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Private investment in infrastructure is dominated by the energy and transport sectors
Infrastructure Monitor
Low private investment in the social, telecommunications, water and waste infrastructure sectors
Private investors have shifted away from non-renewables in both developed and developing markets. The appetite for renewables is stronger in developed markets.
Preliminary evidence shows superior performance for some sustainable infrastructure investments in comparison with other infrastructure sector investments
The green bond market has seen exponential growth since its inception in 2007. In 2020, green bonds represented 60% of bond issuances for private investment in sustainable, primary infrastructure globally, mostly concentrated in developed regions.
Green investment in infrastructure outside of renewables is limited. While renewables represent almost 90% of total green private investments in infrastructure projects, green investment in other sectors only represent 14%.
Co-financing provide a supportive enabling environment that minimises risk exposures, catalysing private co-financing for infrastructure in middle- and low-income countries.
In 2021, global green private investment in infrastructure projects in primary markets rose to a record-high share of 60%, but this trend needs to accelerate and expand beyond renewables to meet climate goals.
In 2021, private investment in infrastructure projects in primary markets recovered to its pre-pandemic level but remains stagnant and far shy of what is needed to close the infrastructure investment gap.
Infrastructure equities provide stronger protection against inflation shocks than the broader equity market. During the rapid inflation shocks in 2022, the return on infrastructure equities was more resilient than that on global equities, which drove private fundraising for infrastructure to record levels.
In 2022, infrastructure assets improved their ESG scores in all three pillars of ESG. The scores are encouraging, but they do not mean the assets themselves are more sustainable.
Infrastructure Monitor 2022 report
The credit risk metrics for infrastructure debt improved during the COVID-19 pandemic, while those for non-infrastructure debt worsened. The performance of infrastructure loans demonstrates that infrastructure assets are resilient to adverse economic scenarios like pandemics.
The higher risk profile of greenfield infrastructure, and lack of investment-ready project pipelines, make it challenging to deploy private investment to greenfield infrastructure.
The number of primary private infrastructure transactions increased by 18% in 2022, the strongest annual growth since 2017, largely driven by strong investor appetite for projects supporting the clean energy transition. However, growth was mostly being driven by high-income countries in North America and Western Europe, with private investment activity in middle- and low-income countries seeing a lot less momentum with volumes on par with pre-COVID levels.
Regional private investment in infrastructure has seen divergent trends in the post-COVID era, with Western Europe and North America emerging as the two strongest performers, followed by Latin America. Meanwhile Asia, while maintaining relatively stable investment as a share of regional GDP, has experienced the sharpest decline in its share of global private investment in infrastructure, as Western Europe and North America expand their shares. Other regions have seen weaker investment in the post-COVID era (Africa, Oceania, Middle East), or remained stagnant (Eastern Europe).
In low- and middle-income countries (LMICs), around three-quarters of private investment in infrastructure is conducted in foreign currencies, most commonly USD, and only a quarter in local currencies. Brazil dominates local currency transactions in LMICs and has driven a trend increase in the share of local currency transactions in LMIC investment since 2016.
The GI Hub’s InfraTracker aims to help address this data gap by analysing public investment data presented in G20 government budgets
Comparison of InfraTracker data with private investment figures in Infrastructure Monitor also indicate that, in general, governments are the driver of investment in all infrastructure sectors except for energy.
Infrastructure investment undoubtedly has a strong impact on economic growth and development.
This simple and free tool enables project proponents to easily conduct early-stage cost-benefit analyses of bus transport projects.
