Infrastructure Monitor

Infrastructure Monitor 2024 is the fifth edition of our flagship report on the state of investment in infrastructure. It provides an in-depth analysis of private investment in infrastructure projects, financial performance of infrastructure investments, blended finance in infrastructure, infrastructure funds as an instrument to raise capital, and ESG factors in infrastructure.

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Mobilizing private capital is key to closing the infrastructure financing gap and has become even more critical as the pandemic and economic and geopolitical shocks have limited the investment capacity of governments. This section focuses on analyses for private investment in infrastructure projects in primary markets. This year, for select insights, the analyses has been extended to private investment in secondary markets and additional financing.

Key takeaways

• In 2023, private investment in infrastructure projects in primary markets continued to rise post-pandemic. However, the secondary market for infrastructure declined, largely driven by a downturn in acquisitions amid rising interest rates.
• Increasingly more investors are backing cleaner energy projects that propel them towards net zero. In 2023, more than half of private investment in infrastructure projects was green investment – mostly renewables but also incorporating other infrastructure sectors. Renewables investment more than doubled in 2023, with a surge in hydrogen projects, though wind and solar remain the most prevalent technologies.

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In infrastructure financing, funds are becoming an increasingly popular investment product among both public and private investors. They are pooled investment vehicles that mobilize capital from public and private investors for a clearly defined purpose. Infrastructure funds are used to channel public savings, a blend of public and private savings, and/or private savings to achieve scale to meet large financing needs of infrastructure projects, while offering due diligence and diversification to investors.

Key takeaways:

• In 2023, there was an unprecedented decline in fund raising for infrastructure, falling to almost half of 2022 levels. Investor surveys note rising interest rates were the leading driver of this decline. 
• Over time, funds have been increasingly concentrated in North America and Europe. In 2023, these two regions continued to attract most of the private capital held by infrastructure funds.
• Infrastructure funds continue to focus on lower-risk segments of the asset class, as higher-risk strategies do not necessarily yield higher returns.

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To attract private capital and establish infrastructure as an asset class, infrastructure investments need to demonstrate a strong performance track record. This section summarizes the financial performance of global infrastructure equities (listed and unlisted) and infrastructure debt.

Key takeaways:

• Key financial performance metrics for infrastructure debt point to its superior performance, on average, than non-infrastructure debt in the long run.
• Low volatility in returns is the most attractive feature of infrastructure investments for private investors.
• Multiple crises during 2020-2024 affected all equities including infrastructure equities.
• Infrastructure debt performance can be enhanced through contractual or regulatory provisions that strengthen revenue-resilience.

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Environmental, social, and governance (ESG) policies, plans, and disclosures are all connected with the sustainability outcomes of infrastructure. This section examines progress made across all three ESG pillars and highlights where improvements are needed to ensure infrastructure is sustainable and infrastructure investments are ESG aligned.

Key takeaways:

• In 2024, infrastructure assets continued to improve their ESG policies, practices, and disclosure, across all three pillars (environmental, social, and governance). While Governance saw the most improvement, overall, it still lags behind the Social and Environment pillars.
• Almost one third of infrastructure assets still have no net zero target. Moreover, over 40% of those who do have targets do not have interim targets or target-setting frameworks.

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Blended finance is the use of catalytical capital from public or philanthropic sources to increase private investment in sustainable development. This section presents the role of blended finance in infrastructure deals and assesses its effectiveness in bridging the infrastructure financing gap in emerging and developing economies through private capital mobilization. It also analyzes the availability and performance of cross-border guarantees for infrastructure business.

Key takeaways:

• The private capital mobilization ratio varies considerably across blended finance infrastructure deals, but exceeded 2x for about one-fifth of the infrastructure deals.
• Guarantees are most commonly used in low-income countries, especially in deals of higher value. Data shows that they play a key role in mobilizing private capital, particularly by enabling access to commercial debt.
• Energy transition drove new commitments for cross-border infrastructure guarantees. In 2023, the guarantees for renewables surpassed non-renewables for the first time. By sector, renewable energy had the strongest performing cross-border guarantees.
• While the new commitments for political risk guarantees slightly declined, they absorbed more risk due to heightened geopolitical conflicts and political risk globally.

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