According to the World Economic Forum, the infrastructure financing gap will exceed $15 trillion by 2040 globally. In the United States alone, the investments needed to modernize existing infrastructure amount to $6 trillion. Private investors have an essential role to play in this transition, as evidenced by the recent acquisitions by several infrastructure funds.
The BCG report provides a comprehensive overview of the infrastructure market as well as a series of regional and sectoral analyses.
Here are the main messages:
1. Private investments in infrastructure are on the rise again after a contrasting 2023 financial year:
- The year 2023 was marked by a global drop of almost 50% in infrastructure fundraising, going from $176 billion in 2022 to only $89 billion in 2023. All regions were affected (-52% in Europe, – 43% in North America). The number of infrastructure-related transactions decreased by almost 20% in 2023 due to the economic context and rising interest rates.
- Despite this slowdown in 2023, private investment in infrastructure is showing resilience , outperforming all other asset classes with a compound annual growth rate of 18% over the period from 2018 to 2023. This class of assets is highly favored by investors in today’s world given its intrinsic characteristics such as stable returns, low cyclicality, the ability to pass on inflation to costs, the reassuring regulatory environment or even the strong barriers at the entrance. Proof of this interest, “limited partners” (such as pension funds or wealth managers) plan to increase their investments in this asset class by at least $600 billion by 2027.
2. 75% of private investors are located in Europe and North America, and more than half of them invest in the energy and environment sectors:
- In 2023, Europe and North America will concentrate 75% of private investors in infrastructure . It is in the United States that transactions are highest with an average sum of around $800 million compared to $500 million in Europe and $300 million in Asia.
- At the global level, the sectors attracting the most private investment are those linked to energy and the environment , driven by projects associated with renewable energies and decarbonization. Thus, between 2018 and 2023, the total value of private investment transactions in these sectors reached $1.1 trillion, or nearly 45% of the total value of private infrastructure transactions during this period.
3. Two other sectors stand out:
- Transport and logistics (rail, air and maritime infrastructure) which represented $510 billion between 2018 and 2023 , or nearly 20% of all private investment over the period.
- Digital infrastructure with $420 billion between 2018 and 2023 , or nearly 20% of all private investments over the period. In Europe, most of these investments concern private data centers.
