The world is running out of roads, power grids, data centers, and fiber networks faster than it can build them. The price tag to fix that by 2040 is $106 trillion — a number so large it has effectively ended the era in which governments alone could be expected to pay it.
Private capital is stepping into that gap. And according to McKinsey's Global Private Markets Report 2026, it is doing so at a pace that has shattered every previous record.
A Record Year for Infrastructure Investment
In 2025, global infrastructure fundraising reached nearly $200 billion — a new all-time high, surpassing the previous record of $180 billion set in 2022 and representing a nearly 60 percent increase over 2024.
The geography of that surge tells its own story. Fundraising in North America nearly tripled — up approximately 285 percent year over year. Europe grew by roughly 65 percent. Asia-Pacific, by contrast, declined sharply, dropping around 75 percent as capital consolidated into larger Western funds.
The driving force behind these numbers is the rise of what the industry calls megafunds — vehicles holding $5 billion or more in committed capital. In 2025, funds larger than $10 billion captured a disproportionate share of total fundraising, growing at a compound annual rate of 36.5 percent since 2020. The infrastructure business is consolidating around scale.
What Infrastructure Now Means
The $106 trillion figure covers far more than roads and bridges. According to McKinsey's analysis, the very definition of infrastructure has expanded dramatically — and that expansion is reshaping where private capital flows.
Energy and power represent the largest single category, requiring an estimated $23 trillion through 2040. After nearly 15 years of U.S. power demand growing below 1 percent annually, the next decade is expected to see growth exceed 3 percent per year — driven by AI data centres, electric vehicles, and industrial electrification.
Digital infrastructure — data centres, fibre-optic networks, telecommunications — is growing even faster in relative terms. Nearly $7 trillion in data centre investment alone may be required through 2030 to keep pace with compute demand. In 2025, the energy and digital sectors together accounted for approximately 75 percent of all infrastructure deal value — far outpacing their 40 percent share of long-term infrastructure need.
The convergence between sectors is creating a new class of investment opportunity. Energy and digital intersect at data centres. Digital and transport intersect at electric vehicle charging networks along highway corridors. Energy and transport intersect at waste-to-fuel processing. The funds best positioned to capture these opportunities are those large enough to deploy capital across multiple verticals simultaneously.
Why Investors Are Choosing Infrastructure
McKinsey surveyed approximately 300 global limited partners — the institutional investors who commit capital to infrastructure funds — and found that 51 percent plan to increase their infrastructure allocations over the next three years. No other asset class comes close: buyout attracted 35 percent, real estate 30 percent.
What is driving this preference has shifted. Diversification remains the top motivation, cited by 68 percent of respondents. But expected return improvements jumped 11 percentage points to 52 percent — a significant move that signals investors are no longer treating infrastructure purely as a defensive, low-volatility allocation. They are increasingly expecting it to perform.
That expectation is pushing capital up the risk curve. The fastest-growing fundraising strategies in 2025 were core plus (up approximately 389 percent) and value added (up approximately 30 percent). Traditional core infrastructure — the stable, regulated assets that defined the asset class a decade ago — actually declined by nearly 19 percent. Investors are seeking higher returns, and they are willing to take on more complexity and risk to get them.
The Maturing Industry and Its Challenges
The infrastructure investment industry is showing clear signs of structural maturity — and with maturity comes a more demanding operating environment.
Dry powder — the undeployed capital sitting in infrastructure funds — has declined from highs of around 40 percent of assets under management in the 2009-2017 period to approximately 23 percent by mid-2025. Capital is being deployed more efficiently. Average deal sizes increased 78 percent year over year in 2025, even as the total number of deals fell by around 24 percent. Bigger bets, more concentrated.
But holding periods are lengthening. The average age of infrastructure holdings rose from 3.1-3.3 years in 2017-2022 to 3.5-3.8 years in 2023-2024. Distributions to paid-in capital — the metric that measures how much cash investors actually receive back — hit their lowest recorded level in 2025, declining to a median of approximately 13 percent from a peak of around 40 percent in the mid-2010s.
The implication is clear: the era of riding market tailwinds and financial engineering is ending. Infrastructure investors will increasingly need to generate returns through genuine operational improvement — active value creation rather than passive ownership.
AI Enters the Infrastructure Playbook
One of the most significant findings in McKinsey's report concerns the role of artificial intelligence in infrastructure value creation — a development that is still in its early stages but carrying significant implications.
The infrastructure sector has historically lagged in digital adoption. Physical assets, long holding periods, and complex unstructured data have made technology integration difficult. But that same complexity, McKinsey argues, now positions infrastructure to benefit disproportionately from AI tools designed to handle exactly those challenges.
Specific applications already being piloted include AI-enabled capital productivity — generative scheduling tools that model resource-loaded project plans, test multiple scenarios, and optimise sequencing to reduce build timelines and costs. In renewable energy projects, AI is supporting the full greenfield development cycle, from site identification and permitting analysis to construction sequencing.
As a growing share of infrastructure investment shifts to greenfield development — new builds rather than acquisitions of existing assets — execution discipline becomes directly linked to investor returns. AI tools that improve that execution are not peripheral. They are becoming central to the investment thesis.
The Bottom Line
The $106 trillion infrastructure gap is not a distant abstraction. It is the accumulated backlog of roads not built, grids not upgraded, data centres not constructed, and fibre not laid — a deficit that is already constraining economic growth and will intensify as digital demand accelerates and the energy transition deepens.
Private capital has demonstrated, in 2025, that it is willing and able to scale to meet that demand. The record fundraising, the consolidation around megafunds, the shift toward higher-risk and higher-return strategies, and the early integration of AI into operational management all point toward an industry that has moved beyond its origins in regulated utility assets toward something more ambitious, more complex, and more consequential.
The challenge ahead is not capital availability. It is the harder work of deploying that capital with the operational discipline and value creation capability that investors — and the world — increasingly demand.
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