Infrastructure Monitor

Key findings:

• Private investment in infrastructure projects in primary markets is almost back to pre-pandemic levels, but remains stagnant for the eighth year running.
• ‘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.
• 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 COVID-19 pandemic in 2020. 
• In the inflationary environment of 2022, the inflation-hedging potential of infrastructure enhanced its attractiveness for private investors.
• 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 into 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.  
• Multilateral development banks (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.
• 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.
• 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.

Key findings:

1. Private investment in infrastructure projects in primary markets is not increasing, but it weathered the pandemic shocks.

2. Overall private investment in infrastructure projects remains insufficient to close the infrastructure gap.

3. There are significant differences in private investment in infrastructure when comparing high-income countries and others.

4. There is a strong appetite for renewable energy.

5. Private investment in infrastructure projects is mainly financed by loans from financial service institutions, but debt capital markets are increasing.

6. In middle- and low-income countries, development banks play an important role as financiers, and export credit agencies are playing an increasing role.

7. In the last decade, returns for both listed and unlisted infrastructure equities have strongly increased.

8. Historically, unlisted infrastructure equities have provided higher risk-adjusted returns than global equities and listed infrastructure equities.

9. Infrastructure debt consistently performs better than non-infrastructure debt worldwide.

10. The lack of bankable and investment-ready pipelines of infrastructure projects is often considered the key bottleneck in mobilising private capital for infrastructure investments.

11. Project preparation facilities (PPFs) are providing technical and funding support for project preparation mainly in developing countries.

12. Companies investing in infrastructure are incorporating ESG factors better than other companies.

13. Green, private investment in infrastructure projects has been increasing.

14. Preliminary evidence shows sustainable investments perform better than the overall infrastructure sector.