How connected capital pools can drive infrastructure growth

Government-led infrastructure projects, from data centres to schools, require vast investment. A connected capital ecosystem is essential to their success.

13 March 2025

6 mins

Public sector & development organisationsIndustries

Nations globally have immense infrastructure needs, which can far exceed government spending capacities, and typically require large injections of additional capital. Such projects have long included classic road and transport developments, well known to investors and generally considered appealing, partly because of their potential to offer ongoing operating revenues through tolls and tickets.

More recently, the scope of externally investible projects has expanded to incorporate nations’ other critical needs, such as building schools and hospitals – and now renewable energy, digital communication and artificial intelligence-ready data centre sites.

It is clear that recent rising tensions over trade tariffs pose some cost risks to infrastructure projects. “I think we are really looking at a world [of] less multilateralism going forward,” said Cumesh Moodliar, Chief Executive of Investec South Africa, during a panel discussion in Davos hosted by Standard Chartered and the Financial Times. He noted that tariffs could prove inflationary, driving up interest rates and worsening nations’ debt-servicing burden. Many of these debts are tied to building infrastructure.

But it is hoped that a number of recently elected governments will still seek to accelerate project development with the broader goal of helping stimulate economies, given that infrastructure is often cited as providing significant job and productivity “multiplier” effects. Roberto Hoornweg, Co-head of Corporate and Investment Banking at Standard Chartered, who was also on the panel, added: “We need to start engineering proper growth to get out of that debt spiral in the G7 countries.”

Private capital pools are critical to project capacity

With infrastructure traditionally at the centre of countries’ stimulus efforts, many nations will seek to attract different pools of investor capital – and knowledge – to help make their projects possible and to spread risk.

The capital pools in play are vast. Members of the Global Infrastructure Investor Association currently have more than USD2tn in AUM invested or ready to invest; their cash and expertise can be vital to ensuring projects get off the ground, complete construction phases and operate well post launch. Export credit agencies (ECAs) are also critical to financing these projects, or underwriting them and reducing risk. In 2023, according to estimates, ECAs facilitated some USD80bn of export credit and trade financing, while infrastructure funds raised USD20bn from investors.

Globally, classic infrastructure funds – and multilateral development banks in the case of projects in developing nations – are highly involved in core road and other transport investments, with some funds focusing more on earlier-stage greenfield initiatives in pursuit of greater returns. Newer backers – including pension funds, insurers and asset managers – are also flooding into the arena, joining project consortia and proving important to infrastructure expansion as they seek alternative and stable long-term growth.

Describing such alliances as “critically important” in an increasingly volatile environment, Moodliar explained: “Public-private partnerships give you an opportunity (…) to have co-investment and to build economically productive infrastructure, which then creates employment, stimulates growth and all the other ancillaries that come with it, but with an underpinning of commercial rationale, solid returns, good regulatory environment and long-term value being built on developing market balance sheets.” Given the backlog of infrastructure opportunities, when the commercial rationale makes sense, “capital will follow”, he added.

Connecting capital flows for consistent success

For success in these settings, the capital sources must all be properly connected so they can use their diverse capacities to support project advancement. Typically, a combination of parties needs to collaborate on any initiative: banks might provide core credit, for example; funds may offer further debt tranches and buy equity stakes in the project company; the newer entrants might take a cautious mixture of these approaches; and ECAs may mix underwriting and direct investment.

Infrastructure deals also differ greatly from funds’ classic five to seven-year corporate investments, with their 15–25-year duration heightening the need for risk sharing, transparency and a long-term view, but they can offer reliable growth even as economic cycles wax and wane. “You’ve got very large fund balance sheets which have long liability tenors. So, infrastructure assets are a great target for them,” Hoornweg said.

In spite of the complications of cross-border investments, such as currency shifts and changing rules, international infrastructure investments would remain appealing, he added. “A lot of that money is in the US. You can’t do all that investment in the US… it is challenging cross-border, but the returns remain good.” The continued growth of private credit in the space would be “very significant” for infrastructure, Hoornweg added.

In order to unlock transformative projects in some of the most challenging regions, we need collaboration.

Roberto Hoornweg

Co-head of Corporate and Investment Banking at Standard Chartered

There is a strong opportunity for these investments to continue growing for the decades ahead. In 2024 alone, investments in clean energy technology and infrastructure were expected to have hit USD2tn, and meeting nations’ climate change targets by 2030 will require extensive further capital injections.

Meanwhile, data centre investments are on the rise, given the growth of artificial intelligence, with several trillion dollars of investment expected internationally by 2030, much of it coming from real estate funds. Standard Chartered plays a critical role in connecting the various capital pools linked to these and other types of projects, given its local expertise and relationships.

“Delivering the right risk profile on infrastructure projects is crucial for investors,” Hoornweg explained. “In order to unlock transformative projects in some of the most challenging regions, we need collaboration: we’re bringing together private credit, multilateral banks and ECAs to transform a complex project into a bankable solution, and support economic growth.”

Standard Chartered has sent a strong signal of its commitment to long-term investments in infrastructure by creating a USD3bn partnership with asset manager Apollo for financing green energy, bringing together the firms’ credit origination and distribution capabilities. Among recent projects, the bank also participated with UK Export Finance, an ECA, to help provide €1.2bn financing for Turkey’s high speed railway.

This content was paid for by Standard Chartered and produced in partnership with the Financial Times Commercial department.