The changing face of infrastructure

Infrastructure provides essential services that allow economies to function, prosper and grow. Without huge investment in these essential services, the world will go backwards - socially, economically, and environmentally.

Some might think that is a bold statement - but I think it is just the reality of where we stand in 2026 and I believe it makes infrastructure one of the most compelling investment themes of our generation.

Historically, infrastructure was considered a safe, low-growth, yield-producing investment. Steady, dependable - but not particularly exciting.

That characterisation, however, has fundamentally changed due to five powerful and interlinked forces creating what I would describe as a generational investment opportunity in infrastructure as a sector. It is an opportunity we believe warrants consideration as part of every diversified portfolio.

Of these five themes, the most topical now is the rise of technology. AI and data centres are the defining technological story of this decade. What many investors miss is that data centres are, fundamentally, an infrastructure demand story. They require data and the infrastructure to provide it, abundant water for cooling and enormous amounts of secure base-load energy - preferably green. As such, a lack of infrastructure investment could derail the AI theme.

Global data centre electricity demand was 460 terawatt-hours in 2024. The International Energy Agency (IEA) projects that will more than double to ~1,000 terawatt-hours by 2030, and over 1,200 terawatt-hours by 2035. US utilities alone will need to invest around $50 billion in new generation capacity and over $700 billion in grid upgrades just to support data centres by 2030. Europe, with one of the oldest power networks in the world, needs >$1 trillion to prepare its power grid for AI. This is extraordinary, structural demand for infrastructure investment.

But the infrastructure story is not just about AI. Four other key investment thematics are happening simultaneously, creating an infrastructure investment super-cycle. They are worthy of just as much commentary.

First, we have the dire and growing need for replacement asset spend after decades of underinvestment in developed markets. Infrastructure in the developed world is aging, and in some cases dangerously so. Here we are talking about corroded water pipes, downed power lines, collapsing bridges and infrastructure that was designed for a world that no longer exists. This is not a background risk. This is an active, urgent problem that is driving hundreds of billions of dollars of non-discretionary replacement spend. Two recent significant examples of the impact and cost to replace aging infrastructure are:

• Baltimore Bridge collapse in March 2024: The ship hit the bridge (which was well past its useful life) because it was under automation and briefly lost power, which meant it couldn't correct its course to avoid the bridge. This one event resulted in human fatality and blocked the Port of Baltimore for weeks at a cost of ~$US15 million a day and loss of worker livelihood. The rebuild of this one bridge is expected to cost ~US$5 billion and will not be open to traffic until 2030.
• Iberian Peninsula blackout in April 2025: An aging grid, increased reliance on intermittent renewable energy and insufficient back-up base load supply resulted in the collapse of the power network. Spain and Portugal went dark for 10-12 hours, effectively shutting down two modern economies. Transportation systems were paralysed, communications crippled and financial services ground to a halt. The estimate cost of this lost productivity was over US$ 2 billion.

The second big driver of investment needs is global population growth. In 1900 the world had 1.65 billion people. Today we're at 8.2 billion, and the UN projects we'll peak at just over 10 billion. Every additional person deserves access to water, energy, transport, and communications. Importantly, much of this population growth is coming from the emerging world where demographic trends are very supportive of economic evolution and infrastructure investment.

Which leads to the third big infrastructure investment thematic: the rise of the middle class in emerging markets. Emerging markets represent 85% of the world's population and growing. The infrastructure opportunity here is enormous and, we believe, significantly underpriced. As personal wealth increases, consumption patterns inevitably change. This includes a demand for basic essential services such as clean water, indoor plumbing, gas for cooking/heating and power - these all require underlying infrastructure. With power comes the demand for a fridge, washing machine, computer or a TV which increases the per capita demand as well as creates a need for transport capacity and logistic chains. It progresses over time to include services that support efficiency and a better quality of life such as travel, with an increasing demand for quality roads (to drive that new scooter and then car on) and airports (to expand horizons).

So, one of the clear and early winners of the middle class evolution is infrastructure. To put this in perspective, emerging markets currently consume energy at roughly one-third the per capita rate of the developed world. As incomes rise, that gap closes - and the infrastructure to support it must continue to be built. The middle class will continue to compound other growth thematics as they evolve.

Which brings me to the fourth big global infrastructure thematic, namely the energy transition. There is no path to net zero without massive infrastructure investment. Renewable energy is booming - but solar panels in the Australian outback or wind turbines off the Scottish coast are of little use without the network connections to move that power to where people live. Decarbonising the power sector - which accounts for around 25% of global carbon emissions - is impossible without huge infrastructure investment. The IEA estimates that global clean energy investment, which was $1.5 trillion in 2022 and $2.2 trillion in 2025, needs to reach $3.5 trillion annually by 2030 and over $4.5 trillion by 2046-2050 if we have any hope of net zero. However, it is not just the energy sector - other forms of infrastructure, namely transportation and technology, also have a key role to play.

The 2022 energy crisis across Europe also highlighted that this transition must be managed in a socially responsible way, with security of supply and affordability a priority. This realisation has fast-tracked the build of new renewables sources, increased investment in grids to enable its distribution to end users, and reaffirmed fuels such as gas and nuclear as important in the shift.

This isn't optional. Infrastructure investment IS the energy transition.

These five themes are not independent. They are deeply interlinked, and they are happening simultaneously. And critically, they must happen regardless of geopolitics, trade wars, or economic cycles.

All that said, every significant opportunity has risk, and core to the current infrastructure investment thesis is:

• Speed of execution - operators are ramping investment fast, and managing staffing, supply chains and capital is a real challenge.
• The demand-supply imbalance - demand for new infrastructure is outpacing execution, creating long lead times. This may slow the underlying thematics but ultimately extends the investment cycle, which is supportive for long-term investors.
• Balance sheet limitations - infrastructure requires high upfront capital before returns are realised, so careful capital management is required.
• Affordability - the cost of investment is ultimately passed to end users, and sharp bill increases invite political and regulatory scrutiny.

While these risks are real, we believe the opportunity and the risk-adjusted returns remain attractive for infrastructure operators.

Infrastructure is the backbone of modern civilisation. Without it, the energy transition stalls, AI grinds to a halt , growing populations in developing markets remain poor, and aging infrastructure in the developed world continues to fail. The investment need is immense, the earnings visibility is high, and the regulatory frameworks that support these businesses provide a stability that almost no other sector can offer.

I can think of no more compelling or enduring global investment thematic for the coming 50 years.