A G20 INITIATIVE

INFRASTRUCTURE
MONITOR 2023
Global trends in private
investment in infrastructure
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 2

CONTENTS

About3

Executive summary 4

Private investment in infrastructure 13

Infrastructure investment performance 28

Infrastructure equity performance 28

Infrastructure debt performance 40

Private capital availability 54

Appendix66
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 3

About About the GI Hub

Infrastructure Monitor is the Global Infrastructure Hub’s (GI Hub) flagship report. Produced The Global Infrastructure Hub (GI Hub) was created by the
annually, it identifies and examines global trends in private investment in infrastructure. G20 and established in 2014 with a mission of supporting the
G20 to drive an ambitious agenda on sustainable, resilient, and
The data insights included in the report help governments, investors, and the broader
inclusive infrastructure through action‑oriented programs. Operating
infrastructure industry steer infrastructure investment where it is needed.
with an inclusive and collaborative mindset, our purpose is to
As a data resource serving the G20, this report is also used to monitor progress toward accelerate infrastructure development to transform societies and
establishing infrastructure as an asset class, an objective set by the G20 in 2018. empower future generations.
Infrastructure Monitor insights address key priorities of the G20 and provide policymakers
We work collaboratively with the public and private sectors to produce
with global benchmarks.
data, insights, knowledge tools, and programs that equally inform
Data used and analysed in the Infrastructure Monitor 2023 report were gathered from our policy and delivery, helping decisionmakers and practitioners create
data partners Convergence, EDHECinfra, MSCI, Moody's, and Preqin, and we received data positive impacts through infrastructure.
from Realfin.
This report covers trends in: i) private investment in infrastructure projects; ii) infrastructure
investment performance; and iii) availability of private capital for infrastructure. Additional
sections on the role of blended finance in infrastructure investment and environmental,
social, and governance (ESG) factors in infrastructure investment will be released shortly
after the initial release, to allow for the inclusion of the most current data.
With Infrastructure Monitor, our objective is to bring together a global evidence base and
expert data insights on the state of private investment in infrastructure, in a single report.
We welcome your feedback on this year’s edition and your suggestions for the 2024 edition.
INFRASTRUCTURE MONITOR 2023

Executive
summary
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EXECUTIVE SUMMARY

After a decade of stagnation, in 2022, private investment in infrastructure projects in primary markets
recovered, and in some sectors, exceeded pre-COVID-19 levels. Transactions increased by 29%, with an
overall value that was 41% higher than the five-year average.
• In 2022, after eight years of stagnation, private investment in infrastructure experienced • It should be noted that – compared with previous years’ reports – the analyses draw
a significant resurgence. Primary markets saw a substantial increase in transactions and on a bespoke new dataset developed in partnership with Realfin which has a more
overall value, marking a 29% rise in transactions and a 41% increase in value compared to comprehensive coverage of transactions, particularly in developing markets. This new
the five-year average (2017–2021). dataset almost doubles the value and number of transactions from previous GI Hub
Infrastructure Monitor reports. Other datasets accessible to the GI Hub also show strong
• This significant increase was the result of a post-COVID-19 recovery back to 2015–2019
– albeit lower – growth.
levels (as a % of GDP), stronger growth in energy transmission and digital infrastructure,
and a set of large airport transactions that pushed the level above their pre-pandemic
averages. Renewables, especially solar energy, remained strong, with a clear shift toward
cleaner energy across income groups. The secondary market also performed strongly
due to growth in acquisitions. However, a single year of data is insufficient evidence to
indicate a lasting shift in the trend.

Private investment in infrastructure projects in primary markets Private investment in infrastructure projects by sector
(USD billion, number of transactions, and % growth in value compared to five-year average) (% of GDP)

+41% 0.5
450 Transport (excl. airports)
1400
400 Airports
1200 0.4
350
No. of transactions

Water and waste

300 1000
USD billion

0.3 Social

% of GDP
250 800 Energy - non-renewables
200
600 0.2 Energy - renewables
150
400 Energy - storage, transmission,
100 and distribution
0.1
0 0 Digital infrastructure
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Other
0.0
Private infrastructure investment (left-axis) No. of transactions (right-axis)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Global Infrastructure Hub based on Realfin data. Source: Global Infrastructure Hub based on Realfin data.
Note: Throughout this report, ‘private investment in infrastructure projects’ refers to private sector investment in infrastructure Note: ‘Other’ includes environment and infrastructure (general) sectors.
projects in primary markets (financed by private and public financiers) including greenfield and brownfield infrastructure, as
well as privatisations, unless otherwise specified. Investment values represent commitments made at the financial close of
investment and not executed investment.
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EXECUTIVE SUMMARY

In 2022, the private infrastructure capital invested significantly outpaced the capital raised. Most of
the private infrastructure capital raised and invested by funds has been concentrated in North America
and Europe.
• In 2022, for the first time, private infrastructure capital invested grew by 64%, significantly • With rising inflationary pressures and risk aversion coupled with intensified government
outpacing the growth in private infrastructure capital raised (15%). The vast majority plans for infrastructure investments, the private capital raised for infrastructure increased
of capital raised (91%) and invested (78%) by funds in 2022 was concentrated in North sharply to a record level (USD166 billion) in 2022, while the aggregate capital raised for all
America and Europe. asset classes declined.
• Private capital raised for all asset classes including infrastructure had consistent growth
before the COVID-19 pandemic before dropping in 2020 and recovering in 2021.

Annual private infrastructure capital raised and invested by funds Private infrastructure capital raised and invested by funds by region in 2022
(USD billion, 2010–2022) (% of total)

Capital raised
Capital invested Capital raised
300

250 2022 USD165 bn

3% 5% 38% 53%
200
USD billion

150 Capital invested

100
2022 USD258 bn
50
3% 2% 14% 41% 37%
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
North America Europe Asia

Source: Preqin data as of 13 October 2023. Latin America Multiregion Others

Note: Capital invested is measured by the annual capital called by the fund manager for investment in the infrastructure asset class.
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EXECUTIVE SUMMARY

In sharp contrast, 2023 has recorded the lowest levels of capital raised in a decade.

• While 2022 saw a record-high in infrastructure capital raised by funds, 2023 has shown a Private infrastructure capital raised by funds
significant decline, highlighting the dynamic nature of private capital and the influence of (USD billion, 2010–2023)
economic conditions and global events.
Second half of the year
• By July 2023, there was a decrease in dry powder, mainly due to the low funds raised 166
and increased funds invested. This decrease, notably in North America, contrasted with First half of the year
rising dry powder in developing economies, signifying lower levels of private capital
mobilisation and investment in these regions. 144
49

• The majority of private infrastructure capital raised and invested by funds, excluding
2023, concentrates in North America and Europe. Renewable energy ranks second after 119
diversified funds, accounting for 16% of infrastructure capital raised in 2022. However, 112
107 81
investments within the renewables sector often target low-risk opportunities that are
categorised as secondary investments rather than greenfield projects. 89 89
66 48
• Interestingly, 70% of the private infrastructure capital raised by funds aims for lower- 73 64
risk strategies while investing in the infrastructure asset class. This trend indicates a 45
61
preference for lower-risk investment options within the infrastructure domain. 54 117
34
48
37 33
32 32 27
63 63
27 53
18 18 45 43 19
39 35
28
21 July – YTD
14 14 11 USD4.6 bn
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Jan – June
YTD USD15 bn

Source: Preqin data as of 13 October 2023.

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EXECUTIVE SUMMARY

The disparity between high-income and middle- and low-income countries persists as high-income
nations continue to attract a much larger share of global infrastructure private investment.
• While high-income nations attracted the lion's share of global private Private investment in infrastructure projects by income group
infrastructure investment, middle- and low-income countries also (USD billion and % growth compared to five-year average)
experienced growth in 2022, albeit only 6% above their five-year average.
High-income countries Middle- and low-income countries
• Prior to 2022, private investment in infrastructure projects was on broadly
similar levels in North America, Western Europe, and Asia. However, 100
350 +61% 350
this was not the case in 2022. While investment increased globally in all
regions except Oceania, growth was particularly strong in North America 300 300 80
(up by 92%) and Western Europe (up by 89%). 250 250
60

USD billion

USD billion
+6%

% share
• In North America, growth was fuelled by the transport sector with several 200 200
large projects, notably airports in the US and light rail in Canada, reaching 150 150 40
financial close. This significant increase may be related to strong policy 100 100
support for infrastructure by the current US administration, such as 20
50 50
the Infrastructure Investment and Jobs Act (2021), which opened up
0 0 0
investment opportunities in the US.

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: Global Infrastructure Hub based on Realfin data.
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EXECUTIVE SUMMARY

The share of green investment has plateaued in recent years, but sustainable financing is increasingly
being used to finance private investment in infrastructure.
• Debt remains the primary source of financing for infrastructure projects, with sustainable investment in other sectors - most notably transport - saw a significant drop. In 2022,
financing gaining traction in both income brackets, particularly in North America and non-green investment grew significantly (54%) outpacing growth in total green investment
Western Europe. In 2022, their use increased in both income groups, with North America (35%).
and Western Europe still leading the way. Banks played a significant role in financing, with
• While green investment typically represents renewable energy generation projects,
the public sector's share rising after years of decline.
in 2022, growth in sectors outside renewables (Other Green) outpaced growth in
• Overall, the share of green private investment in infrastructure has increased since 2016, renewables. This growth in Other Green primarily reflects energy transmission and battery
aligned with the global clean energy transition. However, it has declined since 2020, when storage projects.
it was particularly high due to continued growth in renewables during the pandemic, while

Green and non-green private investment in infrastructure projects Sustainable financing of private investment in infrastructure projects
(% of total private investment in infrastructure projects) (USD billion, by income group)
50
100
Middle East 2%
% of total private investment

North America 11%

80 Eastern40
Europe
3% 37%
Oceania
5%
60
Africa 30 5%

USD billion
40 Latin America 89%
9%
20
20
Asia 13% 27% Western Europe
10
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
Renewables Other green Non-green 2016 2017 2018 2019 2020 2021 2022

High-income countries Middle- and low-income countries

Source: Global Infrastructure Hub based on Realfin data. Source: Global Infrastructure Hub based on Realfin data.
Note: Includes only transactions for which instrument details are available.
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EXECUTIVE SUMMARY

Recent shocks have affected returns for all equities, but unlisted infrastructure has proven much more
stable than global equities.
• Infrastructure equities provided increasing returns to private investors for the decade • Infrastructure assets generally offer protection from inflation, but the sensitivity to
prior to the COVID-19 pandemic. Unlisted infrastructure equities provided higher risk- interest rate changes varies by sector depending on the revenue model.
adjusted returns to investors compared to other equities, including global listed equities.
• Unlisted infrastructure equities demonstrate better downside protection and exhibit risk
• Annual returns on global infrastructure equities – listed and unlisted – declined from parameters similar to bonds, particularly from project finance structures as opposed to
highly attractive levels in 2019 to nearly zero in 2020 due to the COVID-19 lockdowns. As corporate structures. They provide attractive returns in both developed and emerging
the world recovered from the pandemic in 2021, so did infrastructure equities. markets.
• The multiple crises of 2022 – rapid inflation, sharp interest rate hikes, supply chain
shocks, and the Russia-Ukraine war – impacted global listed markets more severely than
unlisted infrastructure equities.

Annualised returns by type of equity​ Annualised returns by type of equity​

(%) (%)
27
Listed global 7.4 23
equities 2019 14
3.4 16
Listed infrastructure 3-year
equities 11.7
17
Unlisted infrastructure 6.9 COVID-19 -2
equities lockdowns
2020 -2
2
Green unlisted 7.0
infrastructure equities 19
2.8
5-year 9.5 2021 6
16
8.9 6

-18
Inflation, supply shocks, -2
8.1 2022 6
Russia-Ukraine war
3.6 -2
10-year
11.5 10
12.0 -4
2023 YTD 6
6

Source: MSCI and EDHECInfra (2023a) as of 30 September 2023.

Note: Annual returns are based on monthly gross returns data in a calendar year. The indices present aggregate performance levels. Global equity performance is measured by the MSCI All Country World Index (MSCI ACWI). Listed infrastructure equity performance is measured by
the MSCI ACWI Infrastructure Capped Index (MSCI ACWI-IC). Unlisted infrastructure equity performance is measured by the EDHECInfra Infra300 equity index. Green unlisted infrastructure equity performance is measured by the EDHECInfra InfraGreen index.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 11

EXECUTIVE SUMMARY

Infrastructure valuations face downward pressures from multiple shocks including a high risk premium
during the COVID-19 pandemic, rapid interest rate hikes, and climate change.
• The net value of an infrastructure equity is negatively impacted by increases in the risk • Climate change poses a significant threat to infrastructure, as rising sea levels,
premium and interest rates. In 2021, the COVID-19 pandemic increased the risk premium extreme weather events, and increased temperatures can lead to the deterioration
from 665 basis points in 2019 to 770 basis points in 2021 – a level last seen in 2011. of infrastructure. Under existing climate scenarios, the potential consequences for
As the world recovered from the pandemic, the risk premium on infrastructure equities infrastructure are significant. By 2050, the net value of an infrastructure asset is expected
began to decline. However, it is still above the 2019 level. Currently, the valuation is being to reduce by 4.4% on average, and by 26.7% in the worst case, due to the increasing
severely impacted by rapid interest rate hikes. physical risks of climate change.

Average change in net asset value of global infrastructure​equities due to increase in: Potential infrastructure losses due to physical risks of
climate change by scenario by 2050 in the current policy scenario
(% of net asset value loss by type of infrastructure asset)

2.1 -4.4
Average asset -26.9
Dividend 2.5
forecast -1.5
3.3 Power generation -7.2

-10.9
% of variation

-6.3 Transport -97.8

Interest
-2.6
rates -5.4
1.6
Network utilities -26.1

-2.4
-1.5
Social infrastructure -13.1
Equity risk
premium -6.2 -3.7
Data infrastructure -5.7
-8.3

Last one-year average Last three-year average Last five-year average Average Maximum

Source: EDHECInfra (2023b). ​

Source: EDHECInfra (2022a). Based on InfraMetrics 2022 data. Note: The analysis is based on a representative sample of 700+ companies for which asset-level climate risk
estimates are available in the EDHECInfra InfraMetrics platform. Portfolio loss was estimated by creating thousands
of random portfolios using hundreds of assets for which net asset value loss was estimated.
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EXECUTIVE SUMMARY

Infrastructure loans consistently maintain lower default rates compared to non-infrastructure loans.
With global recovery from the COVID-19 pandemic in 2021, the default rates reduced across all
regions and sectors.
• With lower default and higher recovery rates, the average expected loss on infrastructure 20-year cumulative default rates by origination year and region
loans represents only a quarter of that for non-infrastructure loans, a trend observed in (%)
both high-income and middle- to low-income countries.
• Default rates on infrastructure loans have historically decreased in most regions, with the Loan origination years: 1983–2019 1983–2020 1983–2021
exception of Eastern Europe and Latin America. Notably, in 2021, default rates dropped
across all regions. The default rates also reduced for all infrastructure sectors in 2021. Infrastructure 5.4 5.0 ↆ 4.5 ↆ
Strong government support to prevent defaults during the COVID-19 pandemic played an
Africa 1.1 1.8 1.1 ↆ
ↆ
instrumental role in reducing default rates for infrastructure projects.

Middle East 1.2 2.2 2.0 ↆ

ↆ
20-year cumulative default rate by sector and origination year

20% Western Europe 4.6 4.0 ↆ 3.6 ↆ

18% B Ba3 Ba2
Asia 5.9 5.2 ↆ 4.7 ↆ
16% Ba1
North America 6.8 6.6 ↆ 5.4 ↆ
Cumulative default rate (%)

14%
Non-investment grade
Oceania 7.3 10.1
ↆ
12% 9.2 ↆ
10% Baa3
Latin America 10.3 10.5 10.1 ↆ
ↆ
1990–2021
8%
2000–2021 Baa2
Eastern Europe 11.8 11.8 11.2 ↆ
6% Baa1
2010–2021 Investment grade
1990–2021
4% A
Source: Moody’s (2023a). Data as of 2021.
2000–2021
2% Aa
2010–2021
0% Aaa
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years since debt organisation

Non-infrastructure Infrastructure

Source: Moody’s (2023a). Data as of 2021.

INFRASTRUCTURE MONITOR 2023

Private investment
in infrastructure
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PRIVATE INVESTMENT IN INFRASTRUCTURE

Introduction

This section presents data and analyses related to levels of private investment in Note the following:
infrastructure. Unless otherwise stated, the analyses refers to private sector investment in
i. The dataset focuses on project-based private investment
primary market projects financed by public as well as private financiers, including greenfield
and does not capture most corporate private investment
projects (new projects on undeveloped sites), brownfield projects (construction on previously
in infrastructure, which may represent a significant portion
developed sites, such as upgrades), and investment via the privatisation of public sector
of private investment in some infrastructure sectors. E.g.
assets.
balance sheet financing is estimated to account for 70% of
Compared with previous years’ reports, the analyses draw on a bespoke new dataset total private investment in renewable energy.
developed in partnership with Realfin which has a more comprehensive coverage of
ii. Coverage of green, sustainable, and sustainability-linked
transactions, particularly in developing markets. The new dataset almost doubles the value
bonds is limited, particularly as use-of-proceeds (intended and
and number of transactions from previous Infrastructure Monitor reports.
actual) are typically not reported and are difficult to identify as
With this additional coverage, the Realfin dataset represents the best available comparable either primary or secondary investment.
data for global project-based private investment in infrastructure. However, it is still not
The estimates in this report are best interpreted as indicative of
exhaustive, so figures presented in this section underestimate the true levels of global private
the broad trends in the size and nature of private infrastructure
investment in infrastructure. In some sectors – notably renewables – global organisations
investment.
have attempted in recent years to improve the availability and granularity of data; however,
detailed data are generally not available for most infrastructure sectors.
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PRIVATE INVESTMENT IN INFRASTRUCTURE

Key findings

• In 2022, after eight years of stagnation, private investment • In 2022, private investment in non-green sectors showed
in infrastructure projects in primary markets increased stronger growth than renewables.
significantly, with the number of transactions up 29% and the
• There is a clear shift toward cleaner energy. While renewables
overall value 41% higher than the five-year average.
have long been the preferred type of investment for energy
• The secondary market for infrastructure also performed generation in high-income countries, middle- and low-income
strongly in 2022, driven by growth in acquisitions. countries are catching up.
• In 2022, private infrastructure investment grew significantly in • Solar is by far the most common type of energy generation
high-income groups. Middle-and low-income groups also saw across both income groups, but the energy mix varies.
an increase but only 6% above their five-year average. Disparity
• Private investment in infrastructure projects continues to be
persists as high-income nations continue to attract a much
primarily debt-financed, and increasingly so.
larger share of global infrastructure private investment.
• Sustainable financing is increasingly being used to finance
• While investment increased in all regions except Oceania in
private investment in infrastructure. In 2022, its use increased
2022, growth was particularly strong in North America and
in both income groups, with North America and Western
Western Europe where investment almost doubled.
Europe still leading the way.
• Investment growth in 2022 was led by the transport sector,
• In 2022, growth in private infrastructure investment was driven
with strong growth also seen in digital infrastructure and
by banks, who continued to increase their role as financiers,
energy transmission.
as well as the public sector, whose share rose after years of
• Private investment in infrastructure has experienced a decline.
post-COVID-19 recovery, with stronger growth in energy
transmission and digital infrastructure pushing levels above
their pre-pandemic averages.
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PRIVATE INVESTMENT IN INFRASTRUCTURE

In 2022, after eight years of stagnation, private investment in infrastructure projects in primary markets
increased significantly, with the number of transactions up 29% and the overall value 41% higher than
the five-year average.
Private investment in infrastructure projects in primary markets • In 2022, global private investment in infrastructure projects in primary markets
(USD billion, number of transactions, and % growth in value compared to five-year average) increased by 46% to USD424 billion, ending an eight-year period of stagnation.
Investment now sits well above pre-pandemic levels and is 41% higher than the past
five-year average (2017–2021).
+41%
450 • Nevertheless, a single year of data is insufficient evidence to indicate a lasting shift
1400 in the trend. Also, if the prevailing macroeconomic conditions persist, or worsen, and
400 interest rates remain elevated or continue to rise, the attractiveness of infrastructure
1200 investments may diminish, and infrastructure fundraising will continue to decline – as
350
seen in 2023. This could impose constraints on investments in upcoming years.

No. of transactions
300 1000
USD billion

• The number of transactions also continued to increase in 2022, rising by 18% to

250 800 reach 1,292 transactions. However, with stronger growth in the value of infrastructure
investment, the average transaction size increased overall in 2022, after three years
200
600 of decline. This primarily reflects stronger investment in sectors with typically larger
150 project sizes, notably transport and digital infrastructure.
400
100

0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Private infrastructure investment (left-axis) No. of transactions (right-axis)

Source: Global Infrastructure Hub based on Realfin data.

Note: Throughout this report, ‘private investment in infrastructure projects’ refers to private sector investment in infrastructure projects
in primary markets (financed by private and public financiers) including greenfield and brownfield infrastructure, as well as privatisations,
unless otherwise specified. Investment values represent commitments made at the financial close of investment and not executed
investment.
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PRIVATE INVESTMENT IN INFRASTRUCTURE

The secondary market for infrastructure also performed strongly in 2022, driven by growth in
acquisitions.
Private investment in infrastructure projects in secondary markets • Secondary private investment in infrastructure projects rose by 16% in 2022 to USD1
(USD billion) trillion across 1,892 transactions, continuing the trend from the past decade. Total
secondary investment in infrastructure projects is now 73% higher in value than the pre-
1200 pandemic level in 2019.
+16%
• Growth in 2022 was driven by an increase in acquisitions, which rose by 37% to USD569
1000 billion, representing 54% of total secondary investment in infrastructure (the highest
since 2013). Acquisition growth is likely to reflect several factors, such as an increasing
attraction toward the safe haven of secondary markets amid heightened global
800
uncertainty, and the potential hedge that infrastructure assets can offer against rising
USD billion

inflation.
600
• Meanwhile, refinancing fell in 2022 for the first time since 2016 (down by 6%). Fewer
investors opted for refinancing due to increasing interest rates which would result in
400 considerably higher interest costs compared to their existing obligations.

200

0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Acquisitions Refinancing Other

Source: Global Infrastructure Hub based on Realfin data.

Note: ‘Other’ includes transactions such as securitisations and financing for infrastructure companies for general corporate
purposes and ongoing operations.
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PRIVATE INVESTMENT IN INFRASTRUCTURE

In 2022, private infrastructure investment grew significantly in high-income groups. Middle- and low-
income groups also saw an increase but only 6% above their five-year average. Disparity persists as
high-income nations continue to attract a much larger share of global infrastructure private investment.
• In 2022, despite the multiple crises and shocks, private investment in infrastructure • This disparity is also evident on a share of GDP basis. In 2022, private investment in
projects increased by 46% in high-income countries (HICs) and 42% in middle- and low- infrastructure projects represented 0.5% of GDP in HICs (the highest on record), and
income countries (MLICs). Investment is now 61% higher than the past five-year average only 0.3% in MLICs. This highlights the urgency of channelling capital toward MLICs,
(2017-2021) in HICs and 6% in MLICs. particularly for sustainable infrastructure.
• Despite increases in both income groups, the gap between HICs and MLICs has
notably widened since 2018. This continued in 2022, with HICs attracting 71% of global
private investment in infrastructure projects while, even with a post-pandemic rebound,
investment levels in MLICs lagged their pre-pandemic peak in 2018. Investment in MLICs
comprises only about 40% of investment in HICs.

Private investment in infrastructure projects by income group Private investment in infrastructure projects by income group
(USD billion and % growth compared to five-year average) (% share of total value)

High-income countries Middle- and low-income countries

100
350 +61% 350
300 300 80
250 250
60
USD billion

USD billion

+6%

% share
200 200
150 150 40
100 100
20
50 50
0 0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

High-income countries Middle- and low-income countries

Source: Global Infrastructure Hub based on Realfin data.

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PRIVATE INVESTMENT IN INFRASTRUCTURE

While investment increased in all regions except Oceania in 2022, growth was particularly strong in
North America and Western Europe where investment almost doubled.
• Prior to 2022, levels of private investment in infrastructure projects were broadly similar • Meanwhile in Western Europe, growth was boosted by the continued rollout of fibre optic
in North America, Western Europe, and Asia. However, this was not the case in 2022. broadband networks, particularly in the UK, with investment in the digital infrastructure
While investment increased globally in all regions except Oceania, growth was particularly sector in Western Europe more than doubling (up by 151%) in 2022.
strong in North America (up by 92%) and Western Europe (up by 89%).
• Private investment in infrastructure continued its post-pandemic recovery in Asia and
• In North America, growth was led by the transport sector with several large projects Latin America, increasing for the second consecutive year. The Middle East and Africa
reaching financial close – notably airports in the US and light rail in Canada. This may be saw strong growth, albeit from low levels, to be broadly in line with their pre-pandemic
related to significant policy support for infrastructure by the current US administration, averages. Investment in Eastern Europe was flat, with Poland emerging as the dominant
such as the Infrastructure Investment and Jobs Act (2021), which opened up investment country in the region after the onset of the Russia-Ukraine war in 2022, which brought
opportunities in the US. investment to a standstill in Russia.

Private investment in infrastructure projects by region

160 (USD billion, % growth in 2022, and % of GDP in 2022)
+92%
140
+89%
120 0.4% of GDP 0.6% of GDP 0.2% of GDP 0.9% of GDP 1.4% of GDP 0.5% of GDP 0.4% of GDP 0.2% of GDP

100
+19%
USD billion

80
+37%
60
-29%
40 +19%
+50%
0%
20

0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
North America Western Europe Asia Latin America Oceania Middle East Africa Eastern Europe

Source: Global Infrastructure Hub based on Realfin data.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 20

PRIVATE INVESTMENT IN INFRASTRUCTURE

Investment growth in 2022 was led by the transport sector, with strong growth also seen in digital
infrastructure and energy transmission.
• Transport and renewable energy sectors typically dominate private investment in • In the renewable energy sector, investment increased by 18% in 2022, with all regions
infrastructure projects, each attracting roughly a third of the total value of investment over except Asia and the Middle East recording a rise. Renewables investment in Asia increased
the 10-year period from 2013 to 2022 (35% and 31%, respectively). While these two sectors for several years, but since 2020, has been declining. 2020 saw investment in some
continued to attract the most private investment in 2022, transport investment surpassed particularly large offshore wind projects in several Asian countries, such as South Korea,
renewables investment for the first time since 2018. However, based on the number of Taiwan, and Japan, which have since tapered out.
projects, renewable energy continues to be the leading sector for private investment in
• Following a period of steady growth, the energy storage, transmission and distribution
infrastructure, accounting for 55% of all projects in 2022.
sector and the digital infrastructure sector saw growth skyrocket in 2022, albeit from low
• While North America led the way with an almost sixfold increase in transport investment, bases. Western Europe continues to dominate investment in digital infrastructure (90% of
the increase in transport was more widespread, with all regions except Oceania and Africa the sector’s total investment in 2022), while transmission projects in both Western Europe
experiencing a rise. Asia saw the largest increase after North America, with transport and North America supported growth in the energy storage, transmission and distribution
investment more than doubling in 2022, largely reflecting a surge in investment in roads sector. Notwithstanding the surge in grid investment in 2022, total energy sector investment
in India due to a favourable regulatory environment and the introduction of innovative has remained at relatively stable levels since 2017. In a positive sign, non-renewable
structures such as the toll-operate-transfer (TOT) model. Even excluding the record levels of private investment declined for the fifth consecutive year, highlighting the continued shift in
investment seen in airport and light rail projects in 2022 (as noted previously), investment in investor preferences toward cleaner energy.
the transport sector – the most impacted sector during the COVID-19 pandemic – has now
• Social infrastructure, waste, water, and other sectors continue to attract the lowest levels of
recovered to 2% above its pre-pandemic average (2017–2019).
private investment, all of which declined in 2022.
Private investment in infrastructure projects by sector
160 (USD billion and % growth in 2022)
+73%
+18%
140
120
100
USD billion

+151%
80
+116%
60
40 -7%
-40% -21% -19%
-49%
20
0
2013

2013

2013

2013

2013

2013

2013

2013

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022

2014
2015
2016
2017
2018
2019
2020
2021
2022
Transport Renewable energy Non-renewable Energy storage, Digital Social Waste Water Other
generation energy generation transmission & infrastructure infrastructure
distribution
Source: Global Infrastructure Hub based on Realfin data.
Note: ‘Other’ includes environment and infrastructure (general) sectors.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 21

PRIVATE INVESTMENT IN INFRASTRUCTURE

Private investment in infrastructure has experienced a post-COVID-19 recovery, with stronger growth in
energy transmission and digital infrastructure pushing levels above their pre-pandemic averages.

Private investment in infrastructure projects by sector

(% of GDP)

0.5
Transport (excl. airports)

Airports

Water and waste

0.4
Social

Energy - non-renewables

0.3 Energy - renewables

% of GDP

Energy - storage, transmission, and distribution

Digital infrastructure
0.2 Other

0.1

0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Global Infrastructure Hub based on Realfin data.

Note: ‘Other’ includes environment and infrastructure (general) sectors.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 22

PRIVATE INVESTMENT IN INFRASTRUCTURE

In 2022, private investment in non-green sectors showed stronger growth than renewables.

• Overall, the share of green private investment in infrastructure has increased since investment, accounting for 90% of the increase in 2022, mostly in energy transmission
2016 in alignment with the global clean energy transition and driven by the demand for and storage projects.
renewables. However, this share of green private investment has been declining since
• On a regional basis, investment in North America and Western Europe has been
its peak in 2020, when it was particularly high due to continued strong investment in
the greenest over the past five years, averaging 51% and 50% of their total private
renewables during the COVID-19 pandemic, while investment in non-green sectors –
investment in infrastructure from 2018 to 2022. In 2022, these two regions continued
most notably transport – was heavily impacted and saw a significant drop. Transport
to account for the majority of green private investment (37% in North America and 27%
investment has since recovered, with only 6% considered green in 2022.
in Western Europe). 2022 also saw Africa and Eastern Europe experience a significant
• While green investment typically represents renewable energy generation projects, surge in green investment, reaching 74% and 70% respectively of total private
in 2022, growth in sectors outside of renewables (Other Green) outpaced that of infrastructure investment in those regions. In contrast, green private investment in Asia
renewables. This primarily reflects growth in energy transmission and battery storage has been on a sharp decline since the COVID-19 pandemic, with an increasing focus
projects. Non-green investment also grew significantly in 2022 (54%), outpacing total on transport, and declining investment in renewables. While its share of green private
green investment growth (35%). investment fell to 13% in 2022, Asia is still the third largest destination for green
private investment, behind North America and Western Europe.
• While non-green investment increased in both HICs and MLICs in 2022, growth in
HICs (64%) outpaced that in MLICs (38%). HICs also led the growth in Other Green

Green and non-green private investment in infrastructure projects Green private investment in infrastructure by region
(% of total private investment in infrastructure projects) (% of total green investment, 2022)
100
Middle East 2%
% of total private investment

North America
80 Eastern Europe
3% 37%
Oceania
5%
60
Africa 5%
40 Latin America
9%

20
Asia 13% 27% Western Europe
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Renewables Other green Non-green

Source: Global Infrastructure Hub based on Realfin data.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 23

PRIVATE INVESTMENT IN INFRASTRUCTURE

There is a clear shift toward cleaner energy. While renewables have long been the preferred type of
investment for energy generation in high-income countries, middle-and low-income countries are
catching up.
• Globally, the trend away from non-renewable energy generation continued in 2022, • Encouragingly, in middle- and low-income countries, the share of renewables in
as noted previously, with non-renewables representing only 12% of total private energy generation projects has been notably increasing since 2016 and continued to
investment in energy generation in 2022, compared with 44% a decade ago (2013). do so in 2022, reaching 79% of total energy generation investment.
However, it is discouraging that new investment in non-renewable energy generation
persists, even in high-income countries (where it represented 9% of total energy
generation investment in 2022).

Private investment in non-renewables and renewables, by income group

(% of total private investment in energy generation projects)
High-income countries Middle- and low-income countries
100 100
% of total private investment in

% of total private investment in

energy generation projects

energy generation projects

80 80

60 60

40 40

20 20

0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Non-renewable energy Renewable energy Non-renewable energy Renewable energy

Source: Global Infrastructure Hub based on Realfin data.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 24

PRIVATE INVESTMENT IN INFRASTRUCTURE

Solar is by far the most common type of energy generation across both income groups, but the energy
mix varies.
• Among energy generation projects, solar is the most preferred type of energy for private
investors. This is true for both HICs and MLICs, although it is relatively more dominant in Fuel production
HICs, where it represented 58% of total energy generation investment in 2022 (compared
While production of both conventional (such as oil and gas) and alternative fuels
with 36% in MLICs). Following solar, wind energy (both onshore and offshore) attracted
(such as biofuels and hydrogen) are excluded from estimates of private investment in
relatively similar shares of energy generation projects in both income groups (27%
infrastructure as they are not considered within the GI Hub’s definition of infrastructure,
in HICS and 28% in MLICs). The attractiveness of wind and solar is consistent with
such data are still captured. The data show that while biofuels have attracted private
significant cost reductions in clean energy technology over the past decade. According to
investors throughout the past decade, investment in the past three years (2020–2022)
the IEA (2023), the costs of key clean energy technologies – solar PV, wind, heat pumps,
has been elevated – at levels almost double (92%) the average of the preceding seven
and batteries – fell by almost 80% between 2010 and 2022.
years (2013–2019). Private investment in hydrogen also emerged strongly in 2022, and
• MLICs also have a notably higher share of energy generation investment in both gas-fired early data for 2023 indicate that this trend will continue and strengthen.
power plants and hydropower. While investment in coal-fired power plants saw a steep
decline from 38% of total energy generation projects in 2016 to virtually zero in 2022, this
was not the case for gas. The share of gas-fired power plants remains at about 18% – on Private investment in alternative fuel projects
par with the 10-year average. (USD billion)
Private investment in energy generation projects by income group 10
(% of total private investment in energy generation projects, 2022)
8

USD billion
High-income 6
countries
4

Middle- and low- 2

income countries

0
0 10 20 30 40 50 60 70 80 90 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
% of total private investment in Biofuels/biomass Hydrogen
energy generation projects

Solar Hydro Wind (onshore) Other renewables

Wind (offshore) Gas-fired Geothermal Other non-renewables

Source: Global Infrastructure Hub based on Realfin data.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 25

PRIVATE INVESTMENT IN INFRASTRUCTURE

Private investment in infrastructure projects continues to be primarily debt-financed, and

increasingly so.
Financing of private investment in infrastructure projects by instrument • In 2022, the share of debt financing of private investment in infrastructure projects
(USD billion and % of total value, 2022) continued its trend, increasing from 63% in 2016 to 81% in 2022. This increase has been
most apparent in Western Europe, where the share increased from 63% in 2016 to 86% in
2022.
Financing of private investment infrastructure projects
• Within debt financing, the use of loans dominates. Moreover, sustainable instruments,
primarily green bonds and green loans, continue to grow strongly. In 2022, 13% of the
total financing of private investment in infrastructure projects was through either green
Debt Equity Grants
USD284 billion USD64 billion USD2.5 billion bonds or green loans.
(81%) (18%) (1%) • Note that there are several challenges related to data on green bond issuances,
particularly around the use-of-proceeds:

Loans Bonds Non-commercial instruments i. Green bond data generally do not indicate whether proceeds are being earmarked for
USD205 billion USD53 billion USD28 billion primary or secondary purposes.
(72%) (19%) (9%)
ii. Data on actual use-of-proceeds are extremely limited. However, anecdotal evidence
suggests that some green bonds are used to refinance existing assets rather than to
finance new assets (CPI/IRENA, 2020).
Green loans Green bonds
USD25 billion USD20 billion
(12%) (37%)
2022 growth: 80% 2022 growth: 171%

Non-green loans Non-green bonds

USD180 billion USD33 billion
(88%) (63%)

Source: Global Infrastructure Hub based on Realfin data.

Note: Includes only transactions for which instrument details are available. In this analysis, sustainability-linked bonds are included
in the green bonds category.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 26

PRIVATE INVESTMENT IN INFRASTRUCTURE

Sustainable financing is increasingly being used to finance private investment in infrastructure.

In 2022, its use increased in both income groups, with North America and Western Europe still leading
the way.
• While most sustainable financing of private investment in infrastructure projects occurs • Sustainable financing continues to grow in prevalence in more regions, with its use
in HICs (89%), its use increased in both HICs and MLICs in 2022. Growth in MLICs was expanding in five out of eight regions in 2022. However, North America and Western
almost entirely driven by Brazil, while the US led growth in HICs. Nevertheless, sustainable Europe remain the clear leaders, accounting for 83% of all sustainable financing in 2022.
financing still represents a relatively small portion of the overall market (13% of the total
value of private investment in infrastructure).

Sustainable financing of private investment in infrastructure projects

(USD billion)

By income group By region

50 50

11%
40 40

30 30

USD billion
USD billion

89%
20 20

10 10

0 0
2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022
High-income countries Middle- and low-income countries
North America Asia Africa Eastern Europe

Western Europe Latin America Oceania Middle East

Source: Global Infrastructure Hub based on Realfin data.

Note: Includes only transactions for which instrument details are available.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 27

PRIVATE INVESTMENT IN INFRASTRUCTURE

Growth in private infrastructure investment in 2022 was driven by banks, who continued to increase
their role as financiers, as well as the public sector, whose share rose after years of decline.
• In 2022, financial service institutions – primarily commercial and investment banks – • Notably, the share of financing contributed by the public sector – which includes
increased their share of financing of private investment in infrastructure projects to 59%. government agencies and state-owned entities and banks – increased from 6% to 10%
This continued the trend of the past decade, which saw their share increase steadily from in 2022 after a period of decline since 2016. This may reflect the heavy involvement of
48% in 2013. state-owned banks such as the State Bank of India and Union Bank of India, in several
Indian highway public-private partnerships (PPPs) in 2022.
• While banks are the most prominent financier type in both HICs and MLICs, their
dominance is more pronounced in HICs, accounting for 66% of total financing in 2022,
compared with only 38% in MLICs. Projects in MLICs rely more on financing from public
institutions. E.g., in 2022, a third of projects in these countries involved an MDB or other
development institution as a financier, accounting for around 15% of total financing of
private investment in infrastructure.

Financing of private investment in infrastructure projects by financier

(USD billion)
400
Commercial bank/Investment bank/other financial services
350
Asset manager

300 Developers
MDB/other development bank
250 ECA
USD billion

200 Insurance company

Pension fund
150 Sovereign
Public sector
100
Utility
50 Infrastructure fund
Private (other)
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Global Infrastructure Hub based on Realfin data.

Notes: 1. ECA = Export Credit Agency, MDB = Multilateral Development Bank, Developers = Developer / Engineering procurement / Construction firm, Asset Manager = Asset managers, fund managers, and private equity firms. 2. ‘Other development
bank’ includes bilateral development institutions, national development banks, and other development institutions not included within MDBs. 3. ‘Other financial services’ includes institutions such as financial advisory firms and hedge funds, and excludes
insurance companies, pension funds, and asset managers, which are included as their own category for the purpose of this analysis. Analysis excludes transactions for which financier details are not available
The graph is based on an average of 82% of primary infrastructure transactions, given that data for financiers was not available for all the transactions.
INFRASTRUCTURE MONITOR 2023

Infrastructure
investment
performance
Infrastructure equity
performance
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 29

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

Key findings

• The performance of listed and unlisted infrastructure equities • Recent crises led to an increase in the risk premium
makes them an attractive investment opportunity, and their associated with infrastructure equities. Risk premiums have
different risk exposures can complement each other. gradually declined since 2021 but remain higher than 2019
levels.
• Recent shocks negatively affected returns on all equities
globally. Unlisted infrastructure equities were less affected, • Sharp interest rate hikes in 2022 and 2023 intensified
providing better downside protection than listed equities and downward pressure on the value of infrastructure equities.
exhibiting risk characteristics similar to those of bonds.
• Although infrastructure generally offers inflation protection to
• Unlisted infrastructure equities have consistently provided investors – with varying degrees of protection – all sectors are
higher risk-adjusted returns than listed equities. sensitive to changes in interest rates.
• Listed infrastructure equities are less common in emerging • By 2050, the physical risks posed by climate change could
markets and also perform better in developed markets. reduce the value of infrastructure assets by up to 27%.
• With their low risk and greater liquidity, listed infrastructure
equities have continued to attract investors, even though they
bring lower returns than unlisted equities.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 30

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

The performance of listed and unlisted infrastructure equities makes them an attractive investment
opportunity, and their different risk exposures can complement each other.
• Global infrastructure assets traded in equity markets were valued at USD10 trillion at • Unlisted markets accounted for 30% of the traded value of infrastructure assets.
the end of 2021, representing between 20% and 50% of global infrastructure assets, Infrastructure assets traded in unlisted markets are mainly schools, universities,
according to the Global Listed Infrastructure Organisation (GLIO). hospitals, government facilities, and telecommunications assets.
• Governments own the majority of other infrastructure assets, limiting the depth and • Listed markets are most mature in North America, which accounted for more than half
maturity of the infrastructure asset class. This results in higher liquidity risk for private the total value of infrastructure assets traded in listed markets. In other regions, unlisted
investors, who may be unable to secure attractive financing terms despite the large infrastructure equities are traded at volumes closer to listed infrastructure equities.
collateral provided by the asset.
• Listed markets accounted for 70% of the traded value of infrastructure assets.
The infrastructure assets traded in listed markets are mainly regulated utilities and
user-pays assets.

Global infrastructure assets traded in equity markets by region

(USD billion)

North America North America

29.6%

Europe
30.6% 18.4%
54.3%
Others 31.4% Unlisted Listed
Unlisted Listed
5.7% Asia Pacific
64.4%
29.2%
21.6% Others
9.8%
Asia Pacific
Europe

Source: GLIO (2023).​

Note: Assets traded in the past 10 years and available to private buyers are included in these estimates. Unlisted infrastructure assets are less likely to be traded.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 31

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

Recent shocks negatively affected returns on all equities globally. Unlisted infrastructure equities
were less affected, providing better downside protection than listed equities and exhibiting risk
characteristics similar to those of bonds.
Annualised returns by type of equity​
• Annual returns on global infrastructure equities – listed
(%)
and unlisted – declined from highly attractive levels in 2019
to nearly zero in 2020, due to COVID-19 lockdowns. The 27
average return in global listed markets overall also declined 23
2019 14
in 2020 but remained closer to 2019 levels. 16
• As the world recovered from the COVID-19 pandemic in 17
2021, so too did infrastructure equity performance. COVID-19 -2
lockdowns 2020 -2
• The economic crises of 2022 – including rapid inflation, 2
supply chain shocks, and the effects of the Russia-Ukraine 19
war – impacted global listed equities more severely than 6
2021 16
infrastructure equities, reversing the gains that global listed
6
equities made in 2021.
-18
• In contrast, although unlisted infrastructure equity returns Inflation, supply shocks, -2
2022 6
were negatively impacted by these economic crises, they Russia-Ukraine war
-2
remained positive.
10
• With inflationary pressures reducing in 2023, global listed -4
2023 YTD 6
equity market returns are recovering. Unlisted infrastructure
6
equities – often backed by inflation-indexed contracts –
continue to deliver positive returns.

Listed global equities Listed infrastructure equities Unlisted infrastructure equities Green unlisted
infrastructure equities

Source: MSCI and EDHECInfra (2023a) as of 30 September 2023.

Note: Annual returns are based on monthly gross returns data in a calendar year. The indices present aggregate performance levels. Global equity performance is measured by
the MSCI All Country World Index (MSCI ACWI). Listed infrastructure equity performance is measured by the MSCI ACWI Infrastructure Capped Index (MSCI ACWI-IC). Unlisted
infrastructure equity performance is measured by the EDHECInfra Infra300 equity index. Green unlisted infrastructure equity performance is measured by the EDHECInfra
InfraGreen index.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 32

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

Unlisted infrastructure equities have consistently provided higher risk-adjusted returns than listed
equities.
• Unlisted infrastructure equities have historically provided higher risk-adjusted returns • However, it is worth noting that the most recent returns on unlisted infrastructure equities
than other equities, including global listed equities. Although listed equities provide high in the three years preceding September 2023 increased to 11.7%. This is likely a result
returns, their higher risk reduces their risk-adjusted returns. of telecommunications and social infrastructure projects performing well during the
COVID-19 crisis. These projects comprise a sizeable share of unlisted infrastructure
• The lower risk of infrastructure equities (listed and unlisted) has meant stable returns for
assets.
investors. In recent years, investors wanting to reduce their portfolio risk have sharpened
their focus on the infrastructure asset class, making the market more competitive and • Green unlisted infrastructure equities have become an attractive option for investors, with
driving up prices. average returns and risk-adjusted returns similar to those of unlisted equities over the
10-year period preceding June 2023. In recent years, however, returns and risk-adjusted
• Annual returns on unlisted infrastructure equities remain higher than returns on listed
returns on green unlisted infrastructure equities reduced. An increase in demand, driven
equities but fell from 11.5% over the last 10 years to 9.5% over the five years preceding
by the performance of these assets and the need to meet climate change commitments,
June 2023.
may have increased competition and therefore reduced returns.

Annualised returns by type of equity​ Annualised risk by type of equity Risk-adjusted return by type of equity ​
(%) (%) (Sharpe ratio)

7.4 17.1 0.4

3.4 14.7 0.2
3-year 3-year 3-year

Sharpe Ratio (<1: unacceptable;

11.7 11.4 1.0

=2: very good; =3: excellent)

>=1: acceptable to good;
6.9 13.0 0.5

7.0 18.1 0.4

2.8 15.7 0.1
5-year 9.5
5-year 11.0
5-year 0.9
8.9 11.5 0.8

8.1 14.5 0.5

3.6 12.9 0.3
10-year 10-year 10-year
11.5 10.9 1.1
12.0 11.3 1.1

Listed global equities Listed infrastructure equities Unlisted infrastructure equities Green unlisted infrastructure equities

Source: MSCI and EDHECInfra (2023a) as of 30 September 2023.

Note: Risk-adjusted return is measured by the Sharpe ratio, which is the ratio of excess returns to the standard deviation of returns, where excess return is total return minus risk-free return. These estimates are based on gross returns regardless of fees. Fees to invest in the unlisted
infrastructure asset class are higher than fees to invest in listed equities.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 33

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

Unlisted infrastructure equities provided better downside protection than listed equities and exhibited
risk characteristics similar to those of bonds.
Total return performance metrics: government bonds, corporate bonds, unlisted Infrastructure equities, listed equities, 2000–2022​
Closest value to the unlisted infrastructure equities values is highlighted in yellow.​

Unlisted
Metric What does it measure? Government bonds Corporate bonds infrastructure Listed equities
equities

Annualised risk Volatility of returns 5.09%​ 6.12%​ 8.26%​ 14.09%​

Skewness Deviation from symmetric normal distribution -0.01​ -0.66​ -0.57​ -0.69​

Kurtosis How often outliers occur 2.91​ 5.24​ 3.27​ 4.77​

Average drawdown Average drop from peak value until a new peak is reached 0.03​ 0.03​ 0.05​ 0.07​

Worst drawdown Maximum drop from peak value until a new peak is reached 0.12​ 0.16​ 0.15​ 0.47​

Average drawdown length Length of any peak-to-peak period 6.24​ 6.32​ 6.23​ 8.81​

Average drawdown recovery Extent of recovery from one peak to another 3.36​ 2.88​ 3.54​ 5.30​

Average of the worst 5% of drawdowns over a given time period using

Conditional drawdown (5%) 0.05​ 0.06​ 0.11​ 0.17​
the average and maximum drawdown as boundaries

Source: EDHECInfra (2022a).​

Note: Monthly local currency total returns data was used for estimation. Reference benchmarks for listed equities, government bonds, and corporate bonds were built as representative proxies covering the geographical composition of infra300 index, the EDHECInfra index for unlisted
infrastructure equity.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 34

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

Listed infrastructure equities are less common in emerging markets and perform better in developed
markets.
• The annualised 10-year return on unlisted infrastructure equities in emerging markets • Listed infrastructure equities are less common in emerging markets and their
(15%) was higher than that in developed markets (12%). performance was also significantly worse than that of unlisted infrastructure equities.
• However, unlisted infrastructure equity risks are higher, and so the annualised 10-year
risk-adjusted return (measured by the Sharpe ratio) is lower in emerging markets (0.7)
than in developed markets (1.1).

Annualised 10-year return by region and type of equity​ Annualised 10-year risk-adjusted return by region and type of equity​
​(%) (Sharpe ratio)​

4 0.3

Sharpe Ratio (<1: unacceptable;

World World

=2: very good; =3: excellent)

>=1: acceptable to good;
12 1.1

4 0.3
Developed markets Developed markets
12 1.0

Emerging markets Emerging markets

15 0.7

Listed infrastructure equities Unlisted infrastructure equities

Source: MSCI and EDHECInfra (2023a) as of 30 September 2023. Source: MSCI and EDHECInfra (2023a) as of 30 September 2023. ​
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 35

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE EQUITY PERFORMANCE

With their low risk and greater liquidity, listed infrastructure equities have continued to attract
investors, even though they bring lower returns than unlisted equities.
Graph Key factors that drive return of listed infrastructure equities
(weightage)
• Lower risk, i.e. lower volatility in returns, is the factor that most drives the attractiveness
of listed infrastructure equities across all markets globally. Low risk Dividend yield Momentum Value Quality Low size
(Lower volatility) (Cash flow paid out) (Rising stock) (Relatively (Sound balance (Smaller companies)
• In developed markets, dividend yield is also a critical factor. 1.0
inexpensive stocks) sheet)

• Higher growth expectations in emerging markets, indicated by the greater weight of 0.9
the momentum factor, support higher price-to-earnings ratios for listed infrastructure 0.8
equities. 0.7 0.7

Table
• In emerging markets, the price-to-book-value ratio for infrastructure equities was higher
than that for other equities. This was not the case in developed markets.
0.3
Key factors explaining the value of listed equities by type of market 0.2
0.1 0.1
Dividend ​yield Price to earnings Price to future Price to book
(%)​ ratio​ earnings ratio​ value ratio​ 0.0
Listed equities in developed markets -0.1 -0.1 -0.1 -0.1
-0.2 -0.2
All sectors​ 2.1%​ 19.5​ 16.1​ 2.9​

Infrastructure​ 4.7%​ 15.3​ 12.6​ 1.8​ -0.4 -0.4

Listed equities in emerging markets

Global markets Developed markets Emerging markets
All sectors​ 3.1%​ 14.1​ 11.6​ 1.6​

Infrastructure​ 3.3%​ 26.2​ 13.8​ 1.8​

Source: MSCI (2023).​
Note: Neutral line = 0 represents factor weights in the global equity universe determined by the MSCI Investable Market Index (IMI). Weight
is the degree to which a factor is a driver of risk and return of listed infrastructure equities relative to the global equity universe. ‘Overweight’
Source: MSCI (2023) as of September 2023. means that the factor is more favourable for listed infrastructure equities relative to listed global equities. ‘Underweight’ means that the factor
is less favourable for listed infrastructure equities relative to listed global equities. Research identifies these factors as the key drivers of risk
and return, which are measured using 16 metrics. The data estimates depict factor exposure relative to MSCI IMI based on standardised
values from a cross-sectional regression in the MSCI Barra Global Equity Factor Model. MSCI data are from January 1999 to 30 June 2023.
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Recent crises led to an increase in risk premiums associated with infrastructure equities. Risk premiums
have gradually declined since 2021 but remain higher than 2019 levels.
Risk premium of unlisted infrastructure equities
• The risk premium impacts asset valuation and private investor (basis points)
demand. The COVID-19 pandemic increased the risk premium
of unlisted infrastructure equities from 665 basis points in 2019 COVID-19 pandemic
800 788
to 770 basis points in 2021 – a level last seen in 2011. The Inflation, Russia-Ukraine war
771 770
heightened uncertainty regarding demand for infrastructure
services and the expected trajectory of the economy increased 750
750 740
the risk premium investors demanded for infrastructure equity 725
722
investments.
• As the world recovered from the COVID-19 pandemic, the risk 600
premium on infrastructure equities began to decline. However,
665
it remains above the 2019 level (pre-pandemic). Since 2022, the
valuation of infrastructure equities has been impacted by rapid 648
650 634 638
interest rate hikes, which resulted from economic shocks like
rising inflation and geopolitical conflicts, and associated supply 615
611
chain disruptions. 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
September

Source: EDHECInfra (2023a) as of 30 September 2023.

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Sharp interest rate hikes in 2022 and 2023 intensified downward pressure on the value of
infrastructure equities.
• The net value of an infrastructure equity can be estimated using a discounted dividend Average change in net asset value of global infrastructure​equities due to increase in:
model in which dividend forecasts positively impact valuations. A discount factor – a
combination of risk premium and interest rates – negatively impacts valuations.
• A rising risk premium during the COVID-19 pandemic negatively impacted the net value of 2.1
infrastructure equities. The net impact on value of an infrastructure equity due to increase
Dividend
in equity risk premium averaged -6.2% per year during 2019 to 2022. As the risk premium forecast
2.5
declined in 2022, the negative impact reduced to -1.5% in 2022.
3.3
• However, overall recovery of the value of infrastructure equities has been hampered by
sharp interest rate hikes. The negative impact of the rate hikes on the net value of an
infrastructure equity increased to -6.3% in 2022, a sharp jump from -2.6% average impact -6.3

% of variation
over the three-year period, 2019–2022. Interest
rates -2.6
• The resilient cash flows of infrastructure equities help in maintaining stable dividend
1.6
payouts. This resilience arises from contractual inflation indexation and/or from the
intrinsically essential nature of infrastructure assets i.e. demand for infrastructure is not
significantly impacted even when prices increase. -1.5
Equity risk
• Inflation shocks and recession expectations in 2022 had a marginal negative impact
premium -6.2
on dividend forecasts. These forecasts continued to positively increase the value of
infrastructure equities at levels similar to previous years. Changes in dividend forecasts -8.3
increased the net value of infrastructure equities by an annual average of 2.5% in the
three years preceding 2022, declining to 2.1% in 2022.

Last one-year average Last three-year average Last five-year average

Source: EDHECInfra (2022a). Based on InfraMetrics 2022 data.

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Although infrastructure generally offers inflation protection to investors – with varying degrees of
protection – all sectors are sensitive to changes in interest rates.
Annualised 10-year risk-adjusted return for Average interest rate sensitivity of
unlisted infrastructure equities by sector​ unlisted infrastructure equity value by sector
(Sharpe ratio) (Five-year average, 2017–2022) ​

Non-renewable 7.9
Sharpe Ratio (<1: unacceptable;

Transport 1.0
=2: very good; =3: excellent)

power generation

% change in interest rates

>=1: acceptable to good;

Change in the price for a

Renewable 8.7
Renewables 0.9 power generation
Social infrastructure 9.1

Utilities 0.9
Network utilities 11.1

Social 0.7
Transport 11.3

Source: EDHECInfra (2023a) as of September 2023. Source: ARES (2022).​

• Infrastructure assets can hedge against inflation shocks when their contracts are indexed • Contracted infrastructure models are often used in power generation projects, where
to the consumer price index (CPI) or other related metrics. Although they both move in revenues increase with inflation, so they are less sensitive to shocks.
the same direction, interest rate changes usually lag inflation.
• Merchant infrastructure models are often used in the transport sector and – compared to
• The sensitivity of infrastructure equity prices to changes in interest rates varies by other sectors – are usually more exposed to fluctuations in demand in response to price
infrastructure sector. increases.
• Data for unlisted infrastructure equities show that the transport sector offers the highest • Although some transport services may have more flexibility than others to increase
risk-adjusted returns, and that it is also the most sensitive to interest rate changes. The their prices in response to inflation, demand will be driven by how essential consumers
renewables sector also offers good risk-adjusted returns and exhibits relatively lower consider services to be.
sensitivity to interest rate changes.
• Infrastructure equities in the transport sector are more sensitive to inflation and interest
• The sensitivity of certain infrastructure assets to changes in inflation and interest rates rate rises than in other sectors because the short-term impact on revenues is uncertain.
reflects their business model. However, the transport sector has historically yielded the highest annualised 10-year risk-
adjusted returns, suggesting that revenues recover in the long-term.
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By 2050, the physical risks posed by climate change could reduce the value of infrastructure assets
by up to 27%.
• Climate change poses a significant threat to infrastructure. Rising sea levels, extreme • Infrastructure investors could see their portfolios reduce in value by an average of 7% by
weather events, and increased temperatures can all contribute to the deterioration of 2050. In a worst-case scenario, the value of portfolios could reduce to less than half of
assets. their current values.
• Using currently available scenarios, the potential impact of climate change on • Most infrastructure investors with direct stakes in assets have less than 20 investments
infrastructure is significant. By 2050, the net value of infrastructure assets is expected to in their total portfolio. For these investors, the concentration of physical risk is high. Less
reduce by an average of 4.4%, and – in a worst-case scenario – by 26.7%. diversification by holding a larger proportion of transport investments, which have higher
potential devaluation (-10.9%), will result in higher portfolio losses. Even if the average
• Negative impacts are expected across all infrastructure sectors. Transport assets are
increase in global temperatures by 2050 stays below 20C, portfolio losses associated
likely to be the most severely impacted, losing almost all (97.8%) of their value in a worst-
with the physical risks of climate change could average 3% and the loss could be 27% in
case scenario. We expect that more value will be depleted in developed markets due to
the worst case.
the higher value of assets in those markets.

Potential infrastructure losses due to physical risks of Potential investor portfolio value loss due to physical risks of
climate change by scenario by 2050 in the current policy scenario climate change by scenario by 2050​
(% of net asset value loss by type of infrastructure asset) (% of value loss)

-4.4 -3
Average asset -26.9 -4.4 Below 2°C -3
Average asset -26.9 Below 2°C -27
-1.5 -27
Power generation -7.2 -1.5 -7
Power generation Current policy
-7.2 Current policy -54 -7
-10.9 scenario
Transport -10.9 scenario -54
-97.8
Transport -97.8
-5.4
Network utilities -26.1 -5.4
Average Maximum
Network utilities -26.1 Average Maximum
-2.4
Social infrastructure -13.1 -2.4
Social infrastructure -13.1
-3.7
Data infrastructure -5.7 -3.7
Data infrastructure -5.7

Average Maximum
Average Maximum
Source: EDHECInfra (2023b). ​
Note: The analysis is based on a representative sample of 700+ companies for which asset-level climate risk estimates are available in the EDHECInfra InfraMetrics platform. Portfolio loss was estimated by creating thousands of random portfolios using hundreds of assets for
which net asset value loss was estimated.
INFRASTRUCTURE MONITOR 2023

Infrastructure
investment
performance
Infrastructure debt
performance
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INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

Key findings

• Default rates on infrastructure loans are lower than non- • Default rates are on a declining trend for infrastructure loans
infrastructure loans, and as they continue to improve, the in economic infrastructure subsectors but are on an increasing
disparity between infrastructure and non-infrastructure loan trend for loans in the social infrastructure subsector.
default rates continues to widen.
• In 2021, default rates declined across all infrastructure
• Considering lower default and higher recovery rates, average subsectors.
expected loss on infrastructure loans is just a quarter of
• Almost all infrastructure subsector loans have higher recovery
average expected loss on non-infrastructure loans.
rates and lower expected losses than non-infrastructure debt.
• Infrastructure loan default and recovery rates are strong in all Energy has a particularly high recovery rate.
countries, regardless of income level.
• Green energy projects have a significantly lower default rate
• Default rates on infrastructure loans are on a declining trend than conventional energy projects.
in most regions – Eastern Europe and Latin America are the
• Renewables are increasingly being supported by the export
exceptions.
credit and investment insurance industry, and they have strong
• In 2021, default rates declined across all regions. recovery potential.
• Despite disparities in default rates, all regions exhibit • Still in all regions except Europe, recovery support for non-
higher recovery rates and lower expected losses than non- renewable energy exceeds renewable energy.
infrastructure debt.
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Default rates on infrastructure loans are lower than non-infrastructure loans, and as they continue
to improve, the disparity between infrastructure and non-infrastructure loan default rates continues
to widen.
• In 2021, the average 20-year cumulative default rate (CDR) for infrastructure continued to • Infrastructure debt performance has been improving over time because newer
decline despite the ongoing shocks of the COVID-19 pandemic. In contrast, the CDR for infrastructure debt is reaching investment grade faster than older infrastructure debt. This
non-infrastructure projects increased. has been particularly true in the last decade. Infrastructure loans that originated from
2010 onward reached investment grade three years sooner than infrastructure loans that
• Infrastructure debt typically reaches investment grade more quickly than non-
originated from 2000 onward. As a result, the 20-year CDR reduces from 3.5% to 1.8%
infrastructure debt. An examination of loans that originated from 2010 onward shows
when the loan origination year cut-off is shifted from 2000 to 2010.
that infrastructure debt reached investment grade eight years earlier on average than
non-infrastructure debt.
• While government support for infrastructure projects during the COVID-19 pandemic may
have helped reduce infrastructure loan default rates, they had been trending down for
some time.
20-year cumulative default rate by sector 20-year cumulative default rate by sector and origination year
(%)
10 20%
18% B Ba3 Ba2

16% Ba1
8

Cumulative default rate (%)

Cumulative default rate (%)

14%
Non-investment grade
6 12%
10% Baa3
8.9% 8.6% 1990–2021
8.2%
4 8%
2000–2021 Baa2
6% Baa1
5.4% 2010–2021 Investment grade
5.0% 1990–2021
4.5% 4% A
2
2000–2021
2% Aa
2010–2021
0 0% Aaa
Non-infrastructure Infrastructure 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years since debt organisation
1983–2019 1983–2020 1983–2021
Non-infrastructure Infrastructure

Source: Moody’s (2023a). Data as of 2021. Source: Moody’s (2023a). Data as of 2021.
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INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

Considering lower default and higher recovery rates, average expected loss on infrastructure
loans is just a quarter of average expected loss on non-infrastructure loans.
• The superior performance of infrastructure loans is attributable to the combination of • For infrastructure loans that originated from 1983 to 2021, the 20-year average expected
lower default rates and more robust recovery rates. When an infrastructure loan defaults, loss after default was 0.7%, while that of non-infrastructure loans was 2.7%.
the average recovery rate is typically high.
• For infrastructure loans that originated from 1983 to 2021, the global average recovery
rate was 83.8% – significantly higher than the 68.2% average recovery rate of non-
infrastructure loans.

Average recovery rates Average 20-year expected loss

(% of total loan value, 1983–2021) (% of total loan value, 1983–2021)

Expected loss (%) = Default rate (%) Loss given default rate (%)
X
Infrastructure 83.8 (Over 20 years) (Cumulative over 20 years) (1 - Recovery rate)

Non-infrastructure 68.2 Infrastructure 0.7 4.5 16.2 (= 1-83.8%)

Non-infrastructure 2.7 8.6 31.8 (= 1-68.2%)

Source: Moody’s (2023a). Data as of 2021. Source: Moody’s (2023a). Data as of 2021.
Note: Expected loss is the proportion of debt value expected to be lost from potential infrastructure debt defaults.
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Infrastructure loan default and recovery rates are strong in all countries, regardless of income level.

• The 20-year CDR for infrastructure loans fell in high-, middle-, and low-income countries brought about a reduction in average default risk on private infrastructure loans.
in 2021. Private investors seek low-risk projects to avoid the potential large losses associated
with large infrastructure projects.
• In high-income countries, the rate dropped from 5.2% in 2019 to 4.3% in 2021.
- Meanwhile, banking regulations – especially the Basel III reforms introduced in
• In middle- and low-income countries, the rate dropped from 7.0% in 2019 to 5.9% in
2017 – apply higher than actual performance risk weights on infrastructure projects,
2021.
meaning that debt financing from banks tends to flow to lower-risk projects.
• This decline may be attributable to one or more of these causes:
• Although default risk is slightly higher in middle- and low-income countries, recovery
- Government support during the COVID-19 pandemic may have helped save rates are similar across countries. The average recovery rate on defaulted infrastructure
infrastructure projects from default. loans remained stable at around 84% in both income groups.
- The increasing maturity and sophistication of public-private partnerships (PPPs) for • For infrastructure loans, the average expected loss after default was 0.7% in high-
infrastructure development should lead to declining default rates. income countries and 0.9% in middle- and low-income countries over a 20-year loan
tenure. Widespread use of credit-risk mitigation instruments and development finance is
- The heightened risk aversion of private investors and the banking sector may have
also likely to have supported higher recovery rates in middle- and low-income countries.

20-year cumulative default rate by income group Average recovery rate by income group Average 20-year expected loss by income group
(%) (% of total loan value, 1983–2021) (% of total loan value, 1983–2021)

Origination years: 1983–2019 1983–2020 1983–2021

Global 5.4 5.0 4.5 Global 83.8 Global 0.7

High-income 5.2 4.8 ↆ 4.3 ↆ High-income 83.8 High-income 0.7

Middle- and low-income 84.0 Middle- and low-income 0.9

Middle- and low-income 7.0 6.5 ↆ 5.9 ↆ

Source: Moody’s (2023a). Data as of 2021.

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Default rates on infrastructure loans are on a declining trend in most regions – Eastern Europe and
Latin America are the exceptions.
• Eastern Europe and Latin America have the highest default rates on infrastructure loans • All other regions have shown an appreciable reduction in default rates.
globally, and rates in both regions worsened last decade (2010–2020).
• Oceania has shown the most remarkable reduction in default rates since 2010. The
- CDR generally spikes during economic or financial crises that severely impact 20-year CDR reduced from over 9.0% for loans originating before 2010 to 2.3% for loans
government balances. originating after 2010. Experts indicate that these markets have evolved to rely on more
conservative forecasts for infrastructure projects.
- In the 2010s, the default rate in Eastern Europe more than doubled after foreign capital
inflows – which the region heavily relied on – collapsed as a result of the 2007–2008 • In North America and Western Europe, CDRs have almost halved since 2010, aided by the
Global Financial Crisis (GFC) and the eurozone crisis (EIB, 2017). However, it is economic recovery after the 2007–2008 GFC.
important to note that the sample size in Eastern Europe is small and may suffer from
• Asia had high default rates for loans originating before 2000, before the 1997 Asian
selection bias, given the banks contributing the data. It is also notable that recovery
financial crisis. CDR has reduced significantly since the 2000s.
rates on defaulted infrastructure loans were close to 100%, which reduced losses to
below the global average. • The Middle East's default rates have dropped to zero. There has been no default since
2010, probably as a result of strong support for infrastructure development by creditworthy
- Latin America’s debt crisis in the 1980s and banking crisis in the 1990s may have
governments.
caused its high default rates prior to the 2000s. The banking crisis was mainly caused
by a combination of macroeconomic imbalances, incomplete financial liberalisation, • Africa’s default rates have hovered around 1% for decades. Projects in the region that gain
and lack of adequate bank supervision. As the crisis receded, 20-year CDR declined private sector capital typically have strong support from development finance institutions
significantly from 10.1% for loans originating 1983–2021, to 5.9% for loans originating (DFIs) and a low risk profile.
from 2000 onward. However, for loans originating from 2010 onward, CDR increased
again to 6.7%.
20-year cumulative default rate by origination year and region
(%)

25.4 1990–2021 2000–2021 2010–2021

12.2
11.2
10.1
9.2 9.1

5.9 6.7
5.1 4.8
3.4 3.6 3.3
2.3 1.7 1.5 2.0 1.9
1.1 0.8 1.1 1.1 0.9
0.0
Eastern Europe Latin America Oceania North America Western Europe Asia Middle East Africa
Source: Moody’s (2023a). Data as of 2021.
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In 2021, default rates declined across all regions.

• The global average CDR for infrastructure loans declined in 2020, but this decline was 20-year cumulative default rates by origination year and region
driven by Asia, North America, and Western Europe – which have more than 80% of total (%)
infrastructure loans.
• CDRs actually increased in 2020 in Africa, Eastern Europe, Latin America, the Middle Loan origination years: 1983–2019 1983–2020 1983–2021
East, and Oceania. The increase was most marked in Oceania, which implemented
very strict measures to stop the spread of COVID-19. The Middle East had the second Infrastructure 5.4 5.0 ↆ 4.5 ↆ
highest increase in default rates. It also implemented strict pandemic containment
Africa 1.1 1.8 1.1 ↆ
ↆ
measures in 2020 (OECD, 2020).
• 2021 was undisputedly the year of default rate recovery across all regions. In several Middle East 1.2 2.2
ↆ
2.0 ↆ
regions, average default rates in 2021 were even lower than in 2019. These results
may be attributable to government support of infrastructure projects. If this support Western Europe 4.6 4.0 ↆ 3.6 ↆ
is offered, regardless of the market risk that is contractually allocated to the private
sector, even projects positioned at the higher end of the risk spectrum may become less Asia 5.9 5.2 ↆ 4.7 ↆ
susceptible to default.
North America 6.8 6.6 ↆ 5.4 ↆ

Oceania 7.3 10.1

ↆ
9.2 ↆ

Latin America 10.3 10.5 10.1 ↆ

ↆ

Eastern Europe 11.8 11.8 11.2 ↆ

Source: Moody’s (2023a). Data as of 2021.

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Despite disparities in default rates, all regions exhibit higher recovery rates and lower expected
losses than non-infrastructure debt.
• Infrastructure loans that originated from 1983 to 2021 have an average recovery rate of • The average expected loss after default over 20 years is lower than that for non-
83.8% globally. infrastructure project loans at 2.7% for 2021. Nonetheless, there are some disparities
among income groups and regions. Most regions have extremely low levels of average
• During this period, infrastructure loans in the Middle East had recovery rates of 100%,
expected loss on infrastructure loans at less than 1% over the loan origination period
while those in Eastern Europe and Asia were 98% and 88%, respectively.
1983–2021. Latin America has the highest default rates and the lowest recovery rates,
• Oceania and Latin America had average recovery rates of nearly 80%. which drove Latin American expected losses to high levels at 1.02% in its high-income
countries and 2.8% in its middle- and low-income countries. High-income countries in
• In all regions, infrastructure loan recovery rates are higher than the average global
Oceania also showed above average expected losses at 1.79%.
recovery rate for non-infrastructure loans, which was 68.2% for loans that originated
from 1983 to 2021.

Average recovery rate by region Average 20-year expected loss by income group
(% of total loan value, 1983–2021) (% of total loan value, 1983–2021)

High-income countries Middle- and low-income countries

Africa Not available Africa Not available

Asia 88 Asia 0.01 Asia 0.89

Eastern Europe 98 Eastern Europe 0.17 Eastern Europe 0.30

Latin America 79 Latin America 1.02 Latin America 2.80

Middle East 100 Middle East 0.00 Middle East 0.00

North America 83 North America 0.96 North America 0.59

Oceania 80 Oceania 1.79

Western Europe 84 Western Europe 0.58

Source: Moody’s (2023a). Data as of 2021.

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Default rates are on a declining trend for infrastructure loans in economic infrastructure subsectors
but are on an increasing trend for loans in the social infrastructure subsector.
• Default rates decreased most substantially in the telecommunication and transport 20-year cumulative default rate by origination year and sector
subsectors. (%)

- Default rates on infrastructure loans in telecommunication have dropped drastically 9.8

over time. When the subsector was liberalised and technology started to advance
quickly in the 1990s, private investors were highly optimistic and invested heavily into
a fast-evolving market. Since then, the subsector has matured significantly, the policy 7.9 7.8
and regulatory environment has improved, and demand has grown rapidly due to
innovative product offerings. Since the 2010s, telecommunication project loans have
had the lowest default rate in the infrastructure sector.
- Privatisation has been a strong trend in transport, particularly since the 2010s. With
more mature markets and more mature regulatory and contractual arrangements, the 4.7

subsector has seen its 20-year CDR fall significantly, from more than 7.8% for loans 4.1

originating before the 2010s to 1.8% for loans originating after the 2010s. 3.4 3.4
2.7
• Default rates on social infrastructure loans crept up to 1.5% for loans that originated from 2.5
2.0
2010 onward, compared to rates that had been as low as 0.9% historically. 1.8
1.5
- Social infrastructure loans have historically had the lowest default rate at 0.9%. This 0.8 0.9 0.9
low rate may be attributable to the revenue stability conferred by availability payments,
which are more common in this subsector, and to public sector participation in social Telecom Transport Energy Water Social
infrastructure, which can help increase guarantees and reduce defaults. Nonetheless,
within time the default rate of infrastructure loans within social sector has increased 1990–2021 2000–2021 2010–2021
up to 1.5% for those loans that originated from 2010 onwards – still one of the lowest
rate across sectors.
Source: Moody’s (2023a). Data as of 2021.
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INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

In 2021, default rates declined across all infrastructure subsectors.

• Default rates declined for all infrastructure subsectors in 2021. Strong government 20-year cumulative default rates by origination year, sector, and income group
support to prevent defaults during the COVID-19 pandemic was instrumental in this. (%)

• In 2021, the telecommunications subsector showed the most significant reduction in 20-
Loan origination years: 1983–2019 1983–2020 1983–2021
year CDR in both high-income and middle- and low-income countries. This is attributable
to strong demand for telecommunication services during the COVID-19 lockdowns. In High-income countries
high-income countries, the 20-year CDR average reduced from 9.8% in 2020 to 8.6% in
2021. In middle- and low-income countries, CDR reduced from 14.0% in 2020 to 12.9% in Social 0.9 0.9 0.8 ↆ
2021.
Water 3.4 3.1 ↆ 2.8 ↆ
• In high-income countries, transport showed the biggest reduction in default rates, albeit
from a high level of 10.2% in 2019 to 8.4% in 2021. This CDR of 8.4% is still higher than Energy 5.8 5.3 ↆ 4.7 ↆ
the CDR of 5.0% on transport infrastructure loans in middle- and low-income countries.
Transport 10.2 9.5 ↆ 8.4 ↆ
The historical high default rates in the transport subsector were due to high demand
risk in the contractual arrangements for transport infrastructure projects, especially in Telecom 9.1 9.8
ↆ
8.6 ↆ
high-income countries. During the pandemic, government support to mitigate the demand
shocks of pandemic-related lockdowns prevented defaults. Middle- and low-income countries
• The social and water subsectors in high-income countries have historically been the least Transport 6.5 5.4 ↆ 5.0 ↆ
risky, as they are underpinned by mature markets and enabling environments, strong
government support, and higher consumer income levels. Recent challenges encountered Energy 6.1 6.1 5.3 ↆ
by water assets may impact this trend moving forward. In middle- and low-income
countries, where markets are less mature and there is more political pressure to make Social 9.0 5.9 ↆ 5.4 ↆ
services affordable to consumers, these subsectors are riskier.
Water 9.6 8.8 ↆ 8.0 ↆ
• The energy subsector saw an appreciable decline in default rates during the pandemic.
This could be due to the growing share of renewable energy projects in this subsector, as Telecom 14.4 14.0 ↆ 12.9 ↆ
those projects tend to have lower default rates than non-renewable energy projects.
Source: Moody’s (2023a). Data as of 2021.
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INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

Almost all infrastructure subsector loans have higher recovery rates and lower expected losses
than non-infrastructure debt. Energy has a particularly high recovery rate.
• Among infrastructure loans that originated from 1983 to 2021, telecommunication loans Infrastructure loans (1983–2021)
had the highest expected losses, due to this subsector’s historically high default rates and
lower recovery rates. With the drastic decline in default rates in the 2010s and exceptional Average recovery rate
demand growth for telecommunications services in the aftermath of COVID-19 (% of total loan value)
lockdowns, expected losses on telecommunications are expected to be much lower.
Infrastructure 83.8
• The transport subsector showed high expected losses at 1.7%. However, the significant
fall in 20-year CDR to more than 7.8% for loans originating before 2010s to 1.8% for Energy 89.3

loans originating after 2010s suggests that the expected losses can be lower on newer
Transport 78.8
infrastructure loans for the transport sector.
• Historically, social infrastructure loans have consistently had the lowest default rates. Water 75.7

Although they have also had the lowest recovery rates, their expected losses have been
Telecom 74.1
the lowest out of all infrastructure subsectors due to their low default levels.
• Energy infrastructure loans had the highest recovery rates following default. This drives Social 66.2

down the subsector’s expected losses to 0.5%, which is less than the average across all
other infrastructure subsectors.
20-year expected loss
(% of total loan value)

Infrastructure 0.7

Energy 0.5

Transport 1.7

Water 0.8

Telecom 2.6

Social 0.3

Source: Moody’s (2023a). Data as of 2021.

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INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

Green energy projects have a significantly lower default rate than conventional energy projects.

• Energy projects have a significantly high recovery rate. In particular, energy projects • Prior to 2010, the availability of green energy projects was quite limited, so the sample
that align with the green transition have a lower default rate than those that do not align mostly reflects conventional energy projects before 2010 and includes green energy
with the green transition. While sustainability may help with getting financial support, it projects from 2010 onwards. This may have played a significant role in reducing the
is not the main driver of the default or recovery rate. Other drivers include contractual default rate for energy investments.
arrangements, credit cycle phase, jurisdiction, industry, project-specific risks, country, and
• To illustrate this, when considering a 20-year CDR for energy projects from 1990 to
industry events, among others.
2021, the default rate was 4.7%. The default rate decreased substantially to 2% when we
• For instance, the 10-year average CDR for green energy projects was 1.7%, whilst it was narrowed our focus to projects exclusively within the period from 2010 to 2021.
6.0% for conventional (non-green) energy projects. This may be explained by several
• Globally, the average recovery rate for green energy projects is 78.3% – lower than the
factors including a lower marginal cost of production and strong appetite from users,
recovery rate for conventional energy projects (91.1%).
governments, and investors to buy electricity from green energy sources. Conversely,
the conventional energy industry is not only facing transition risks, but its marginal • This is consistent across both country income groups. In high-income countries, the
production costs have been impacted by volatility in prices of inputs like coal, natural gas, average recovery rate for green energy projects is 81.1%, and 91.6% for conventional
etc. energy projects. The gap is wider in middle- and low-income countries – where green
energy markets are still at a relatively early stage of maturity – with an average recovery
rate for green energy projects of 75%, and 90% for conventional energy projects.

10-year cumulative default rate by energy subsector and country group Average recovery rates by energy subsector and country group
(%, 1983–2020) (% of total loan value, 1983–2020)

1.7 78.3 Global

Green energy 1.8 Green energy 81.1 High-income

2.1 75.0 Middle- and low-income

6.0 91.1

Conventional energy 6.3 Conventional energy 91.6

6.8 90.0

Source: Moody’s (2023b).

Note: Estimates are based on Moody’s definition and methodology for default and recovery. Green energy includes renewable energy projects including solar, hydro, wind as well as other energy efficiency projects. High-income country group is proxied by European Economic Area
countries and OECD member states in this graph. Middle- and low-income country group follows the World Bank Group classification.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 52

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

Renewables are increasingly being supported by the export credit and investment insurance industry,
and they have strong recovery potential.

• Looking at performance across the global export credit and investment insurance • As the renewable energy sector has lower default risk than the non-renewable energy
industry, renewable energy projects have more potential for recovery compared to non- sector, its claims ratio (0.1%) is also lower than that of non-renewables (0.3%). Renewable
renewable energy projects. However, in developing economies, renewable energy markets energy’s 44% recovery rate is considerably higher than the recovery rate for non-
are still underdeveloped, and non-renewable energy markets are larger. renewable energy, which is only 5%.
• In 2021, new commitments for export credit insurance in the non-renewable energy
sector totaled USD16.8 billion, whilst new commitments in the renewables sector were
only USD8.0 billion. The new commitments for renewable energy projects in 2021
recorded the strongest growth so far, of 43%.

Export credit insurance market: Financial support by sector, 2021

New financial support commitments Growth % Claims paid to premiums earned ratio Recoveries to 3-years claims paid ratio
(USD billion) (2019‒2021) (%) (%)

Renewable 8 +43% 0.1 44.0

energy

Non-renewable 17 -20% 0.3 5.0

energy

Other infrastructure 17 -20% 0.6 7.0

Source: Berne Union (2022).

Note: Medium and long-term insurance, guarantee and lending for export credit, political risk insurance and other cross-border credit are included. New commitments: insurance/guarantee/loan/etc. commitments issued to support recovery.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 53

INFRASTRUCTURE INVESTMENT PERFORMANCE INFRASTRUCTURE DEBT PERFORMANCE

In all regions except Europe, the export credit and investment insurance industry’s support for
non-renewable energy still exceeds renewable energy.
• In all other regions except Europe, non-renewable energy projects recorded significantly • Climate goals and the renewable energy sector’s higher recovery potential is expected
higher levels of new export credit insurance commitments than renewable energy to increase coverage and availability of these supporting instruments in all regions in
projects. The differences vary between regions, with the biggest difference recorded in the near future. In Europe, renewable energy projects already have better recovery rates
the Middle East and North Africa (69.0% non-renewables vs. 4.8% renewables). (93.3%) than non-renewable energy projects (89.8%).
• East Asia Pacific and Sub-Saharan Africa recorded the smallest differences, and a large
uptick in new commitments for renewables in 2021.

Export credit insurance market: New financial support commitments by sector

(Share in total value of new financial support commitments, 2021)

17.6%
22.1%
35.7% 35.7%
47.8% 9.3%
60.5% 57.1%
45.6% 69.0% 3.6%
7.1%

27.8% 4.8%
9.3% 68.6%
60.7%
57.1% 4.8%
36.8% 38.1%
30.2% 24.3% 26.2%

Europe North America South Asia East Asia Pacific Middle East Subsaharan Russia and Latin America
and North Africa Africa Commonwealth and Caribbean
of Independent States

Non-renewable energy Renewable energy Other infrastructure

Source: Berne Union (2022)

Note: Medium and long-term insurance, guarantee and lending for export credit and political risk insurance are included.
INFRASTRUCTURE MONITOR 2023

Private capital
availability
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 55

PRIVATE CAPITAL AVAILABILITY

Key findings

• Although 2022 was a positive year for the infrastructure sector • 70% of the private capital raised by funds for infrastructure
with capital raised by funds reaching a record high, there was a investment targets lower-risk strategies.
notable downward shift in 2023, reflecting the dynamic nature
• 2023 saw a substantial decline in capital raised for
of the private capital landscape and its sensitivity to economic
infrastructure investments.
conditions and global events.
• Dry powder decreased in 2023, mainly due to the record low
• In 2022, for only the second time in a decade, infrastructure
level of funds raised and the recent surge in funds invested.
capital investment materially outpaced the infrastructure
capital raised. • In 2023, North America led the decrease in dry powder.

• Most of the private infrastructure capital raised and invested • In other regions, dry powder increased in the first half of 2023,
by funds has been concentrated in North America and Europe. reflecting persistently low levels of private capital mobilisation
and investment.
• Renewable energy was the most popular sector, accounting for
16% of the private infrastructure capital raised in 2022.
• Capital within the renewable sector mainly targets low-risk
investment opportunities, which are often classified as
secondary or brownfield investments rather than greenfield
investments.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 56

PRIVATE CAPITAL AVAILABILITY

Although 2022 was a positive year for the infrastructure sector with capital raised by funds reaching a
record high, there was a notable downward shift in 2023, reflecting the dynamic nature of the private
capital landscape and its sensitivity to economic conditions and global events.
• Prior to the COVID-19 pandemic, private capital raised by funds for all asset Annual private infrastructure capital raised by funds
classes showed consistent growth, before falling in 2020 and recovering in 2021. (USD billion, 2010-2022)
The inflation crisis in 2022 led to another fall across all asset classes.
• In line with this, private capital raised by funds for infrastructure experienced 1800 180
consistent growth before the COVID-19 pandemic. There was a temporary
1600 160
decline in 2020 with a strong recovery in 2021 – not only fully recovering from
1400 140
the previous drop but reaching a record level (USD144 billion).
1200 120

USD billion
USD billion
• However, in 2022, in contrast to the amount of private capital raised by funds
1000 100
for all other asset classes, funds raised for infrastructure increased sharply
800 80
to a record level (USD166 billion). During this period of elevated inflation,
infrastructure investments may have been attractive as a means of protection. 600 60
400 40
• Infrastructure accounted for around 8% of the total funds raised in the decade
preceding 2021. This share grew to 11% in 2022, during a period where multiple 200 20
economic shocks – rising inflation, geopolitical tensions, and a global energy 0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
crisis – increased investors’ risk aversion and preference for infrastructure as a
low-risk asset class. The boost in private capital allocation to infrastructure may
All asset classes Infrastructure asset class (right axis)
also be due to investor efforts and government plans to invest in sustainable
infrastructure, especially in developed economies.
Source: Preqin data as of 13 October 2023.
• Whilst sharp interest rate hikes have increased returns on private debt in 2023,
private debt is the only main asset class from which most private investors
expect to earn higher returns in 2024 and to which they intend to increase long-
term allocations. Core infrastructure is the other popular target among private
investors due to the inflation-indexation and stability of its cash flows. For all
other asset classes, rising interest rates, asset valuations, and commodity price
volatility are the main challenges impeding positive return expectations for next
year. (Preqin, 2023d).
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 57

PRIVATE CAPITAL AVAILABILITY

In 2022, for only the second time in a decade, infrastructure capital investment materially
outpaced the infrastructure capital raised.
• Over the last 10 years, the annual private capital raised for infrastructure generally • The positive trend in investment shows that although infrastructure is one of the
outpaced the private capital that was invested in infrastructure (except in 2017). top choices for hedging inflation risks, there was also an unprecedented shift within
infrastructure markets – suggesting that there were many new investment opportunities
• In 2022, for the first time, the private infrastructure capital that was invested by funds
available that year.
grew significantly and outpaced the growth in private infrastructure capital that was
raised by funds. Funds raised grew significantly in 2022 (15%), but the funds invested
grew by 64%.

Annual private infrastructure capital raised and invested by funds

(USD billion, 2010–2022)

Capital invested Capital raised

300

250

200
USD billion

150

100

50

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Preqin data as of 13 October 2023.

Note: Capital invested is measured by the annual capital called by the fund manager for investment in the infrastructure asset class.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 58

PRIVATE CAPITAL AVAILABILITY

Most of the private infrastructure capital raised and invested by funds has been concentrated in
North America and Europe.
Private infrastructure capital raised and invested by funds by region in 2022 • Historically, North America and Europe account for most of the private
(% of total) infrastructure capital raised and invested by funds.
• The capital raised has increased over time, and in 2022, was mostly from North
Capital raised America (53%), followed by Europe (38%).
• The amount of private infrastructure capital invested more than doubled after
2022 USD165 bn the COVID-19 pandemic, and in 2022, was mostly from Europe (41%) and North
America (37%).
3% 5% 38% 53%
• North America and Europe are concentrating more opportunities and less risk
compared to emerging markets and developing economies (EMDEs), where the
Capital invested challenges from recovering from the COVID-19 pandemic persist and economic
shocks are hitting harder. The levels of capital raised and invested in EMDEs have
not shown a significant change compared to pre-pandemic levels.
2022 USD258 bn
• In 2022, Europe took the lead and raised USD106 billion, almost tripling its pre-
3% 2% 14% 41% 37%
pandemic level of USD39 billion. This may be associated with the opportunities
raised by post-pandemic recovery plans and strong commitments to the climate
transition, which also generated a robust pipeline of infrastructure investment
North America Europe Asia opportunities, particularly in renewable energy assets.
Latin America Multiregion Others • In 2022, North America caught up, increasing funds raised to USD96 billion, more
than double its pre-pandemic level of USD46 billion. This boost may have been
intensified by recent US government announcements, such the Infrastructure
Investment and Jobs Act (2021) and the Inflation Reduction Act (2022), both of
Source: Preqin data as of 13 October 2023.
which opened up investment opportunities for the substantial pool of North
American capital.
• In a recent study, 80% of private investors listed the United States as a preferred
market for infrastructure investment, whilst 50% listed Western Europe as a
preferred market (Preqin 2023c).
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 59

PRIVATE CAPITAL AVAILABILITY

Renewable energy was the most popular sector, accounting for 16% of the private infrastructure
capital raised in 2022.
• Historically, most of the private capital invested by funds in Private infrastructure capital raised by funds, by sector
the infrastructure asset class is diversified across a mix of (USD billion, 2010–2022)
infrastructure sectors. 200
Diversified
• Diversification is a key reason cited by investors for allocating
funds toward infrastructure. Energy

• Other than the need to diversify, the availability of a pipeline of Renewable energy
operational infrastructure assets with no or low construction risk,
150 Social
and the potential return, dictate which infrastructure sectors fund
managers decide to invest in. Telecommunications
• In 2022, renewable energy was the most popular sector, with Transport
16% of the capital targeting this sector. The popularity of
renewable energy has increased over time, with private capital Utilities
raised by funds for this sector nearly doubling from USD15 billion 100 Waste Management
in 2019 to USD28 billion in 2022. Optimistic expectations of the
future of the renewable energy sector and the stable revenues
of utilities have encouraged investors to prioritise these sectors
during inflationary conditions.
• As the energy transition matures, the renewable energy sector 50
is expected to continue its evolution from a niche sector to a
mature sector targeted by mega funds.

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Source: Preqin data as of 9 October 2023.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 60

PRIVATE CAPITAL AVAILABILITY

The capital raised within the renewable sector mainly targets low-risk investment opportunities,
which are backed by business models with low demand and/or price risk.
• The renewable energy sector has shown remarkable and Renewable energy: private infrastructure capital raised by funds, shares by investment strategy
constant growth in fundraising during recent years. (%, 2010–2023)

• On average, from 2010 to 2023 (YTD), 82% of the annual private

Increasing risk
infrastructure capital raised by funds for renewables targeted
debt, core, and core+ as investment strategies, which typically
aim to invest in business models with low demand and/or price
risk.
• From 2019 to 2023 (YTD), the average share of total investment
driven by the value-added investment strategy remained low. This
strategy typically seeks opportunities featuring enhancements to
existing assets and business models with low demand and price
risk. In 2023 however, the value-added strategy featured more
prominently for renewable energy (increasing to 42% YTD).

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD
2023

Debt Core Core+ Value-added Opportunistic

Source: Preqin data as of 9 October 2023.

Note: Funds can be mapped to five infrastructure investment strategies according to their risk appetite. See the Glossary for a detailed definition of each strategy.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 61

PRIVATE CAPITAL AVAILABILITY

70% of the private capital raised by funds for infrastructure investment targets lower-risk strategies.

• From 2010 to 2022, on average, 70% of the private infrastructure capital raised by funds • Although private investors remain mostly equity providers to funds, providing lending
was invested according to core (26%) and core+ (32%) investment strategies, reflecting a facilities is a strategy that features in 11% of private capital raised.
preference for low-risk assets.
• The least popular strategy among funds is the opportunistic infrastructure investment
• On average, funds targeting secondary projects had the lowest share of dry powder strategy, which focuses on the potential future growth in asset value and not on recurrent
(11%), while greenfield projects had the highest share (45%). cash flows. This strategy is only followed by 9% of funds.
• The value-added investment strategy focuses on infrastructure assets that actively
pursue enhancements to boost usage or demand. This is the third most popular
investment strategy and is followed by 21% of funds. Funds that apply this strategy
typically target brownfield projects which, on average, have the second lowest share of
dry powder (12%).

Private infrastructure capital raised by investment strategy Dry powder by type of investment
(% of capital raised, 2010–2022) (% of cumulative private infrastructure capital)
Increasing risk

2023 YTD
2022
2021 Greenfield 45%
2020
2019
2018 Mixed 27%
2017
2016
2015 Brownfield 12%
2014
2013
2012 Secondary 11%
2011
2010

70%

Debt Core Core+ Value-added Opportunistic

Source: Preqin data as of 13 October 2023. Source: Preqin data as of 5 July 2023.
Note: Mixed covers funds investing in more than one project stage.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 62

PRIVATE CAPITAL AVAILABILITY

2023 saw a substantial decline in capital raised for infrastructure investments.

• In 2023, the fundraising environment for private infrastructure capital has been Private infrastructure capital raised by funds
more challenging than at any other point over the past decade. Funds raised in the (USD billion, 2010–2023)
first half of 2023 reached only USD15 billion, considerably less (-87%) than the level
raised in the first half of 2022. Not only was the strong growth from previous years Second half of the year
reversed in 2023, but the level of capital raised was the lowest in a decade. 166
First half of the year
• This sharp decline is a reversal of the record growth that was seen in 2021 and
144
2022, and potentially due to the deteriorating financial and macroeconomic 49
environment. Much of 2022’s infrastructure fundraising success can be attributed
to decisions that were made before the current market turmoil. Hopes are fading 119
that increases in inflation and interest rates are transitory, and this is putting 112
107
downward pressure on asset valuations. The proportion of investors that cite 81
interest rates as a key challenge for return generation increased from 12% in 2020
89 89
to 56% in 2022 (Preqin 2023a), and this is reflected in the 2023 data. 66 48

• In addition to economic conditions and their impact on asset valuations, there 73 64

are other key challenges. Limited Partners (LPs) are approaching, have reached, 45
61 54 117
or have exceeded their infrastructure allocation targets, and face competition for 34
48
assets, an unfavourable geopolitical landscape, and regulatory restrictions (Preqin 33
37
2023c). Political risks, such as government pressure to lower the prices charged 32 32 27
for infrastructure services are also higher during inflationary periods, e.g. some 63 63
27 53
18 18 45 43 19
countries introduced energy price caps in 2023 due to an affordability crisis. 39 35
28
21 July – YTD
14 14
• In more positive news, 58% of investors expect to increase their capital allocations 11 USD4.6 bn
to the infrastructure asset class in the longer term (Preqin 2023c). However, this 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Jan – June
will depend on the macroeconomic trajectory. So long as inflation remains high YTD USD15 bn

and monetary policy continues to tighten, investors are likely to remain cautious or
hesitant to invest.

Source: Preqin data as of 13 October 2023.

INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 63

PRIVATE CAPITAL AVAILABILITY

Dry powder decreased in 2023, mainly due to the record low level of funds raised and the
recent surge in funds invested.
• From 2010 to 2022, the cumulative total value of private infrastructure capital Cumulative private infrastructure capital by component
increased sevenfold from USD165 billion to USD1,144 billion. (USD billion, 2010–2023)

• Since 2010, the investment value component has grown ninefold, and since 2019, it Oct 2023:
USD318 bn
has nearly doubled. 1400
• The dry powder component also increased consistently from 2010 to 2022, due to 1,219
1200
the faster rate of capital raised compared to the rate of capital invested during the 1,144
previous decade.
1000 955 314 353
• As capital invested outpaced capital raised in 2021 and 2022, the investment
value component increased from 65% in 2019 to 73% in 2022, while the dry powder
800

USD billion
773 283
component decreased from 35% in 2019 to 27% in 2022. This suggests a new array of
available investment opportunities – also seen in transaction trends. 649
600 542 276
• Dry powder decreased in 2023 from USD353 billion at the start of the year to USD318 464
224
831 866
billion as of October 2023. This can be attributed to the reduced availability of 387 183
400 164
funds, mainly due to the record low levels of funds raised in 2023, and the recent 322 672
271 294 149 498
surge in funds invested. This has resulted in increased overall deployment while 223 105
200 209 103 425
165 105 359
simultaneously diminishing dry powder. 83 75
69 218 300
191 238
126 148 165
96
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
March

Dry powder Investment value

Source: Preqin data as of 13 October 2023.

Note: Capital committed is the sum of unallocated capital and portfolio returns, minus any disbursements to investors.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 64

PRIVATE CAPITAL AVAILABILITY

In 2023, North America led the decrease in dry powder.

• The global decline in dry powder in 2023 was mainly led by the decline in dry powder of • While large investment opportunities (such as airports) and recent US infrastructure
funds targeting North America. stimulus have strengthened the investment momentum, the fundraising momentum is
being negatively affected by the deteriorating macroeconomic environment, especially
• In North America, the decline in annual capital raised by funds from USD87.5 billion in
sharp interest rate hikes.
2022 to USD5.5 billion as of October 2023 was much sharper than the decline in annual
capital invested (USD98.1 billion in 2022 to USD36.9 billion as of March 2023). This • In Europe, the annual private infrastructure capital investments by funds doubled every
was driven by the extraordinary overall market growth in 2022 and by an investment year during the COVID-19 pandemic from USD38.4 billion in 2019 to USD111 billion in
momentum that was stronger than the fundraising momentum. 2022, driven by a heavy emphasis on accelerating the clean energy transition. In 2023,
due to deteriorating macroeconomic and geopolitical conditions, Europe suffered a sharp
fall in capital raised and in capital invested.

Annual private infrastructure capital raised and invested by funds, and cumulative dry powder, by region, 2010–2023

North America Europe

140 140
120 120
100 100
USD billion

USD billion
80 80
60 60
40 40
20 20
0 0
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 YTD

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023 YTD
Capital invested Capital raised Dry powder

Source: Preqin data as of 13 October 2023 for annual capital raised and dry powder, as of March 2023 for annual capital invested.
Note: The gaps in the charts represent regions and years for which data is currently unavailable.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 65

PRIVATE CAPITAL AVAILABILITY

In other regions, dry powder increased in the first half of 2023, reflecting persistently low levels of
private capital mobilisation and investment.
Annual private infrastructure capital raised and invested by funds, and cumulative dry powder, by region, 2010–2023

Asia Mulitregion Latin America

40
35 14 14
30 12 12
25 10 10
USD billion

USD billion
USD billion
20 8 8
15 6 6
10 4 4
5 2 2
0 0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD
Africa Australasia Middle East

3 2

USD billion
USD billion

6
USD billion

4 2 1
2 1
0 0 0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023 YTD
Capital invested Capital raised Dry powder

Source: Preqin data as of 13 October 2023 for annual capital raised and dry powder, as of March 2023 for annual capital invested.
Note: The gaps in the charts represent regions and years for which data is currently unavailable.
INFRASTRUCTURE MONITOR 2023

Appendix
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 67

APPENDIX GLOSSARY

Private investment in infrastructure

Financial close The transaction stage where all financing documentation has been signed, all conditions precedent have been satisfied or waived, and initial
drawdown is contractually possible.

Primary market Transactions including investment in greenfield and brownfield infrastructure, as well as in projects involving the privatisation of public sector
assets.

Private infrastructure investment Investment made by the private sector in infrastructure projects in primary markets (financed by private and public financiers). Investment
values represent commitments made at the financial close of investment and not executed investment. It includes both debt and equity
transactions.

Refinancing The replacement of an existing debt obligation with a debt obligation bearing new and different terms.

Secondary market Secondary market transactions include acquisitions, refinancing, securitisations, and financing for general corporate operations.

Securitisation Transaction in which a pool of assets is collateralised into one vehicle of loan products for sale.
INFRASTRUCTURE MONITOR 2023 GLOBAL INFRASTRUCTURE HUB | A G20 INITIATIVE | 68

APPENDIX GLOSSARY

Private investment in infrastructure

Income group classifications

High-income countries Åland Islands, Andorra, Aruba, Australia, Austria, Bahrain, Belgium, Bermuda, Bouvet Island, British Virgin Islands, Canada, Cayman Islands,
Chile, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Equatorial Guinea, Estonia, Falkland Islands, Faroe Islands, Finland, France, French
Guiana, French Polynesia, Germany, Gibraltar, Greece, Guadeloupe, Guam, Guyana, Hong Kong SAR, China, Hungary, Iceland, Ireland, Israel,
Italy, Japan, Korea, Kuwait, Liechtenstein, Luxembourg, Malta, Martinique, Monaco, Netherlands, New Zealand, Norway, Oman, Panama,
Poland, Portugal, Puerto Rico, Qatar, Romania, Saint Helena, San Marino, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Georgia
& The South Sandwich Islands, Spain, Svalbard and Jan Mayen Islands, Sweden, Switzerland, Taiwan, The Bahamas, Trinidad and Tobago,
Uruguay, United Arab Emirates, United Kingdom, United States, Vatican City.

Middle- and low-income countries Afghanistan, Albania, Algeria, Angola, Argentina, Armenia, Azerbaijan, Bangladesh, Belarus, Benin, Bhutan, Bolivia, Bosnia and Herzegovina,
Botswana, Brazil, Bulgaria, Burkina Faso, Burundi, Cabo Verde, Cambodia, Cameroon, Central African Republic, Chad, China, Colombia,
Comoros, Congo, Costa Rica, Côte d'Ivoire, Dem. Rep. Congo, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Eritrea, Eswatini,
Ethiopia, Fiji, Gabon, Georgia, Ghana, Guatemala, Guinea, Guinea-Bissau, Honduras, India, Indonesia, Iran, Iraq, Jamaica, Jordan, Kazakhstan,
Kenya, Lao PDR, Latvia, Lebanon, Lesotho, Liberia, Libya, Lithuania, Madagascar, Malawi, Malaysia, Maldives, Mali, Marshall Islands,
Mauritania, Mauritius, Mayotte, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, Niger,
Nigeria, North Macedonia, Pakistan, Palau, Papua New Guinea, Paraguay, Peru, Philippines, Russia, Rwanda, Sao Tome and Principe, Senegal,
Serbia, Seychelles, Sierra Leone, Solomon Islands, Somalia, South Africa, South Sudan, Sri Lanka, Sudan, Suriname, Syrian Arab Republic,
Tanzania, Thailand, The Gambia, Timor-Leste, Togo, Tunisia, Türkiye, Uganda, Ukraine, Uzbekistan, Vanuatu, Venezuela, Vietnam, West Bank
and Gaza, Western Sahara, Yemen, Zambia, Zimbabwe.
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APPENDIX GLOSSARY

Private investment in infrastructure

Sector classifications

Energy storage, transmission, and Investment in energy storage, transmission, and heat networks.
distribution

Non-renewables energy generation Investment in coal-, gas- and oil-fired power plants, nuclear, and co-generation power.

Renewables energy generation Investment in geothermal, hydro, marine, offshore wind, onshore wind, photovoltaic solar, and thermal solar.

Social Investment in education, healthcare, social housing, student accommodation, justice, recreational facilities, tourism, arts and culture, and
municipal infrastructure.

Digital infrastructure Investment in mobile and internet infrastructure.

Transport Investment in airports, roads, bridges, tunnels, heavy rail, ports, maritime transport, urban transport, electric vehicle charging infrastructure,
and car park facilities.

Waste Investment in waste management and treatment facilities, waste-to-energy plants, and recycling and waste minimisation solutions.

Water Investment in water distribution, treatment, and desalination facilities.

Environment Investment in carbon capture and storage, energy efficiency, or environmental protection/management projects.

Infrastructure (general) Investment in infrastructure for which no further details are available e.g. urban redevelopment projects.
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APPENDIX GLOSSARY

Private investment in infrastructure

Region classifications

Africa Algeria, Angola, Benin, Botswana, Bouvet Island, Burkina Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Comoros,
Congo, Côte d'Ivoire, Dem. Rep. Congo, Djibouti, Egypt, Equatorial Guinea, Eritrea, Eswatini, Ethiopia, Gabon, Ghana, Guinea, Guinea-Bissau,
Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mayotte, Morocco, Mozambique, Namibia, Niger, Nigeria,
Rwanda, Saint Helena, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, South Sudan, Sudan, Tanzania, The
Gambia, Togo, Tunisia, Uganda, Western Sahara, Zambia, Zimbabwe.

Asia Afghanistan, Bangladesh, Bhutan, Cambodia, China, Hong Kong SAR, China, India, Indonesia, Japan, Kazakhstan, Korea, Lao PDR, Malaysia,
Maldives, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Timor-Leste,
Turkmenistan, Uzbekistan, Vietnam.

Eastern Europe Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Lithuania, Moldova, Montenegro, North
Macedonia, Poland, Romania, Russia, Serbia, Slovak Republic, Slovenia, Ukraine.

Latin America Argentina, Aruba, Bolivia, Brazil, Cayman Islands, Chile, Colombia, Costa Rica, Curaçao, Dominican Republic, Ecuador, El Salvador, Falkland
Islands, French Guiana, Guadeloupe, Guatemala, Guyana, Honduras, Jamaica, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, South Georgia
and The South Sandwich Islands, Suriname, The Bahamas, Trinidad and Tobago, Uruguay, Venezuela.

Middle East Armenia, Azerbaijan, Bahrain, Georgia, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, Türkiye,
United Arab Emirates, West Bank and Gaza, Yemen.

North America Bermuda, Canada, Mexico, United States.

Oceania Australia, Fiji, French Polynesia, Guam, Marshall Islands, New Zealand, Palau, Solomon Islands, Vanuatu.

Western Europe Åland Islands, Andorra, Austria, Belgium, British Virgin Islands, Cyprus, Denmark, Faroe Islands, Finland, France, Germany, Gibraltar, Greece,
Iceland, Ireland, Italy, Latvia, Liechtenstein, Luxembourg, Malta, Martinique, Monaco, Netherlands, Norway, Portugal, San Marino, Spain, St.
Martin (French part), Svalbard and Jan Mayen Islands, Sweden, Switzerland, United Kingdom, Vatican City.
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APPENDIX GLOSSARY

Infrastructure equity performance

Annual total return Share price appreciation and income from regular cash distributions (cash dividend payments or capital repayments) that are reinvested on
the intended date, without considering withholding taxes.

Annualised risk The volatility (extent of fluctuation) in the value of an investment over a given period.

Annualised risk-adjusted return Measured by the Sharpe ratio, which is the ratio of excess returns to the standard deviation of returns, where excess returns are total returns
minus risk-free returns.

Equity investment Money that is invested in a company by purchasing shares.

Risk premium The excess return investors expect to earn from their investments in addition to the prevailing risk-free return.

Duration The sensitivity of the price of an instrument to a change in interest rates.

Physical risks Risks arising from the physical impacts of climate change and environmental degradation.
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APPENDIX GLOSSARY

Infrastructure debt performance

Cumulative default rates (CDR) The weighted average marginal default rates (hazard rates) for all cohorts. The marginal default rate (hazard rate) is the ratio of the number
of project defaults in a specific time period divided by the number of projects exposed to the risk of default at the beginning of that time
period. For the purposes of this study, marginal default rates were calculated on a monthly basis.

Expected loss A function of the probability of default and ultimate recovery rates to indicate the creditworthiness of debt obligations.

Investment grade Debt that is believed to have a lower risk of default and thus receives higher ratings by the credit rating agencies as Baa3 or higher (by
Moody's) or BBB- or higher (by S&P and Fitch).

Project finance A method of funding in which the lender looks primarily to the revenues generated by a single project, both as the source of repayment and
as security for the exposure. This type of financing is usually for large, complex, and expensive installations. This can include power plants,
chemical processing plants, mines, transportation infrastructure, environment, and telecommunication infrastructure. Project finance can
include financing the construction of a new capital installation, or refinancing an existing installation, with or without improvements.
In project finance transactions, the lender is usually paid solely or almost exclusively out of the money generated by the contracts for the
facility’s output. This includes the electricity sold by a power plant. The borrower is usually an SPV that is not permitted to perform any
function other than developing, owning, and operating the installation. The consequence is that repayment depends primarily on the project’s
cash flow and on the collateral value of the project’s assets. In contrast, if repayment of the exposure depends primarily on a well-established,
diversified, credit-worthy, and contractually obligated end user for repayment, it is considered a secured exposure to that end user.

Public-private partnership (PPPs) Defined in the World Bank PPP Reference Guide as ‘A long-term contract between a public party and a private party, for the development and/
and non-PPPs or management of a public asset or service, in which the private agent bears significant risk and management responsibility through the life
of the contract, and remuneration is significantly linked to performance, and/or the demand or use of the asset or service. PPPs can be used
as an alternative to conventional procurement.
PPPs are one way to procure and deliver infrastructure (including finance, construction, operations, and maintenance) with private finance
participation. It has multiple variations across the globe. The interpretation of PPP varies broadly as any form of association or co-operation
between the public and private sectors.
Projects under non-PPP schemes refer to other types of contracts between the government and private companies like design-build, turnkey
contracts, financial lease contracts, management contracts, and affermage contracts, among others.
The dataset does not provide the type of contract for non-PPPs.
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APPENDIX GLOSSARY

Infrastructure debt performance

Ultimate recovery Recoveries following emergence from default. Emergence from default occurs after any of the following events:
• Repayment of overdue interest
• Restructuring with no subsequent default
• Restructuring with the lender taken out of the deal e.g. by repayment of the defaulted loan with no participation in a restructured debt
facility
• Material restructuring
• Liquidation.

Income group classification

High-income countries The report includes countries classified by the World Bank Group as high-income, in 2019. These include: Australia, Austria, The Bahamas,
Bahrain, Belgium, Bermuda, Brunei, Canada, Cayman Islands, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Guam, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Kuwait, Lithuania, Luxembourg, Macau, Malta, Mauritius,
The Netherlands, New Zealand, Norway, Oman, Panama, Poland, Portugal, Puerto Rico, Qatar, Romania, Saudi Arabia, Singapore, Slovakia,
Slovenia, South Korea, Spain, Sweden, Switzerland, Taiwan, Trinidad and Tobago, Turks and Caicos Island, United Arab Emirates, United
Kingdom, United States, Uruguay.

Middle- and low-income countries The report includes countries classified by the World Bank Group as middle- and low-income, in 2019. These include: Albania, Algeria, Angola,
Argentina, Armenia, Azerbaijan, Bangladesh, Belize, Benin, Bolivia, Botswana, Brazil, Bulgaria, Burkina Faso, Cabo Verde, Cameroon, Chad,
China, Colombia, Costa Rica, Democratic Republic of the Congo, Djibouti, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea,
Ethiopia, Fiji, Gabon, Ghana, Guatemala, Guinea-Bissau, Guyana, Honduras, India, Indonesia, Iran, Ivory Coast, Jamaica, Jordan, Kazakhstan,
Kenya, Laos, Lebanon, Lesotho, Liberia, Macedonia, Madagascar, Malawi, Malaysia, Mali, Marshall Islands, Mauritania, Mexico, Moldova,
Mongolia, Morocco, Mozambique, Myanmar, Namibia, Niger, Nigeria, Pakistan, Papua New Guinea, Paraguay, Peru, Philippines, Russia,
Senegal, Serbia, Sierra Leone, Solomon Islands, South Africa, Sri Lanka, Syria, Tanzania, Thailand, Timor-Leste (East Timor), Tunisia, Türkiye,
Turkmenistan, Uganda, Ukraine, Uzbekistan, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe.
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APPENDIX GLOSSARY

Infrastructure debt performance

Sector classification

Energy Project loans for the construction and maintenance of renewable and non-renewable power plants, transmission and distribution, and oil
refineries.

Infrastructure These comprise selected subindustries within water, waste, transportation (roads, bridges, tunnels, rail, and ports and terminals), media
distribution and telecommunications, and oil and gas refining and power (transmission and distribution, renewable and non-renewable
electricity generation).

Non-infrastructure Project loans for the construction and maintenance of chemicals production including petrochemicals and plastics, leisure and recreation
(casinos, lodging and other – not ‘real estate’), manufacturing, media, and telecommunications – media content (motion pictures, etc.),
metals and mining – mining (ores, coal, etc.), metals and mining – processing (smelting, refining, foundries, etc.), oil and gas – biofuels, oil
and gas – exploration and production, oil and gas – LNG, oil and gas – other, oil and gas – storage, other.

Social Project loans for the construction and maintenance of facilities that support social services. Types of social infrastructure include healthcare
(hospitals), education (schools and universities), and public facilities (community housing and prisons).

Transport Project loans for the construction and maintenance of roads, bridges, tunnels and rail services, and ports and terminals.

Water and waste Project loans for the construction and maintenance of water systems, water desalination, waste treatment, waste to energy.
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APPENDIX GLOSSARY

Private capital availability

Private infrastructure capital raised by funds Aggregate capital raised by funds with a commitment to invest in the infrastructure asset class.

Private infrastructure capital invested by Capital invested is estimated using the ‘capital called up’ data series, which refers to capital committed by private investors that has been
funds called up for investment.

Cumulative private infrastructure capital The total investment value of all the financial assets in a fund’s portfolio plus the fund’s dry powder.

Investment value The market value of the portfolio (including mark-to-market gains from investments in infrastructure assets).

Dry powder Capital committed by investors that is available to fund managers but has not yet been invested or allocated (‘capital committed’ is the sum
of unallocated capital and portfolio returns, minus any disbursements to investors).

Greenfield An asset or structure that does not currently exist and needs to be designed and constructed. Investors fund the building of the infrastructure
asset as well as the maintenance once the asset has been designed and built and is operational.

Brownfield An existing asset or structure that requires improvements, repairs, or expansion. The asset or structure is usually partially operational and
may already be generating income.

Secondary stage Involves a fully operational asset or structure that requires no investment for development.
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APPENDIX GLOSSARY

Private capital availability

Infrastructure investment strategies

Core Strategies targeting essential assets with no operational risk, where the asset is already generating returns. These are typically secondary
stage assets in developed countries with transparent regulatory and political environments. Key features of the underlying assets include a
monopoly position, demonstrated demand, and long-term stable cash flows that are forecastable with a low margin for error.

Core+ Strategies targeting assets exhibiting similar characteristics to those of core assets. They are exposed to demand and market risk but
are more affected by and correlated with the economic cycle. These assets have features that act to limit these risks, including long-term
contracts, long-term government or regulatory price support, and/or high barriers to entry for competitors.

Debt Strategies using debt or issuing debt securities to fund investment activities. These strategies tend to be less risky than other infrastructure
strategies, targeting assets and/or infrastructure developers/owners producing regulated revenues for essential services or user revenues
from assets with a monopoly position, as well as contracted assets. The risk/return exposure of these strategies depends on the type of debt
provided; however, most infrastructure assets are typically financed by senior debt and have simple capital structures.

Value-added Strategies that are deemed moderate- to high-risk, targeting assets where enhancements are being made, and where growth in usage of such
assets or demand for the service provided or produced is the focus. These are typically greenfield or brownfield assets, potentially involving
new or unproven technologies that do not have pricing power at the time of the investment but that can be developed over time to provide
pricing power in the future. ‘Pricing power’ refers to a business's ability to adjust and control the prices of its products or services in response
to various factors, such as changes in demand, costs, or market conditions.

Opportunistic These strategies have the highest risk/return profile of infrastructure strategies, focusing less on stable cash flows and more on capital
growth via the value of the underlying assets. Assets targeted by these strategies typically do not have an existing cash flow.
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APPENDIX METHODOLOGY

Private investment in infrastructure

1. Data for private infrastructure investment is drawn from a new, bespoke dataset 8. Investment in renewables:
developed in partnership with Realfin. Data is as at 30 September 2023.
i. The significant increase in the level of private investment in renewables and its
2. Compared with previous GI Hub Infrastructure Monitor reports, the dataset has increased growing attractiveness as a destination for global private investment in infrastructure
coverage of transactions, particularly in developing markets and China. The new dataset is indisputable. The renewables analysis in this report is based on Realfin data, which
almost doubles the value and number of transactions from previous reports. underestimates the total level of private investment as it focuses mostly on project-
based private investment. Project-based renewables investment accounts for around
3. Throughout this report, unless otherwise specified, ‘private investment in infrastructure
30% of total private investment in renewables (CPI, 2022).
projects’ refers to private sector investment in infrastructure projects in primary
markets (financed by private and public financiers) including greenfield and brownfield ii. While most direct private investment in infrastructure on corporate balance sheets
infrastructure, as well as projects involving the privatisation of public sector assets. is not included because this data is unavailable for most sectors, it is more readily
Investment values represent commitments made at the financial close of investment, not available for the renewables sector due to increased global efforts to improve data in
executed investment values, and are in real terms. support of the transition to sustainable energy.
4. The Realfin dataset is focused on project-based private investment and does not capture 9. Realfin’s data on green bond issuances is not as exhaustive as data from some other data
most corporate private investment in infrastructure. providers. Therefore, it is likely that the volume of green bonds for primary infrastructure
included in this analysis is underestimated.
5. The dataset is the best available comparable data for global project-based private
infrastructure investment. However, the list of transactions it covers is not exhaustive. 10. There are also data challenges in relation to the use of green bonds, as outlined below:
The estimates in this document are best interpreted as indicative of broad trends.
i. Green bonds data generally do not indicate whether proceeds are being earmarked for
6. While Realfin’s data for middle-and low-income countries is broadly consistent with primary or secondary purposes.
the World Bank’s Private Participation in Infrastructure (PPI) dataset, key differences
ii. Reporting on actual use of proceeds is extremely limited. However, anecdotal evidence
exist. Most notably, PPI data includes divestitures as well as some non-commercial
suggests a portion of green bonds are used to refinance existing assets as opposed to
transactions which are not included in the GI Hub’s analyses.
financing new assets (IRENA and CPI, 2020).
7. Not all transactions have tranche level details for instruments and financiers. Such
transactions have been excluded for these analyses.
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APPENDIX METHODOLOGY

Infrastructure equity performance

Private investors can invest in the infrastructure asset class through equity markets. Equity Performance is compared against a benchmark of listed global equities. Listed global equity
investments can be in listed markets where listed infrastructure equities are publicly performance is measured by the MSCI ACWI, MSCI’s flagship global equity index which
traded on a stock exchange. Alternatively, they can be in unlisted or private markets where is designed to represent the performance of the full opportunity set of large- and mid-cap
investment opportunities are generally offered through private placements made by the stocks across 23 developed and 24 emerging markets. In May 2022, it covered more than
company signatory of the project or concession agreement. The channel of investment 2,933 constituents across 11 sectors and approximately 85% of the free float-adjusted
is materially correlated with financial performance. The following indicators were used to market capitalisation in each market.
analyse the performance of infrastructure equity investments:
In addition, green unlisted infrastructure equity performance was analysed to assess the
• Listed infrastructure equities: Performance is measured by the Morgan Stanley Capital relative performance of sustainable and climate-aligned investments. The performance
International All Country World Index Infrastructure Capped Index (MSCI ACWI-IC), is measured by the EDHECInfra InfraGreen index, which tracks investments in solar and
comprising a global opportunity set of companies that are owners or operators of wind projects worldwide and provides a unique view of the renewable energy sector’s
infrastructure assets that are selected from the parent index – Morgan Stanley Capital performance. The InfraGreen equity index tracks 100 investments and goes back 10 years.
International All Country World Index (MSCI ACWI) – covers mid- and large-cap securities
across 23 developed markets and 24 emerging markets for five infrastructure sectors:
telecommunications, utilities, energy, transport, and social.
• Unlisted infrastructure equities: Performance is measured by EDHECInfra’s Infra300
equity index, which is designed as a representation of 6,800 investible unlisted
infrastructure companies (often private equity funds) identified in 25 key markets by
infrastructure sector, business model, and corporate structure. The index is equally
weighted with 300 constituents with a market capitalisation of USD250 billion.
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APPENDIX METHODOLOGY

Infrastructure debt performance

Infrastructure project loans Longer-tenor business: Export credit and investment insurance
• This analysis is based on data on infrastructure project loans drawn from Moody’s The International Union of Credit and Investment Insurers (Berne Union) includes government-
2023 report Examining Infrastructure as an Asset Class of the Data Alliance Project backed export credit agencies, private credit and political risk insurers, and multilateral
Finance Consortium of Moody’s Analytics. The Data Alliance Project Finance Consortium institutions from across the globe who provide direct and indirect support for international
comprises leading project finance lenders and investors that provide historical portfolio trade and cross-border investments through insurance, guarantees, and various direct
and credit loss data to Moody's Analytics, for the purpose of creating an aggregate financing instruments. The Berne Union holds the most comprehensive data set on the
dataset. The dataset therefore contains information from more than 80 global institutions business of export credit and investment insurance. Members submit data on their business
(including commercial banks, insurance companies, asset managers, and other activities twice annually, covering activity up to the end of the second quarter, and for the full
institutional investors) that participate in the Consortium. year.
• For the purpose of this analysis, the GI Hub was provided with confidential default and The following two types of products are relevant for the infrastructure asset class and are
recovery information on a total of 10,054 project finance loans that originated from 1983 included in our analysis:
to 2021, representing nearly 70% of all global project finance loans that originated in that
• Medium and long-term export credit: insurance, guarantees, and lending for export/trade-
period. Of the 10,054 project finance loans that were analysed, 8,340 were infrastructure
finance credit of which the repayment term is greater than 360 days.
loans and 1,714 were non-infrastructure loans, all involving private sector participation.
This sample was used in our analysis of infrastructure debt performance. Although the • Political risk insurance: insurance or guarantees that indemnify an equity investor or a
infrastructure loans sample includes construction, operations, and refinancing loans, bank financing the equity investment for losses incurred to a cross-border investment, as
construction loans account for 60% of all loans in the sample. a result of political risks.

• The sample distribution used in this report is presented by income group, region, sector, The three metrics analysed in our report are explained below:
and contract. These distributions are compared to non-infrastructure loans. The income New ‘Flow’ item, showing the total volume of new insurance/guarantee/loan/
groups used are based on the World Bank Group’s classification of countries as high- commitments etc. commitments issued during the half-year for which commitment
income, middle-income, or low-income on the basis of 2020 per capita income levels. has been confirmed. This Includes the full amount of new commitments
This report analyses cumulative default rate curves, expected losses, and recovery rates issued during the half-year, even if disbursements are to take place later.
for the period 1983–2021. Cumulative default rate curves were considered over a period
of 20 years, and the horizontal axes in all the charts presented correspond to the year Claims paid 'Flow' item recording the total volume of claims paid or non-performing
of default since loan origination. The analysis considers the 20-year period because, loans, categorised by the type of loss event (political or commercial).
although the average maturity of infrastructure debt may be shorter, there are sectors and Claims ratio Claims paid as a percentage of premiums earned.
regions with higher debt maturities.
Recoveries 'Flow' item recording the total volume of recoveries collected, categorised
by the type of loss event (political or commercial).
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APPENDIX METHODOLOGY

Private capital availability

Private infrastructure capital raised and invested by funds

This includes infrastructure capital raised and invested for core, core+, debt, value-added
and opportunistic strategies.
Secondaries funds were excluded because they invest in pre-existing infrastructure assets
by acquiring interests in private capital funds from the original investors.
Funds of funds were excluded because they represent the acquisition of interests in other
funds.
Cumulative private infrastructure capital: analysis by strategy, project stage, dry powder,
return, and risk
The analysis uses the Preqin Pro database and is based on data relating to 656 funds that
originated in or after the year 2000 and followed infrastructure investment strategies. A
liquidated fund with an extreme net internal rate of return (IRR) value of 448% was excluded
from the analysis because it created a material bias in the value of all metrics.
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APPENDIX REFERENCES

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Ashokan T, ‘India’s roads sector to generate the most infra opportunities’, Infrastructure Investor, June 2022, accessed 17 November 2023
Berne Union (2022). Export credit & Investment Insurance, Industry Report 2021, Annual Report of the export credit and investment business of Berne Union Members, August 2022,
accessed on 6 November 2023
EDHECInfra (2022a). F Blanc-Brude, Is Infrastructure shockproof? The Resilience of Infrastructure Equity Investments During Market Downturns, 2000–2022. EHDECInfra and Long-term
Infrastructure Investors Association (LTIIA), Singapore, July 2022, accessed 26 October 2023
EDHECInfra (2023a). EDHEC infraMetrics, accessed 26 October 2023
EDHECInfra (2023b). Amenc et al., It’s Getting Physical, EDHEC Infrastructure & Private Assets Research Institute, Singapore, August 2023, accessed 26 October 2023
EIB (2017). Wind of Change: Investment in Central, Eastern and South Eastern Europe, European Investment Bank, September 2017, accessed on 6 November 2023
GLIO (2023). C Hamieh, N Langley, S Hurst, The infrastructure opportunity: listed vs unlisted, GLIO Journal, 2023 (12):6-7, accessed 26 October 2023
IEA (2023). World Energy Outlook 2023. IEA. Paris, October 2023, accessed 17 November 2023
IRENA and CPI (2020). Global Landscape of Renewable Energy Finance, 2020. International Renewable Energy Agency, Abu Dhabi, 2020, accessed 17 November 2023
Moody’s (2023a). Kelhoffer K, Examining Infrastructure as an Asset Class, Moody’s Analytics, September 2023, accessed on 6 November 2023
Moody’s (2023b). Default and recovery rates for sustainable project finance loans, 1983-2020. Data Report. 23 February 2023
MSCI (2022). Factsheets for MSCI ACWI (USD), MSCI ACWI Infrastructure Capped Index (USD), MSCI World Infrastructure Capped Index (USD), MSCI Emerging Markets Infrastructure
Capped Index (USD), July 2023, accessed October 2023
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Preqin (2023a).Preqin Global Report 2023: Infrastructure, Preqin, January 2023, accessed 31 October 2023
Preqin (2023b). Omisa C., ‘Global Energy Market Update: the impromptu return of conventional energy’, Preqin, July 2023, accessed 31 October 2023
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Preqin (2023d). Preqin Investor Outlook: Alternative Assets H2 2023, Preqin, accessed 31 October 2023.
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ISBN

978-0-646-88925-2