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Private capital flows target digital infrastructure

Private capital flows target digital infrastructure

06/10/2025
Felipe Moraes
Private capital flows target digital infrastructure

In today’s rapidly evolving digital economy, private investors are channeling unprecedented resources into the backbone of modern connectivity. From sprawling data centers to fiber networks and wireless towers, the surge in capital is reshaping how businesses and communities access and process information.

The Resurgence of Private Infrastructure Investment

After two consecutive years of declining deal volumes, the private infrastructure market is experiencing a powerful revival. Assets under management (AUM) soared to an all-time high of $1.3 trillion by June 2024, marking renewed confidence among institutional and retail investors alike.

  • 2023 saw a 19% drop in deal activity; 2024 declined by 8%
  • Q1 2025 fundraising hit $48 billion, the third-highest first quarter in five years
  • Private infrastructure fundraising remains below the 2022 peak, reflecting cautious optimism

Despite lingering hesitations, mega funds are expected to bolster this momentum, targeting high-yield assets and development pipelines that promise stable cash flows and inflation hedges.

Digital Infrastructure Takes the Lead

Among all infrastructure segments, digital assets are emerging as the fastest growth drivers. Investors are zeroing in on:

  • Data centers powering AI and cloud computing loads
  • Fiber optic backbones expanding broadband reach
  • Wireless towers supporting 5G and edge deployments

Data center investment alone leaped from $11 billion in 2020 to a record $50 billion in 2024, now representing 25% of all sector-specific capital raised in 2025. The broader digital infrastructure category, including towers and fiber, added another 9%, underscoring a decisive shift in allocation strategies.

This trend is driven by corporate AI rollouts, global cloud migration, and the relentless demand for low-latency connectivity in finance, healthcare, manufacturing, and entertainment.

Drivers of Investment Growth

Several powerful forces are fueling the digital infrastructure boom:

  • Artificial intelligence surge: Exponential rise in data processing needs
  • Digital power problem: Investments in sustainable power and grid upgrades
  • Connectivity and latency: Proximity to demand centers becomes critical

The AI revolution alone compels investors to underwrite vast expansions in processing capacity, while parallel commitments to renewable energy projects address the carbon footprint of data-intensive operations.

Investment Strategies and Emerging Models

Traditional infrastructure investors favor development-stage data center projects for their higher yield potential. However, with some assets trading at multiples upwards of 30x EV/EBITDA, a new paradigm is taking hold: capital recycling through sales of stabilized, cash-flowing centers.

By monetizing completed facilities, funds can redeploy capital into greenfield developments, optimizing returns across market cycles. This dual approach balances growth prospects with short-term yield objectives.

Emerging Investor Types

The private digital infrastructure arena is no longer exclusive to large institutions. Managers are crafting innovative vehicles—evergreen open-end funds with fewer capital calls—to attract retail and high-net-worth individuals.

According to Bain & Company, private markets could expand from $25 trillion in 2022 to $60–$65 trillion by 2032, outpacing public markets by a factor of two. Notably, 44% of financial advisors now prefer evergreen structures over traditional closed-end vehicles, signaling a democratization of infrastructure investing.

Risks and Considerations

Despite the growth narrative, several risks demand careful evaluation:

  • Technological obsolescence as compute efficiency accelerates
  • High entry multiples potentially compressing future returns
  • Dependence on reliable, sustainable power sources

Investors must prioritize markets with durable demand and consider platform-based strategies to mitigate pricing volatility. Sustainability-linked financing and green certifications can also enhance resilience against regulatory shifts.

Global and Policy Dynamics

Cross-border data regulations, climate mandates, and geopolitical tensions are increasingly shaping capital flows. Regions offering regulatory clarity, robust grid infrastructure, and incentives for clean energy stand to attract disproportionate investment.

Meanwhile, digital infrastructure investments remain viewed as relative safe havens, given their essential services and long-term contracted revenue streams.

Project Spotlight and Collaboration Examples

Major partnerships exemplify the sector’s dynamism:

These collaborations highlight how strategic alliances between tech giants, utilities, and private funds can accelerate deployment while sharing risk and expertise.

Charting a Path Forward

For investors and project developers seeking to capitalize on this trend, consider the following steps:

  • Identify regions with robust digital demand and supportive policies
  • Balance greenfield development with stabilized asset acquisitions
  • Incorporate sustainability metrics in project underwriting
  • Engage local stakeholders to streamline permitting and grid access

By adopting a holistic, forward-looking approach, market participants can harness the full potential of private capital to build the digital infrastructure that will power the next decade of innovation.

Ultimately, the convergence of AI, cloud computing, and renewable energy demands presents an unprecedented opportunity. Private capital is not merely chasing yield—it is underwriting the very foundations of tomorrow’s digital society. Stakeholders who align strategy with technological and policy trends will not only secure competitive returns but will also play a pivotal role in shaping a connected, sustainable future.

Felipe Moraes

About the Author: Felipe Moraes

Felipe Moraes