Infrastructure debt fundraising faces challenges such as rising interest rates and increased redemptions from insurance companies. However, despite these obstacles infrastructure debt exhibits resilience and strong underlying demand growth. Viktor Kozel highlights that debt remains a dominant force in the sector given the substantial capital needs across industries which are primarily met by debt financing. Amid these challenges, opportunities abound in the mid-market segment, offering investors a chance to tap into spaces traditionally dominated by banks. Emphasizing the favorable outlook, Kozel underscores the infrastructure sector’s robustness, “driven by the four Ds: digitalization, demographics, decarbonization and deglobalization.”
Looking ahead, there is reason to be optimistic over the sector’s future, in part thanks to the comparative resilience of alternative over mainstream equities and bonds. As interest rates stabilize, Kozel anticipates an uptick in deal activity, signaling a promising trajectory for infrastructure debt. This sentiment aligns with the ongoing dominance of debt financing in capital structures, buoyed by the increasing demand for capital amid business transformations towards decarbonization and digitalization. Additionally, the allure of high-yield credit over equity is enhanced amidst rising interest rates, further solidifying the position of infrastructure debt as a preferred investment avenue.