Infrastructure Monitor

Infrastructure Monitor 2022 is the third edition of our flagship report on the state of investment in infrastructure. It provides in-depth analysis of global private investment in infrastructure projects and examines infrastructure investment performance. This year, the analysis of environmental, social, and governance factors in infrastructure will be released in the coming months, to allow for the inclusion of the most current data. Sign up to be notified when it is published.

The 2022 edition also introduces reporting on the availability of private capital for infrastructure investment raised through infrastructure funds, as well as the role of multilateral development banks (MDBs) in private investment in infrastructure.

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Mobilising 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 analyses private investment in infrastructure projects in primary markets.

Key takeaways: 

• Private investment in infrastructure projects in primary markets is almost back to pre-pandemic levels, but stagnant for the eighth year running.
• The gap between private investment in infrastructure projects in high-income countries and that in middle- and low-income countries continues to widen.
• ‘Green’ private investment reached a record high, primarily driven by the renewable energy sector, while the global trend away from non-renewables continued. However, more private investment is still required to hasten the green transition.

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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 summarises the financial performance of global infrastructure equities (listed and unlisted) and infrastructure debt.

Key takeaways: 

• Throughout the recent economic shocks, infrastructure equities were more resilient and had a lower risk profile than global listed equities.
• Default and recovery rates of infrastructure debt have been consistently better than those for non-infrastructure debt, and this gap widened during the pandemic in 2020. 
• In the inflationary environment of 2022, the inflation-hedging potential of infrastructure enhanced its attractiveness for private investors.

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Private capital is crucial to address infrastructure deficits that the public sector cannot address alone. This year our report tracks the level of private capital raised for infrastructure and how it is being deployed into projects.

Key takeaways: 

• The amount of private capital available for infrastructure more than quadrupled from 2010 to 2021. 
• The greater availability of private capital for infrastructure has translated to greater opportunities for investment, but also greater dry powder (capital committed by investors and available to fund managers but not yet invested or allocated). This is primarily due to limited availability of projects and high hurdle rates.  

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MDBs are uniquely placed to respond to the current challenging context of stagnant private investment in infrastructure, significant public sector fiscal constraints, the pandemic recovery, recent global economic shocks, and longer-term development needs.

Key takeaways:

• MDBs continue to play a major role as financiers of private investment in infrastructure in middle- and low-income countries. As well as financing infrastructure projects and providing technical support, MDBs can also help crowd in more private capital to infrastructure directly and indirectly.
• MDB co-financing helps reduce risk for private financiers and can facilitate the financing of larger private investments in infrastructure projects.

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Key takeaways:

• Infrastructure assets are getting better at setting up ESG policies, plans, systems, and disclosure. In 2022, infrastructure assets improved in all three pillars of ESG (environmental, social, and governance).
• Among the alternative asset classes, infrastructure is the most transparent in its ESG disclosure.
• Improvements in ESG policies, plans, systems, and disclosure are encouraging because they indicate a willingness to improve the sustainability outcomes of infrastructure; however, these improvements do not themselves lead to improved sustainability outcomes.
• Although more infrastructure assets are setting GHG emission targets, still less than half have such targets, and very few have a zero target.
• In 2022, very few infrastructure assets had short-term zero targets and met them.
• To inform investment decisions and reduce infrastructure’s significant carbon footprint, the infrastructure sector must capture data on the ESG outcomes of infrastructure assets.

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