 2024.

GPs adapted to clogged exit channels by using alternative methods to unlock liquidity. At the beginning of 2025, Bain’s analysis showed that nearly one in every three portfolio companies in buyout portfolios (30%) had already undergone some form of liquidity event, ranging from minority stake sales and dividend recaps to NAV financings and continuation vehicle (CV) deals.

The continuation vehicle (CV) structure, in particular proved a popular option for expediting liquidity, with figures from Jefferies showing that CV deals accounted for almost a fifth (19%) of private equity exits through the first half of 2025.

The CV structure proved to be flexible through the course of the year, with GPs not only making us of single-asset CV liquidity at relatively attractive valuations (90% of single asset CVs priced above 90% of NAV, according to Jefferies) but also constructing multi-asset CVs to provide investors with much wider and deeper liquidity optionality.

The rise of non-institutional capital

The challenging fundraising market also served to strengthen the tailwinds behind the rise of private wealth investment into private equity.

The constraints in the institutional fundraising market obliged managers to broaden their investor base and innovate to unlock new pools of investors – most notably in the non-institutional space.

This drove a significant increase in the formation of evergreen fund structures (including interval funds and semi-liquid funds, among others), which were launched to facilitate more flows from private wealth into private equity strategies.

Analysis from HSBC Asset Management found that the net assets for the largest 16 private equity-focused evergreen funds registered with the US Securities and Exchange Commission (SEC) increased more than sixfold between 2021 and 2025, from US$10 billion to US$61 billion. The increase between 2024 and 2025 alone was 68%, reflecting the rapid growth of the non-institutional wealth channel through the year.

Retooling the private equity production line

For private equity managers, grasping the CV and private wealth opportunities not only necessitated a shift in investment and fundraising strategy, but also a significant operational overhaul.

As CVs and private wealth grew in 2025, managers encountered added layers of complexity in their operational model.

In the CV context, for example, asset pricing and reporting transparency, not to mention the capacity to support additional fund structures, demanded enhanced reporting and back-office capability. GPs also had to manage LP wariness of CV structures when they were in an incumbent investor position, particularly in multi-asset deals where portfolio companies included in the package were valued as a group rather than individually. Managers had to respond by producing granular pricing detail, as well as providing comprehensive reporting for the CV structures on their books.

GPs who dipped their toes into the non-institutional fundraising market, meanwhile, found that they had to ramp up their investor relations content output to reach a much broader, more disparate non-institutional investor base, often through distribution partners.

GPs also had to scale up back-office capability to service the preferred fund structures that non-institutional investors sought out when making allocations to private equity. New requirements included publishing monthly NAV figures and managing liquidity sleeves to ensure that vehicles could meet redemptions.

In addition, managers had to step up as LPs undertook detailed reviews of their fund exposures through the cycle of market dislocation – raising the bar on GP reporting.

From back office to front office, 2025 proved a challenging year for private equity firms − one that GPs nonetheless managed to navigate and adapt to.

Conclusion

Taken together, 2025 was a demanding but defining year for private equity. Managers contended with volatile markets, tighter operational and reporting requirements, and shifting investor dynamics, yet continued to broaden liquidity routes and refine their models to manage complexity. The year’s developments ultimately underscored the sector’s ability to adapt under sustained pressure.

Private Debt:
2025 Year in Review

Private Debt highlights from 2025

Private debt posted good returns for investors and enjoyed strong fundraising support in 2025.
Patchy M&A markets, however, limited deployment opportunities and increased competition for deals.
Private debt managers reduced margins and eased lending terms in the race to win financing mandates.
The formation of private credit continuation vehicles and private credit CLOs climbed in 2025, reflecting the asset class’s sophistication and maturity.

Jessica Mead

Global Head of Private Debt

A Year of Strength and Structural Change

Private debt delivered another strong year in 2025, buoyed by resilient performance, healthy investor demand, and the asset class continued appeal as a flexible source of capital. While macro volatility and tariff-related market dislocations influenced deployment conditions, private debt managers benefited from fundraising momentum and borrowers’ growing preference for speed, certainty, and tailored structuring.

At the same time, intensifying competition, evolving loan features, and new fund architectures signaled a sector continuing to mature and expand its role within private markets.

Performance, Fundraising, and Market Dynamics

Strong investor returns and steady fundraising support underpinned private debt’s solid performance in 2025. The asset class delivered exceptional risk-adjusted returns for LPs and continued its run of outperforming leveraged loan, high yield bond, and investment grade debt markets.

At a time when fundraising in other private-markets asset classes stalled and sputtered, fundraising for private debt in first nine months of 2025 reached US$252.7 billion – a record high for any Q1-Q3 period – as investors recognized private debt’s exceptional performance.

Competition Intensifies

Private debt’s unique selling points – speed and certainty of execution, no requirement for borrowers to obtain credit ratings, and flexible structuring – proved particularly relevant for borrowers in the first half of the year.

Tariff tumult saw public debt markets all but shutter in Q2 2025, with figures from White & Case and Debtwire recording a 16% fall in US and European syndicated loan and high yield bond issuance between the first and second quarters of 2025, opening the way for private debt players to fill the void.

Through the second half of the year, however, as the tariff fallout settled, syndicated loan markets reopened and rallied strongly to present stiff competition for private debt players in market still characterized by limited deal financing transaction flow.

According to Bloomberg, Wall Street banks had built up a pipeline of more than US$20 billion of M&A debt financing heading into the final quarter of 2025, winning mandates off private credit players by pricing debt at very low margins. Private credit players also faced pressure to defend existing loan books, as the low pricing offered by leveraged loan markets lured private credit borrowers with the opportunity to refinance debt at cheaper rates.

Private debt players had to respond by squeezing margins and upping leverage. Figures from Deloitte show that the margins on most private credit loan issuance dropped below five percent in 2025, while margins greater than six percent became a rarity. Leverage multiples increased during the same period, with around one in two new deals leveraged at more than 4x. There was a sharp spike in the volume of private credit deals levered at 5x or more.

Private debt funds also had to offer other bells and whistles to stand out from the crowd. Payment-in-kind (PIK) features, which allow borrowers to add interest payments to the principal balance of a loan rather than paying in cash, for example, became an increasingly common feature in private debt structures.

Research from investment bank Configure Partners showed that the inclusion of PIK features in terms when private debt loans were issued increased from 14.8 percent of loans in Q2 2025 to 22.2 percent in Q3 2025. The margins on these PIK facilities also compressed in 2025, as lenders narrowed pricing to win transactions.

Ratings agency Moody’s, meanwhile, noted that covenant-lite structures, historically only a feature of syndicated loan issuance, had become more common in the private credit space.

Dealing with Defaults

Private debt players also had to contend with growing concerns around default risk after the headline-grabbing defaults of auto-sector lender Tricolor and car parts supplier First Brands, where private credit lenders had exposure. Following the defaults, some industry executives expressed concerns that more hidden pockets of distress in private credit could emerge in the coming months, leading to potential losses for managers and investors.

Private credit was singled out for scrutiny following these defaults, even though BSL markets and banks carried exposure to the same borrowers, Indeed, private credit portfolios actually held up well in 2025, with KBRA DLD Default Research forecasting a direct lending default rate for 2025 of just 1.5 percent – lower than syndicated loan and high yield bond markets.

Nevertheless, covenant breaches did increase through the year, and even though breaches remained below longer-term averages, managers did have to invest more time and resources into managing portfolio credits in these situations.

A New Era of Operational Sophistication

In addition to building up their benches of workout and restructuring expertise, private debt players also had to upgrade their operating models as they followed private equity’s example and adopted new fund and distribution structures.

During the last year continuation vehicle (CV) structures became more prevalent in private credit, as private credit managers looked to extend hold periods for portfolio credits that hadn’t been able to exit to original timelines and required refinancings, term amendments and maturity extensions.

In workout situations extended hold periods were also required, although private credit funds also used CV deals to parcel up existing loan portfolios and sell to secondaries investors as a way to expedite payouts to existing investors.

The private credit market also saw an increase in the launch of private credit collateralized loan obligations (CLOs), which package up portfolios of private credit loans that are then securitized and sold off in tranches.

Bank of America forecast that the market was on track to deliver US$50 billion worth of private credit CLO formation by the end of 2025 – an all-time high. Executing private credit CLO deals required private debt managers to invest in additional accounting and legal expertise to manage the securitization process, structure special purpose vehicles to house portfolios, obtain ratings, and manage ongoing CLO administration.

Outsourcing partners stepped in to support private credit managers as they took on these higher back-office workloads and helped managers to focus on their core business of loan origination, underwriting and portfolio management in what proved to be an exciting but increasingly complex market.

Conclusion

Taken together, 2025 underscored private debt’s resilience and growing sophistication. Managers navigated a competitive environment marked by tighter margins, evolving borrower demands, and the increasing use of advanced fund and distribution structures.

Despite periods of market disruption, the asset class continued to attract capital and reinforce its role as a core component of private markets. As private credit strategies matured and operational expectations rose, the year demonstrated the sector’s ability to adapt, innovate, and maintain momentum in an increasingly complex landscape.

Real Estate:
2025 Year in Review

Real Estate Highlights from 2025

Despite tariff dislocation and geopolitical uncertainty, 2025 was a year of recovery and relative stability for real estate on the equity side.
Total real estate investment showed double-digit year-on-year gains in 2025, while real estate fundraising was set to beat 2024 totals.
Lower interest rates in the US and Europe brought down financing costs and debt markets were open for business.
The ongoing fall-out from the Chinese real estate crisis continued to linger and concerns about AI valuation bubble gave some cause for concern, but overall sentiment was positive the year drew to a close.

Maximilian Dambax

Global Head of Real Assets

Signs of Stabilization After Years of Volatility

Real estate entered 2025 on the back of prolonged macroeconomic and sector-specific pressures, including rising interest rates, weak bricks-and-mortar retail, and subdued office demand. Yet as the year progressed, falling financing costs, improving transaction activity, and pockets of resilience across logistics, data centers, and select regional markets signaled a broader reset.

While geopolitical uncertainty and tariff-driven volatility still weighed on sentiment, the asset class began to show clearer signs of stabilization compared with the disrupted post-pandemic period.

Market Recovery, Sector Divergence, and New Demands Drivers

After prolonged period of rising interest rates, declining bricks-and-mortar retail and falling office space demand post-pandemic, 2025 was a year of reset and recovery for real estate.

Despite market disruption in Q2 2025 following US tariff announcements, direct real estate investment activity rallied strongly in Q3 2025 to come in at US$213 billion for the quarter, boosting year-to-date transaction volumes by 21 percent on 2024 levels, according to JLL.

The STOXX Global 3000 Real Estate Index, meanwhile, was showing gains of close to 10 percent towards the end of 2025, as real estate real estate valuations stabilized following an extended run of market volatility and pricing uncertainty.

Steadier Outlook Support Fundraising

The improving backdrop for real estate investment was good news for private real estate fundraising, which fell to a five-year low in in 2024, but rallied through the course of 2025.

PERE figures showed real estate fundraising coming in at US$164.39 billion for the first nine months of 2025, a 24.1 percent year-on-year increase on the same period in 2024, and already close to matching the full year total of $167.39 billion for 2024. In another signal pointing to a fundraising recovery, the proportion of funds closing below target fell from 62 percent in 2024 to 49 percent through the first nine months of 2025.

Headwinds Still to Navigate

Annual fundraising for 2025, however, did not match the US$299.38 billion raised at the peak of the market in 2021, and global real estate assets under management remained on a downward slope, dropping to US$3.8 trillion according to the latest figures compiled by real estate industry associations ANREV, INREV, and NCREIF.

Green shoots did emerge, but the industry still had a way to go to claw back lost ground.

Real estate balance sheets were still stretched as a result of falling asset values and higher interest rates through the market downcycle. Refinancing debt remained challenging, and while lenders did afforded real estate borrowers breathing room by extending terms, a US$936 billion wall of commercial real estate debt is due to mature in 2026, according to S&P Global Market Intelligence, loomed over the industry

Real Estate investors also had to grapple with the ongoing fallout from the ongoing downturn in the Chinese real estate space, one of the biggest real estate markets in the world and a cornerstone of the Chinese economy, ran into its fourth year.

Despite various stimulus measures to support the Chinese market, real estate valuations didn’t improve, and large-scale developers have faced large losses and financial distress. The fallout rippled out, impacting other Asian property markets – and beyond.

Real estate investors also kept a close eye developments in the AI sector, the spur for investment in data center assets and one of the strongest real estate fundraising categories in 2025.

Three of the ten largest real estate funds that closed in 2025 – the US$7 billion Blue Owl Digital Infrastructure Fund III, the US$3.64 billion Principal Data Center Growth & Income Fund, and the US$11.7 billion DigitalBridge Partners III Fund – were raised to invest in data center assets, which accounted for just under a third (31 percent) of real estate fundraising in 2025, according to PERE.

Rising concerns around the risk of an AI valuation bubble, however, surfaced in the final quarter of the year, leading to share price volatility in stocks with AI exposure.

Technology share prices stabilized following strong earnings reports and positive revenue forecasts from key players in the AI ecosystem, but real estate managers did take pause to spend more time sense-checking data center and AI investment cases.

Upward Trajectory

For all the complexities and challenges that managers encountered in 2025, interest rate cuts by central banks in the US, UK and Europe were a much-welcomed macro-economic development, and brought down debt servicing costs for real estate assets. This helped real estate dealmakers to refinance debt and push out maturity walls, as well as facilitate a clearer picture on asset valuations.

Indeed, closer alignment on pricing was observed in 2025 and positively impacted the market, with analysis from Savills analysis showing an increase in average real estate transaction sizes in 2025. According to Savills there was a 14 percent increase in the number of individual properties trading for more than US$100 million, and a 17 percent uptick in the value of portfolio and entity level deals. Big cheque sizes suggest increasing confidence on the part of buyers.

Fundraising trends, meanwhile, also indicated that private real estate managers were finding assets at attractive entry valuations, and add value to properties sentiment improved.

Opportunistic real estate investment strategies, which present the highest return potential but require significant upfront redevelopment and construction investment in underperforming assets, accounted for 40 percent of the real estate capital raised across the first nine months of 2025, according to PERE. This highlighted the opportunity to invest in assets that had been passed over in recent years because of market volatility.

Real estate investors also began to feel the benefits a favorable supply-demand imbalance (particularly in segments such as office real estate) that became a feature of the market as new developments went on hold due to market uncertainty and elevate financing costs in prior years.

In the office segment, for example, new groundbreakings had fallen to a record low in the US and Europe, according to JLL, and most new property pipelines had been pre-leased. As a result, global office leasing climbed to it is best level since 2019. Global office vacancy rates dropped, and prime sites were at a premium, supporting leasing growth.

Other real estate categories also looking in good shape, albeit with some regional differences.

In logistics real estate, for example, leasing improved in North America and Europe in Q3 2025, although Asia markets were more cautious on the back of tariff and export uncertainty, although logistics presented opportunity for savvy buyers who were able adapt to changes in trade policy. Retail was another bright spot, with store openings outpacing store closures in the US, according to JLL, while in Europe and high growth Asian economies premium sites were in high demand with space limited.

Real estate has had rough ride through the last 36 months, but as interest rates come down and valuations recover, 2025 marked a year where the asset class finally has a chance to turn the corner.

Conclusion

Despite persistent challenges—from the ongoing fallout in China’s property sector to volatility in office markets—2025 marked a turning point for global real estate. Falling interest rates, firmer transaction activity, and renewed investor appetite helped stabilize valuations and support a gradual recovery in fundraising.

Strength in logistics, data centers, and select regional markets further underscored the sector’s adaptability in the face of macro and structural headwinds. While not all segments rebounded equally, the broad improvement across pricing, liquidity, and sentiment suggested that real estate finally began to regain its footing after several difficult years.

Infrastructure:
2025 Year in Review

Infrastructure Highlights from 2025

Private infrastructure posted excellent fundraising numbers in 2025 as managers reaped the rewards for delivering solid returns.
Investment cases benefitted from favorable long-term growth drivers, with digital infrastructure and power driving deal flow.
Areas of complexity emerged in the renewables sub-sector, where the US and European markets diverged.
Infrastructure secondaries and infrastructure debt provided infrastructure GPs and LPs with welcome pools of liquidity.

Maximilian Dambax

Global Head of Real Assets

Growth Anchored by Fundamentals

Infrastructure continued to demonstrate resilience in 2025, supported by strong fundraising momentum, robust long-term demand drivers, and solid underlying fundamentals across core and emerging sub-sectors.

While market volatility, policy shifts, and technology-led disruption influenced activity, investors remained focused on the asset class’s capacity to deliver stable returns and capital deployment opportunities. These dynamics shaped a year marked by both sustained growth and evolving complexity across the global infrastructure landscape.

Market Performance, Capital Flows, and Sector Dynamics

The positive long-term outlook for infrastructure investment growth and a good run of returns boosted private infrastructure fundraising in 2025.

By the end of Q3 2025 private infrastructure fundraising had already achieved a record annual high, as fundraising for the first nine months of 2025 reached US$200 billion – the first time the asset class had crested the US$200 billion mark ever, according to Infrastructure Investor data.

The share of private infrastructure funds closing on target, meanwhile, climbed more than three-fold, from nine percent in 2024 to 31 percent in 2025. Funds also took less time to reach a close, with average time on the road down by more than six months when compared to the previous year.

The strong 2025 fundraising numbers reflected private infrastructure’s consistent returns performance. Analysis of the MSCI Private Infrastructure Asset Index by commercial real estate services and investment business CBRE showed private infrastructure posting 11.5 percent rolling one-year total returns – outperforming listed infrastructure and global bonds over a three- and five-year investment horizon.

The industry’s returns performance was grounded in solid underlying fundamentals, with the requirement for investment in water and sanitation, electricity and power, and transport and logistics capacity increasing as global populations grow.

These fundamentals supported positive growth in global private infrastructure investment, with CBRE analysis of Infralogic data showing a 22% year-on-year gain through the first nine months of 2025, with investment reaching US$960 million for the period.

Shifting Ground

One of the single-most important drivers of infrastructure’s overall performance and deal flow in 2025 was the data center market, where huge investment in AI spurred robust demand for digital infrastructure.

McKinsey forecast in the summer that capital expenditure on data center infrastructure could reach as much US$1.7 trillion by 2030 – predominantly driven by AI expansion.

The positive momentum from the data center boom rippled out into other infrastructure sub-sectors, most notably power. Electricity consumptive data centers drove up power demand and pricing, with McKinsey models projecting that data power center would require1,400 terawatt-hours of power by 2030, representing four percent of total global power demand.

There were, however, some bumps in the road for the AI growth story during the year. In August a research report compiled by the Massachusetts Institute of Technology (MIT) found that 95 percent of organizations were deriving zero return from investments in AI, raising concerns of an AI bubble. Market anxiety around the sustainability of AI spending peaked again in November, leading to share price drops across the board for large technology companies.

Positive earnings from chipmaker Nvidia – a key bellwether for the sector – eased AI bubble concerns, but the year closed with infrastructure stakeholders taking a more measured approach on AI and data center growth projections.

Renewables Reset

Renewable energy was another infrastructure sub-sector that encountered volatility and complexity in 2025.

In July the US passed legislation to phase out tax credits for wind and solar projects by 2027, rather than the original 2032 deadline. This left developers facing truncated project timelines and under pressure to accelerate project developments, or risk losing tax credit benefits.

The phase out of tax credits followed an earlier executive order from the White House temporarily withdrawing offshore leasing for wind power, as well as the Securities and Exchange Commission (SEC) dropping its defense against state-led lawsuits challenging its climate-related disclosure rule.

The shifts in the US led to divergence from the European position, where the EU retained the key pillars of its environmental legal framework, including the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), although the EU did bring forward proposals to ease the compliance burden of these directives for small and medium-sized enterprises.

The European Central Bank (ECB), meanwhile, continued to integrate climate risk into its operations, and the European Investment Bank (EIB) signed off on €15 billion of green transition funding.

This left infrastructure managers with US and European LP bases and operations having to walk a fine line between the ESG and climate priorities of US and European regulators and investors.

Nevertheless, renewables still represented the single biggest category for infrastructure fundraising in 2025, with the US$20 billion raised for Brookfield’s Global Transition Fund II – which will focus on investment in the transition to clean energy – the third biggest infrastructure fund close in the first nine months of 2025. Brookfield cited an “any and all” approach to ramping up power capacity as a key driver of low carbon energy production, with clean energy an essential component to meet growing demand for power, not just from data centers, but also from the electrification of transport and industry.

Political instability may have shaken up the investment case for investment in decarbonization and renewable energy infrastructure, but investors continued to see long term value in the industry.

Sophisticated Structuring to the Fore

Infrastructure also saw momentum build in areas such as infrastructure secondaries and infrastructure debt, which injected additional liquidity and flexibility into the asset class.

According to private markets investment adviser Stafford Capital Partners infrastructure secondaries deal volume was on track to climb by around 50 percent in 2025 and reach approximately US$15 billion for LP-led deals, and between US$15 billion and US$20 billion for GP-led transactions.

The increase was spurred by a combination of the liquidity requirements of private markets programs and the use of secondaries markets to manage exposure to regulatory change and geopolitical uncertainty.

Infrastructure debt provided a similarly useful pool of liquidity to complement infrastructure M&A and project development, as well as offering investors an opportunity to diversify their fixed income portfolios and lock in consistent yields uncorrelated to public markets.

Infrastructure debt assets under management (AUM) grew at a compound annual growth rate (CAGR) of 23.1 percent, according to Institutional Investor, and positioned infrastructure debt as an increasingly sizeable and influential constituent of the infrastructure funding mix.

The growth of these adjacent pools of capital in the infrastructure ecosystem provided valuable support to infrastructure dealmakers, who sought out partners to provide liquidity and share risk.

Conclusion

Overall, 2025 reinforced infrastructure’s position as a resilient and strategically important private markets asset class. Strong fundraising, dependable performance, and accelerating demand in areas such as digital infrastructure supported continued growth, even as policy shifts and renewables volatility added layers of complexity for managers and investors.

The expanding role of infrastructure debt and secondaries, combined with divergent regulatory developments across the US and Europe, further shaped capital flows and operating conditions. Despite these challenges, long-term fundamentals remained intact, underscoring infrastructure’s ability to adapt and attract capital in a rapidly evolving environment.

Strategic chess pieces symbolizing investor considerations in syndicated loan and private credit decisions.

Data centers and renewable energy have emerged as two of the fastest growing sub-sectors within the infrastructure asset class.

The digitalization the economy and the transformative impact of generative AI on society and business has seen a surge in demand for data, which is forecast to climb from just two zettabytes in 2010 to 2142 zettabytes by 2035, according to CBRE Investment Management analysis.

The exponential increase in data demand has in turn driven unprecedented levels of investment and growth in the data center market. According to Blackrock the data center market is expanding at a compound annual growth rate of 22 percent and will reach 291 GW by 2030, while data center M&A reached an all-time high of $73 billion in 2024, according to Synergy Research.

Growth in renewable energy market, meanwhile, has been spurred by initiatives to reduce carbon emissions, strengthen energy security, and transition the global energy system off hydrocarbons in order to mitigate the risks of climate change. According to the International Energy Agency (IEA), the ratio of clean power to investment to hydrocarbon investment has increased from 2:1 in 2015 to 10:1 in 2024, with global renewable energy capacity expected to expand by 2.7 times by 2030.

Changing the face of infrastructure

The growth of data centers and renewables reflects the changing way investors and dealmakers are thinking about infrastructure, driven by evolving infrastructure trends that emphasize sustainability and long-term value.

Traditionally infrastructure has been defined as an asset class focused on “hard” assets in the built environment, like roads, railways, and utilities, but the combination of rapid advances in digital technology, growing sensitivity to climate change risk and increasing electric vehicle use, is reframing how governments, investors and consumers think about essential services.

These megatrends are broadening out the scope for where and how infrastructure funds invest, with Goldman Sachs Asset Management noting that there is more scope for infrastructure funds to invest in assets with a wider variety of risk profiles, at different points in their development cycle.

The emergence of data centers and renewables in the infrastructure mix are illustrative of how infrastructure has expanded beyond its core and core-plus base, where investors target classic, mature assets with long-term contracted revenues that deliver steady yields, into value-add infrastructure, where assets require investment and enhancements; and opportunistic infrastructure, where investors will take on construction and development risk.

Data centers and renewables can straddle the full infrastructure risk curve, with managers either targeting the steady yields on offer from established renewable energy and data center assets characterized by contracted revenue streams and inelastic demand, all the way through to higher returning value-add and opportunistic plays, where infrastructure investors will either digitalize and decarbonize existing assets, or finance the construction of new data centers, wind and solar farms.

Data centers and renewables do present the key infrastructure investment characteristics (defensive, predictable cashflows and returns with a low correlation to market cycles and other asset classes), but in different shades.

This means that the lines between infrastructure and other asset classes, such as real estate, can often blur and overlap.

Data centers, for example, provide an essential service, and have high barriers to entry and have long-term contracts, which puts them squarely in the infrastructure bucket; but also exhibit real estate characteristics, as they will usually be leased to third-parties and their relative attractiveness will be determined by location, access to utilities, and permitting sign-offs, according to CBRE Investment Management.

For investors and dealmakers, it is important to have an investment framework in place that is flexible and can accommodate any natural overlaps between infrastructure and other asset class, but also precise enough to avoid strategy drift.

Intertwined fortunes

As the data center and renewables asset classes continue to evolve and expand, their progression will become increasingly intertwined.

The single biggest bottleneck to meeting data center demand will be access to power. Data centers are heavily power consumptive. In the US, for example, data centers currently account for 2.5 percent of total US electricity consumption, and close to a fifth of power generation in Northern Virginia, where around half of the US’s data center infrastructure is located, according to CBRE Investment Management. By 2023 data centers could account for 7.5 percent of US electricity consumption.

Linking data center assets up to the power grid, however, is complex process, with timelines for securing permits and adding to grid capacity running from anywhere between 5 and fifteen years.

Grid bottlenecks can pitch data center developers against other, as new renewable energy assets are also faced with long lead times and delays to secure access. CBRE Investment Management notes that in the US alone close to 1,600 gigawatts of electricity generation capacity – mainly from wind, solar and storage – is awaiting the regulatory green light to access the power grid.

But while data centers and renewable may be scrambling against each other for scarce grid access in some cases, there is also growing cooperation between the two assets classes to meet their respective requirements.

Data center users, for example, are working with renewable energy providers to offset emissions from their energy intensive operations. Bringing on additional renewable power capacity will be crucial for data center growth.

According toMcKinsey, hyperscale data center operators are among the biggest backers of 24-7 renewable energy power purchase agreements (PPAs) (where energy users commit every hour of electricity consumption with hydrocarbon free generation) with these PPAs filling the gap left by government-backed subsidies and tax credits that funded the roll-out of renewable energy projects, but have gradually been rolled back as renewable energy has matured and become more competitive with hydrocarbon power generation on price.

Google, for example, plans to purchase clean energy 24 hours a day on every grid it draws power from. In 2024, for example, the technology giant signed up to its largest PPA deal ever, buying up 470MW of offshore win capacity to power its Dutch operations. Microsoft has agreed a similar deal in Sweden, while Amazon is now one of the single biggest corporate buyers of renewable energy in the world, backing over 500 projects with annual generation capacity of 77,000 GwH, according to Data Center Dynamics.

For renewable energy project developers, the strong demand from data centers for clean energy ensures that they have a ready-baked market for their output, with PPA deals securing long-term contracted revenues at a set price for all their energy production.

PPA deals, however, are not only a way for data centers to offset fossil fuel power consumption. Data centers and renewables providers are also developing new models to supply clean energy to data centers directly.

Data Power Optimization (DPO), for example, focuses on aligning the location of data centers with so-called “stranded” renewables assets in remote ocean and desert locations, where there is plenty of wind and sun, but it is difficult to transmit this energy to populous urban areas where its required.

Matching up these locations with data centers solves for the grid access issues a data center may encounter, as well as given the data center direct access to clean energy, while ensuring that the renewable energy provider has a buyer for its production.

Indeed, Data Center Dynamics reports that technology companies are teaming up earlier with renewable energy developers earlier in the development of renewable energy projects to secure long-term energy supply deals for their data centers directly. As demand energy-hungry data centers continues on its upward trajectory, renewables power provision will be a crucial lever for meeting this energy ask. Infrastructure investors targeting one of these asset classes will find that its long-term progress is becoming inextricably linked with the other.

Global demand for infrastructure is skyrocketing and governments around the world are struggling to keep pace.

The world’s population, estimated at around 8 billion, has more than tripled since 1950 and is forecast to increase by more than 20 percent by 2025, according to the United Nations. This has driven up demand for more provision of electricity, transport, water and sanitation and telecommunications.

In addition to the pressure for additional core infrastructure capacity to come onstream to support a growing population, there is also growing demand for investment in new areas, including digital, renewables and decarbonization. Ageing infrastructure also requires capital for urgent upgrades and maintenance, usage of existing assets increases in line with rising populations.

A widening fund gap

It has become increasingly difficult for governments – who have had to rein in spending after pandemic financing stimulus and in the face of rising borrowing costs – to keep up with the accelerating demand, as required investment outstrips available public resources.

According to The G20 Global Infrastructure Hub initiative, current levels of investment in infrastructure will not be enough to meet long-term demand, with $15 trillion investment gap opening by 2040 if investment doesn’t increase materially.

If governments do not make the necessary investment to fix, upgrade and build new infrastructure, the costs to economies and societies will be immense, with impacts on domestic and cross-border trade, economic competitiveness, consumers and the environment.

Governments will remain ultimately responsible for infrastructure development, but will have to work with private sector capital providers to finance the build of new projects and operate and maintain existing assets.

The investment case for private markets

The urgent requirement for governments to up infrastructure investment align with the commercial objectives of private markets fund managers, who can invest in infrastructure on a sound commercial basis at the same time as serving a wider societal objective.

The solid long-term fundamentals that underpin infrastructure demand, and the stable contracted revenue streams tied to infrastructure assets, have drawn more and more capital into private infrastructure funds during the last 15 years.

Infrastructure assets under management (AUM) have expanded at a compound rate of 16 percent since 2010 and now exceed US$1 trillion, according to Preqin figures. By 2026 AUM could exceed US$1.8 trillion.

The levels of infrastructure AUM relative to the forecast 2040 US$15 trillion infrastructure funding gap suggests that their a is still a long runaway of growth ahead for infrastructure funds, and clear incentive for the public sector to funnel this capital into infrastructure projects.

Bringing in the private sector

Bringing in private capital to finance the construction of new infrastructure can be facilitated through the range procurement channels and public-private-partnerships (PPPs), where the private and public sector share the risk and capital expenditure burden of construction new assets. Private sector operators can also back existing infrastructure assets, investing in the ongoing provision and maintenance of services.

Funding core infrastructure operations and build-out with private sector capital, however, is not a silver bullet that will magic away the widening infrastructure funding gap and eliminates financial risk and delay on infrastructure projects

There have been high profile examples of PPP deals. for example, that have been hit by long delays and large cost overruns, such as the California High-Speed Rail project in the US and the Sydney light rail development in Australia. Direct private ownership of infrastructure assets has not always worked either.

Projects run only by the public sector, however, have also been subject to prolonged timelines and mushrooming budgets, and there is a body of research showing that in the round, PPP projects offer better value for money than vanilla government procurement.

In addition, G20 Global Infrastructure Hub analysis shows that the increase in capital flows into private infrastructure funds has translated into more investment. Private investment in infrastructure does not come without its risk, but with the infrastructure gap widening every year, the requirement to accelerate private investment is becoming ever more pressing.

In it for the long-haul

From an investor and private funds manager perspective, while infrastructure does offer protection against downside risks, there will be points in the cycle when wider macro-economic and geopolitical and even infrastructure trends impact deployment and fundraising opportunities.

Interest rate dislocation during the last 36 months, for example, has taken a toll on infrastructure fundraising, which has declined for the last three years, falling to a decade low in 2024.

Deployment can also prove challenging, through all points in the cycle. Competition for a limited pool of existing assets, with bankable, established cashflows is intensifying and high valuations on entry can make it tough for managers to meet investor return expectations.

The Global Infrastructure Hub, meanwhile, notes that sourcing suitable greenfield projects is also difficult given the risk that comes with backing these projects. The highest share of uninvested infrastructure dry powder is held by managers who are targeting greenfield projects exclusively.

If governments want to draw more private capital into funding infrastructure, preparing a longer pipeline of bankable investment opportunities will be essential.

Even entirely privately funded infrastructure projects involve close coordination with government agencies to cover of planning permissions and permitting. According to the World Bank project preparation can take between 24 and 30 months and absorb between five and 10 percent of total project investment before ground is even broken.

When crowding in private capital governments also have to ensure that risk is allocated sensibly between the private and public sector. Private investment in infrastructure is not sustainable if managers are seen to be taking excessive profits from building and running public assets without taking on any risk, but at the same time private markets players won’t have the balance sheets or capacity to bear all the risk of large projects entirely in isolation. Rigorous planning, structuring and negotiation is necessary to strike this fine balance.

Governments that expedite pre-project planning and permitting work and take a balanced approach to risk sharing, will have a deeper pool of bankable projects for private funds managers to back, and be in the front of the queue to attract more private investment.

Demand for infrastructure, across all geographies and all categories, is not slowing down. private markets managers have the potential to generate excellent returns when serving that demand. Governments should be ready to help them every step of the way.

During the last decade private infrastructure has grown from an esoteric asset class on the periphery of the private markets ecosystem into a mainstay of alternative asset portfolios.

In 2010 infrastructure assets under management (AUM) only totaled less than US$170 billion, according to Preqin figures, but during the following decade infrastructure AUM have grown at an annual compound rate of 16 percent and now exceed US$1 trillion.

The steady long-term cashflows and relative low volatility that characterize the asset class have made infrastructure one of the fastest growing areas of private market.

The strategy, of course, hasn’t been immune from the wider headwinds that have faced private markets through the recent interest rate rising cycle. Infrastructure fundraising has declined for three years in a row, falling to the lowest levels in a decade in 2024.

Over the long-term horizon, however, infrastructure remains a highly attractive investment strategy for pension and sovereign wealth funds that want to diversify their private markets portfolios and build exposure to assets that offer inflation protection and stable, uncorrelated investment returns.

Even as AUM have skyrocketed, many investors are still under-allocated to infrastructure, with a survey of more than 100 investors in 20 countries by Cornell University’s Program in Infrastructure Policy and advisory firm Hodes Weill Associates found the almost two thirds of public and private pension funds said they were under-allocated to infrastructure, while global institutions, on average, reported being 1.23 percent below targeted allocations.

After a challenging 36 months, prospects for fundraising are looking up, demonstrating long-term investor appetite for exposure to the asset class.

Infrastructure Investor estimates that the ten largest funds in the market will seek to raise more than US$143.63 billion between them alone during the next year, while asset manager Schroders sees fundraising rebounding back in line with historical patterns.

With the private infrastructure industry set for a period of sustained growth, Alter Domus provides a detailed breakdown the attributes that make infrastructure such an attractive investment strategy for long-term institutional investors.

1. Assets with predictable cash-flows

Infrastructure assets, such utilities, transport networks, schools and hospitals, provide essential services funded by non-discretionary spending, with demand sustained across investment cycles.

As providers of essential services, infrastructure assets and operators benefit from long-term financing arrangements fixed contractable revenues, often running for 10 years or more and supported by government guarantees.

The fact that infrastructure provides non-discretionary services makes it easier to pass on high-costs to end users, and many contracts will have inflation-adjustment mechanism provisions, offering a shield against inflation on margins.

Analysis from KKR shows that in cycles of high inflation, infrastructure assets provide superior real returns to equities and real estate.

2. Returns with low correlation to other asset classes

Infrastructure will typically produce returns that have low correlation with other asset such as equities and fixed income. This offers investors attractive diversification benefits, as well as steady revenues and yields through downcycles. This long-term investment horizon aligns closely with infrastructure trends that emphasize durability, resilience, and stable returns.

Hamilton Lane analysis shows that the pooled one-year IRR for global infrastructure over the last ten vintage years, has come in at 12.5 percent, and when looking at the highest and lowest 5-year annualized performance periods over the last 20 years, investors in infrastructure avoided the drop off on performance observed in other asset classes.

3. Returns with low correlation to other asset classes

Infrastructure assets will typically have long life spans, making illiquid private markets funds are good structure for holding these assets.

For pension funds, insurers and sovereign wealth funds that have to meet long-term financial liabilities the long hold periods for infrastructure assets (HarbourVest estimates that core infrastructures assets can have asset lives in excess of 100 years) are a good option for matching liabilities with assets to ensure they meet their investment obligations.

4. Solid underlying growth fundamentals

A confluence of global megatrends is driving up demand for infrastructure investment across all areas. There is a long growth runway ahead for infrastructure investors, driven by multiple factors:

The world’s population has more than tripled since the 1950s, according to the United Nations, driving up demand for energy, transport, water and sanitation and telecoms.
The world is more urbanized. More than half of the global population now lives in urban areas – up from a third in 1950, according to the UN. The drives particularly intense demand for ongoing infrastructure investment in concentrated areas
Decarbonization will require existing infrastructure to be retrofitted to reduce energy and emissions, as well as investment in new infrastructure to facilitate the use of renewable energy, as well as battery storage and charging infrastructure to support the switch to electric vehicles.
The digitalization of the economy, cloud computing and the rise of AI are driving huge increase in demand for investment in data center capacity. According to BlackRock, data center capacity will have to expand at a compound annual growth rate of 22 percent to meet projected demand.
There is an urgent requirement to upgrading aging infrastructure. According to the American Society of Civil Engineers failure to upgrade existing assets could cost the US economy up to US$4 trillion GDP between 2016 and 2025.

5. Partnering with government to deliver infrastructure

Government budgets are stretched following the pandemic period, especially as borrowing costs have gone up. It will be difficult for governments to meet infrastructure investment requirements without private capital.

Partnering with governments using structures like public-private-partnerships (PPPs), where the private and public sector share the risk and capital expenditure burden of construction new assets, opens opportunities for the private sector to support the build of new infrastructure projects in return for access to stable revenue streams and the appreciation of underlying asset values.

PPPs are designed to share risk between the state and private sector, making it easier for private infrastructure players to invest than taking on greenfield projects without the support of the state.

6. A pathway to meeting ESG obligations

Almost all institutions will be obligated to meet environmental, social and governance (ESG) goals as part of their investment mandates.

Infrastructure assets are well-positioned to align these ESG goals with financial performance metrics. Investments in clean energy, water sanitation or schools and hospitals all present sound commercial investment opportunities, but also drive visible, positive environmental and social impact.

Risks and challenges

Regulatory risk:
Infrastructure can be impacted by shifts in government and regulatory policy, which can disrupt revenue and funding models, particularly for assets developed in PPP deals.

Political risk:
Some jurisdictions can present political risk and even possible expropriation in some circumstances. Protecting infrastructure assets in unstable regions can erode earnings.

Operational risk:
Infrastructure assets are complex and challenging to build and maintain, which can often lead to delays and cost overruns. Construction consultancy Mace estimates that four in five large infrastructure projects globally experience cost or time overruns, while McKinsey analysis shows that 98 percent of mega projects will exceed budgets by more than 30 percent, with more than three in four of these projects subject to delivery delays of at least 40 percent.

A good fit for institutional investor portfolios

It is important for investor to go into the infrastructure segment with their eyes open to these risks, but equally important to recognize that experienced managers with proven operational expertise will be able to mitigate these risks significantly through due diligence and building up diversified portfolios of infrastructure assets.

For institutional investors the benefits of infrastructure allocations to a portfolio far outweigh the risks. The asset class dovetails tidily with long-term private markets fund structures and presents investors with stable, long-term revenue streams that are insulated against inflation and have low correlation to other investment classes and economic cycles. Infrastructure investment also aligns with ESG objectives

As growing populations drive long-term demand for infrastructure, and with governments unable to meet investment demand without private sector capital, infrastructure will remain a key part of private markets portfolios.

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2025 Private Markets Year-End Review

Private Equity: 2025 Year in Review

A Year Defined by Resetting Expectations

A Slower Than Expected Deal Recovery

Fundraising lagged deal rebound

The rise of non-institutional capital

Retooling the private equity production line

Conclusion

Private Debt: 2025 Year in Review

A Year of Strength and Structural Change

Performance, Fundraising, and Market Dynamics

Competition Intensifies

Dealing with Defaults

A New Era of Operational Sophistication

Conclusion

Real Estate: 2025 Year in Review

Signs of Stabilization After Years of Volatility

Market Recovery, Sector Divergence, and New Demands Drivers

Steadier Outlook Support Fundraising

Headwinds Still to Navigate

Upward Trajectory

Conclusion

Infrastructure: 2025 Year in Review

Growth Anchored by Fundamentals

Market Performance, Capital Flows, and Sector Dynamics

Shifting Ground

Renewables Reset

Sophisticated Structuring to the Fore

Conclusion

Insights

Growth changes everything: how middle-market private equity firms can prepare to scale

Operational resilience in private equity: building a business that performs under pressure

What is a company secretary? Navigating Jurisdictional differences across Europe

Broadening horizons: how data centers and renewables are reshaping infrastructure

Infrastructure Solutions

Insights

Growth changes everything: how middle-market private equity firms can prepare to scale

Operational resilience in private equity: building a business that performs under pressure

What is a company secretary? Navigating Jurisdictional differences across Europe

Mind the gap: the vital role of private markets in meeting the infrastructure funding gap

Infrastructure Solutions

Insights

Growth changes everything: how middle-market private equity firms can prepare to scale

Operational resilience in private equity: building a business that performs under pressure

What is a company secretary? Navigating Jurisdictional differences across Europe

Solid foundations: the infrastructure opportunity

Infrastructure Solutions

Insights

Growth changes everything: how middle-market private equity firms can prepare to scale

Operational resilience in private equity: building a business that performs under pressure

What is a company secretary? Navigating Jurisdictional differences across Europe

Private Equity:
2025 Year in Review

Private Debt:
2025 Year in Review

Real Estate:
2025 Year in Review

Infrastructure:
2025 Year in Review