The Taiwan Banker

Infrastructure has become an increasing focal point of global financial markets. Factors such as reconstruction following the Ukraine war, technological and defense competition accelerated by geopolitical tensions, large investments by the tech industry in global computing capacity, and the critical stage of the decarbonization transition have all reshaped the infrastructure landscape. The balancing between economic expansion and sustainable development has become a central issue for global infrastructure, which has significantly increased the importance of green sustainability and digital industries related to AI. These emerging sectors are accelerating the global energy transition, driving continued worldwide growth in new infrastructure demand, and leading to major shifts in investment patterns. Infrastructure fundraising recorded strong growth in the first half of 2025. According to the 2024 annual report of the Global Infrastructure Investor Association, global infrastructure assets under management reached USD 2.04 trillion. McKinsey forecasts that global private infrastructure capital will expand from USD 500 billion in 2016 to USD 1.5 trillion by 2025. From 2025 to 2040, it forecasts that cumulative global investment across transportation, energy, water resources, circular economy, digital, and social infrastructure will reach USD 106 trillion. It projects that annual AI related infrastructure will contribute between USD 15.5 trillion and USD 23 trillion to global economic output by 2040, while also helping to alleviate the growing challenges of low birth rates and demographic aging. The US passed a USD 1.2 trillion infrastructure bill at the end of 2021, and in July 2025 President Trump introduced the America AI Action Plan to support private sector development of emerging technology infrastructure such as AI data centers. In Germany, Chancellor Friedrich Merz launched a EUR 500 billion infrastructure and investment special fund. In 2025, the UK established the Critical Minerals Strategy, led by the National Wealth Fund, to advance domestic renewable energy infrastructure. Governments across the world are rolling out fiscal stimulus targeting new infrastructure, the energy transition, and defense. Against this backdrop of strong policy support, global asset managers are increasingly positioning infrastructure as a long term investment theme, backed by government policy. Vehicles such as infrastructure ETFs, actively managed funds, and private equity funds are being used to capture structural growth opportunities while diversifying geopolitical risk. As global asset managers move beyond the traditional perception of infrastructure as simply being roads and bridges, these assets are becoming more attractive. Infrastructure can broadly be categorized into traditional – including industrial facilities, transportation, energy, and residential assets – and emerging sectors (computing and data centers, cloud and network facilities, smart energy storage and energy efficiency systems, as well as long term care, medical, and senior living facilities). Demand for emerging infrastructure is driven by AI development, new energy technology, and corporate process transformation. Many countries are actively promoting sovereign AI initiatives, accelerating infrastructure demand and expansion across value chains. In the future, traditional public infrastructure will also integrate AI, big data, the Internet of Things, and automation, while incorporating green building concepts, conservation, environmentally friendly materials, and renewable energy. This integration of traditional and emerging infrastructure will accelerate the transformation toward sustainability and stimulate related industries. According to a 2025 Goldman Sachs survey of 250 global general partners and limited partners, 93% of investors are optimistic about the outlook for private investment in emerging infrastructure. Upgrades of aging assets and construction of new infrastructure both require substantial public and private capital. Funding sources for infrastructure include sustainable development bonds issued by governments and corporations, insurance capital invested directly in public infrastructure, and investments through private equity and REITs. Infrastructure construction in rural and remote areas can narrow urban-rural disparities and promote balanced regional development, while related industry value chains can generate significant employment opportunities and income growth. Private capital is now being used around the world to address infrastructure funding gaps. Private infrastructure equity now exceeds USD 1 trillion, making this specialty market the fastest growing segment within global private equity, as well as a new strategic focus for asset management development and institutional investment. These funds primarily invest in unlisted infrastructure companies, whose valuation complexity, investment thresholds, and asset heterogeneity necessitate closed end structures, restricting redemptions during the investment period to give fund managers sufficient time to apply professional management. Infrastructure assets are closely tied to everyday economic activity and typically benefit from regulated frameworks and long-term contracts, resulting in low correlation with public markets. Their long-term revenue prospects, predictable cash flows, inflation hedging characteristics, and low volatility make them well-suited for high net-worth investors seeking stable long-term allocations. In contrast to traditional equity and bond investments, financial institutions historically had limited exposure to public infrastructure, but governments have started actively guided financial sector capital toward public infrastructure. Data from the Taiwan Insurance Institute show that as of September 2025, total life insurance industry assets reached TWD 36.6 trillion. While overseas investments accounted for TWD 22.07 trillion (67.56%), and securities TWD 6.75 trillion (20.66%), project-based utilization and public investments amounted to only TWD 157.1 billion (0.48%), indicating substantial room for growth. Public infrastructure investment is increasingly becoming a core component of long-term fixed income allocation. Government initiatives such as the Trillion NTD Investment Program for National Development and the Asia Asset Management Center aim to encourage insurers to invest in public infrastructure through incentives and regulatory relaxation. Under existing regulations governing project-based investment, insurers can submit proposals through public-private partnership platforms, improving the efficiency and effectiveness of capital deployment. Incentives include reduced risk-based capital allocation for direct or indirect investments through venture capital or private equity, as well as expanded investment limits, broader investment scope, streamlined procedures, inclusion of strategic industries, and innovative financial service platforms. Importantly, however, these allocations must still align with insurers’ requirements for cost of capital, safety, liquidity, return, and asset-liability duration matching. Internationally, large asset managers have accumulated extensive experience managing investments in transportation, clean energy, smart power systems, circular economy, and data centers. By introducing overseas private funds aligned with long-term economic and industry trends, and collaborating with international asset managers, financial institutions can cultivate domestic professional talent and develop asset management models tailored to high net-worth clients. The integration of sustainability with energy and digital transformation helps attract both private and international capital, enabling the design of products that meet stringent risk management and resilience requirements while mitigating geopolitical and macroeconomic risks, and supporting long-term wealth preservation and succession goals. Taiwan’s Forward-Looking Infrastructure Development Program encourages domestic investment in emerging industries. The financial sector is starting to incorporate international expertise to support public-private partnerships as key private equity investment targets. Combined with the development of the Asia Asset Management Center, infrastructure assets with stable long-term cash flow and growth potential can be integrated into high net-worth portfolios through professional management and a variety of financial instruments, offering clients stable returns and effective portfolio diversification. Given industry investment and integration expertise from private equity, government support for domestic investment by qualified funds can facilitate access to insurance and other institutional capital. By channeling abundant domestic capital into strategic infrastructure projects, Taiwan can accelerate its industrial transformation and upgrade, while strengthening the scale and international competitiveness of its domestic private equity sector. The author is director of the Sustainable Finance Development Center at TABF.