The private equity landscape is undergoing a significant transformation as infrastructure moves to the centre of institutional attention. Investors are deploying record levels of capital into assets that promise stable, long-term returns, while also addressing pressing societal needs such as renewable energy, digital connectivity, and transportation modernization.

Market Overview and Momentum

In 2024, the infrastructure segment within private equity recorded a robust $87 billion in fundraising, marking a 14% increase year-on-year. Although this figure remains 43% below the 2022 peak, it signals renewed growth and investor confidence. Meanwhile, assets under management (AUM) in infrastructure surged to record $1.3 trillion as of June 2024. This surge underscores private capital’s expanding role in filling public funding gaps and financing large-scale projects.

However, the war chest of unallocated capital, or “dry powder,” remains substantial. CBRE estimates stand at $335 billion, while McKinsey reports $418 billion of dry powder available for deployment in the first half of 2024. Despite modest declines from earlier highs, these sums enable private equity firms to target transformative deals on a global scale.

Fundraising, AUM and Dry Powder Dynamics

Detailing the key metrics offers clarity on the scale and pace of growth:

Deal value climbed by 18% in 2024, the second-highest annual increase on record after 2022, while volume rose by 7%, pointing to bigger ticket sizes. In Q1 2025 alone, total transaction value hit a staggering $221 billion, even as M&A activity dipped 9% from the prior year’s quarter.

Shifting Sectoral Priorities

Private equity capital is migrating toward sectors that combine resilience, growth potential, and positive societal impact. Three core areas stand out:

• Digital infrastructure: Data center investment soared to $50 billion in 2024, up from just $11 billion in 2020. Early 2025 saw greenfield announcements exceeding $2 billion each in six U.S. projects, reflecting quadrupled year-on-year growth.
• Energy transition and renewables: Renewables accounted for roughly one-third of all Q1 2025 infrastructure deals, highlighted by the $1.74 billion acquisition of National Grid Renewables LLC.
• Transportation, logistics, and utilities: Core assets remain attractive for their defensive cash flows, with long-term concession models and regulated returns.

These shifts align with broader U.S. infrastructure needs, where a projected $9.1 trillion investment is required over the next decade. Even if current funding levels persist, a $3.7 trillion shortfall looms, presenting a vast opportunity for private capital to bridge the gap.

Macroeconomic Drivers and Risk Factors

Persistently higher interest rates have prompted institutional investors to seek higher-return strategies within infrastructure, moving beyond traditional core allocations. Yet core and core-plus funds remain popular, with approximately 60% of AUM expected to reside in these strategies through 2029.

Regulatory developments also play a role. For instance, the EU’s Infrastructure Supporting Factor (ISF) incentivizes banks to lend to infrastructure projects, potentially freeing up public capital for co-investment alongside private equity. However, evolving trade policies and geopolitical tensions can introduce complexity into cross-border transactions.

Challenges include extended fundraising cycles due to slower deal exits and heightened competition for prime assets. Compressed entry yields on core infrastructure have driven many firms to pursue value-add and opportunistic strategies, which carry higher risk but promise greater upside.

Investor Strategies and Deal Structures

Private equity firms are adapting their approaches to secure and scale deals:

• Platform investments: Building large-scale platforms—such as integrated data center networks or offshore wind portfolios—allows firms to leverage operational synergies and optimize capital deployment.
• Consortium bidding: Partnering with strategic investors, pension funds, and sovereign wealth funds spreads risk and enhances bidding power for megaprojects.
• Blended finance: Combining concessional debt, public subsidies, and private equity equity improves project economics in emerging markets and greenfield ventures.

Structurally, many funds now offer co-investment vehicles, enabling limited partners to commit additional capital alongside the general partner. This approach deepens LP engagement and often accelerates deployment timelines.

Notable Deals and High-Profile Fundraises

Several marquee transactions illustrate the expanding footprint of private equity:

• Blackstone’s acquisition of a multi-gigawatt offshore wind platform in Europe, valued at over $4 billion.
• Digital Realty’s landmark data center deal, supported by PE capital, totalling $3.2 billion.
• Brookfield Infrastructure Partners’ $2.5 billion investment in a U.S. toll road concession, reflecting continued interest in transport corridors.

Meanwhile, the largest upcoming funds aim to raise north of $140 billion. Preqin projections point to sustained allocations for infrastructure over the next five years, driven by strong LP appetite and attractive risk-adjusted returns.

Outlook: Opportunities Amidst Challenges

Looking ahead, private equity’s role in infrastructure is poised to deepen. Key factors shaping the trajectory include:

• Technology integration: The rise of smart grids, AI-enabled tolling systems, and edge computing will create new investment themes.
• Climate resilience: Funds focusing on adaptation—such as flood defenses and grid resilience—will gain prominence.
• Emerging markets: Infrastructure deficits in Asia, Africa, and Latin America offer high-growth potential but require innovative risk mitigation.

Nevertheless, investors must navigate headwinds such as inflationary pressures on construction costs, regulatory unpredictability, and the ongoing need to demonstrate environmental, social, and governance (ESG) impact. By balancing caution with strategic vision, private equity can continue to expand its presence and deliver long-term societal benefits alongside financial returns.

Conclusion

Private equity’s expanding footprint in infrastructure deals reflects a broader realignment of capital toward essential assets that underpin modern economies. From data centers powering the digital age to renewable energy projects driving the green transition, PE firms are deploying unprecedented resources to meet global demands.

With record AUM, significant dry powder, and evolving strategies, the asset class is well positioned for further growth. Yet success will hinge on managing risk, fostering public-private collaboration, and maintaining a clear focus on sustainable outcomes. As private equity deepens its engagement in infrastructure, the potential to reshape communities and drive technological progress has never been greater.