Anish Butani

Institutional investor conviction in infrastructure remains exceptionally strong – but the way capital is being deployed is changing materially, according to a major new global survey from bfinance, the independent investment consultancy that advises more than 620 institutional investors across 47 countries.

The bfinance Global Infrastructure Survey 2026, based on one-to-one interviews with more than 40 senior institutional investors – including CIOs and Heads of Infrastructure – managing over US$4 trillion across 13 countries, found that more than 90% of respondents view infrastructure positively, 50% plan to increase their allocation, and 97% expect to commit capital in 2026.

Yet the survey also reveals that infrastructure is no longer treated as an automatic or undifferentiated allocation. Investors are becoming sharply more selective: pulling back from greenfield development and expressing growing caution around mega-fund fees and AI-driven digital infrastructure valuations. Meanwhile, there is increasing focus on operational brownfield assets, mid-cap strategies, European markets and shorter-duration fund structures.

Geopolitics and AI bubble fears top the agenda

Geopolitics emerged as the single biggest macro concern, cited by 25% of respondents, followed by regulatory and policy risk at 22%. Investors described geopolitics as an umbrella risk, cascading into inflation, supply chains and policy direction in ways that are difficult to anticipate.

Fears of an AI-related overbuild in digital infrastructure – flagged by 18% of respondents – have also risen sharply up the agenda. Investors cited concentration risk, valuation stretch and the potential for oversupply as key concerns, even as digital infrastructure remains a core sector preference overall.

The greenfield gap

One of the survey’s most striking findings is the disconnect between stated flexibility and actual portfolio construction. While 68% of investors report no formal cap on greenfield exposure, 74% describe their portfolios as predominantly brownfield (existing, operational assets) in practice – a gap driven by experience with rising construction costs, supply chain disruption and the difficulties of justifying j-curve profiles internally.

Investors said they increasingly favour operational assets with contracted cash flows and predictable downside protection. Energy transition remains the most preferred sector at 38%, followed by digital infrastructure at 24%, power and electrification at 18% and transport at 10%.

Geographic preferences shift toward Europe

Geographic allocation is also changing. Europe is the most preferred region for incremental capital, cited by 42% of investors, valued for its regulatory visibility, energy security priorities and perceived political stability. North America, at 27%, remains a core allocation but faces harder scrutiny over political and policy uncertainty. APAC and emerging markets remain selective, niche exposures for most, typically accessed via developed market or specialist managers.

Mid-cap strategies gain ground as fee pressure intensifies

Fee structures are under significant pressure. Twenty-two per cent of investors named lower fees as the single improvement most likely to unlock additional capital, with performance fees a particular area of concern over alignment.

This dynamic is driving a clear preference for mid-cap strategies over large-cap mega-funds, with 53% of respondents favouring mid-cap opportunities. Investors cited less competition, greater operational influence and broader exit optionality as key advantages. bfinance’s own performance analysis supports this, with small-cap funds showing stronger DPI outcomes across vintages, while large-cap funds have performed in line with or below broader asset class metrics.

Duration preferences and fund structure

Investors are also shortening their duration expectations. Sixty-one per cent prefer capital to be returned within a 15-year window, with governance and alignment concerns cited as key factors limiting appetite for longer-dated structures. Closed-ended funds remain the dominant deployment vehicle, though open-ended structures play a specific role in portfolio construction, pacing and liquidity management for some investors.

Return targets have shifted upward by approximately 100–200 basis points across strategies compared to predecessor vintages, reflecting a higher cost of capital and a broader repricing of risk. Most investors now target nominal returns of 8–10%, with income accounting for around half of total returns.

Anish Butani, Managing Director and Head of Infrastructure at bfinance, said: “This survey captures a market entering a more mature phase. The broad enthusiasm of the last decade is being replaced by far greater precision around risk, manager selection and portfolio construction. This is a refinement of capital allocation, not a retreat – and investors who approach it with rigour stand to benefit from a rich opportunity set in the years ahead.”

Frithjof van Zyp, Senior Director, Australia at bfinance, said: “What this survey tells us is that Australian investors are maturing in how they approach infrastructure. The days of broad, undifferentiated exposure are over. We’re seeing a much sharper focus on operational assets, on fee efficiency, and on making sure the risk in a portfolio is the risk investors actually want to be taking.”

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Anish Butani

Appetite for renewable energy infrastructure has been extremely strong, buoyed by ESG agendas as well as broader demand for infrastructure as an asset class.

The COVID-19 crisis threw a spotlight on renewables, with energy price volatility highlighting the sensitivity of renewable energy assets to merchant power prices while, at the same time, reduced energy consumption provided a glimpse into a future where renewables represent a greater proportion of global power generation.

Asset managers in renewable energy infrastructure – an increasingly numerous group with over 65 strategies now available – have not reduced return expectations amid today’s more competitive climate. Instead, the strategies available to investors have evolved substantially, with key trends including greater exposure to development risk, use of less conventional technologies, investing in new geographies and greater specialisation.

These are the key findings from bfinance’s new report, ‘Renewable Energy Infrastructure: Lessons from Manager Selection”.

Increasing investor appetite…

According to the report, demand for renewable energy infrastructure has continued to rise with investors driven by ESG related priorities or drawn by the opportunity associated with the energy transition. A growing number of institutional asset owners are seeking ESG-related ‘thematic investments’ and/or ‘impact investments’ that explicitly aim to deliver positive non-financial outcomes. bfinance data shows that 34% of investors in real assets (infrastructure and real estate) are involved in thematic investing, with a further 20% considering doing so.

The report touches upon the trend among asset owners towards assessing portfolio carbon emissions and creating targets around reducing those emissions – a practice that can support demand for carbon-offsetting strategies such as renewable energy infrastructure. Recent data from bfinance shows that 46% of asset owners globally are now assessing portfolio carbon emissions, versus just 13% three years ago, and a further third are “actively considering” doing so.

Frithjof van Zyp, Senior Director of bfinance’s Australian office said: “We are currently working with an Australian asset owner on a renewables infrastructure manager search. As more and more investors in Australia commit to net zero carbon emission by 2050, we expect the interest in renewables will only accelerate in order to meet stated carbon reduction targets. This is very much in line with the interest we are seeing in renewables from institutional asset owners globally, as noted in our report.”

… leading to more strategies and greater variety

bfinance´s report highlights the considerable growth in the number of funds available to investors in renewable energy infrastructure, with more than 65 strategies fundraising as of early-2021 compared with approximately 50 in 2019. Strategies are classified in a variety of ways including by geography, where Europe remains the most popular region, and by sector focus where the report notes a rising number of strategies now focused on ´energy transition´. Offerings also be classified by overall risk profile – ‘Commoditised’ strategies with very well-established technologies and low development risk at one end of the spectrum; ‘Frontier’ strategies at the other.

A sector in transition

The report highlights that due to a general reduction in the expected returns, particularly for conventional technologies in new markets, managers have been evolving their strategies to remain attractive. There is an increasing trend of managers prepared to enter projects during the development phase. Some managers are expanding the geographical remit, such as adding Central and Eastern Europe or developed Asia. Many are incorporating newer technologies, such as offshore wind, rather than focusing purely on the more conventional sectors of onshore wind, solar and hydro. bfinance´s report also notes a growing number of strategies targeting less-well established themes associated with the energy transition, such as smart meters, electric vehicle charging or grid stability projects. A notable emerging trend is the use of batteries paired with renewable energy generation projects.

Investors must understand greenfield and revenue risks

According to the report, as greenfield investment becomes mainstream, it is important to distinguish between construction risk and development risk. Renewables differ significantly from other types of infrastructure investment in this regard: construction periods in mainstream infrastructure can often be longer than the development phase, whereas the construction lead-time for conventional renewable technologies is now relatively short. As such, construction premia have fallen considerably – particularly in Western Europe, where the difference between operational projects and those that are ‘shovel-ready’ translates to a premium of about 25-50 bps for solar and 50-150bps for onshore wind.

Although all risks should be handled with care, the report highlights that its is worth paying particular attention to the subject of how exposed investors are to merchant power price risk. With the decline of subsidy-led economics in renewable energy generation, managers now often point to corporate Power Purchase Agreements (PPAs) as the secure foundation for revenues but not all PPAs are created equal.

ESG – a word of caution

While ESG standards are generally improving in this asset class, the report does note differentiation between managers who rest on the argument that renewables represent a visible form of ESG in action versus those who are more committed to the broader ESG picture. The authors point towards asset managers that talk about their ESG capability but have no ESG sections in their Investment Committee papers, and even managers receiving ESG-related industry awards who have been found lacking when it comes to ESG integration in their investment process. Careful analysis is needed to distinguish between substance and style.

Anish Butani, Senior Director at Private Markets at bfinance said: “Although renewables seem to be the way forward for global energy production, we are now entering a new phase for the emergent asset class of renewable energy infrastructure. The economics of this asset class are fundamentally changing with the overall withdrawal of subsidies and the development of the technologies. With more competition than ever, both from a fundraising perspective and an investment perspective, managers are having to be creative and adapt to the new climate.”

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