Today, investor interest in infrastructure remains strong, driven by resilient performance and an increase in allocations. But if more investors are focused on the space, why is private markets fundraising lower and taking longer to execute?
Infrastructure remains a relatively nascent asset class, having only picked up significant allocations in the past 10 years. As a result, it remains reasonably concentrated in the largest fund managers and only a handful of these managers can significantly impact the fundraising dollars in any given year. In 2023, for example, the top five fund managers accounted for 66 per cent of the capital raised. In 2024, this dropped to 32 per cent, so manager growth in the lower middle market has expanded investor options in the space.
The longer time to market though has been consistent across managers both large and small. In 2024, the average time to reach a final close increased to 31 months. This is almost double the amount of time it took to raise a fund in 2021. With longer fundraising timelines, infrastructure general partners are increasingly looking to co-investments as an additional source of capital to close deals.
Infrastructure capital flows
Fundraising dynamics are directly connected to capital flows. As a somewhat newer asset class which investors have been leaning into over the last 5–10 years, new investor commitments and asset appreciation have – for the time being – outpaced the capacity for distributions. This has resulted in net positive capital inflows into the infrastructure sector and an increase in net asset values.
At the same time, transaction volumes have continued to reach new highs, implying robust deal activity and a reduction in the overhang of unfunded commitments. However, distribution ratios must rise for fundraising to return to historic trends – a shift that will likely occur as underlying assets mature and are realised.
Source: Hamilton Lane June 2025
A new era in infrastructure fundraising
Just as those two dynamics are impacting today’s fundraising environment, we also observe an evolution in the manager landscape from a broader market perspective. In our view, the market has entered into what we call “Infrastructure 3.0”, which is characterised by several key features distinguishing it from previous eras – particularly Infrastructure 1.0 and 2.0.
Infrastructure 1.0, which spanned 2003–16, was marked by an increasing number of managers raising an increasing amount of capital. The fundraising “equation” during this time was linear – more managers and more capital. During this phase, expanding the breadth of investment opportunities and participants in the market was the primary focus.
Infrastructure 2.0 lasted until 2023 and was defined by the advent of mega funds. This era saw an increased concentration of capital in fewer large managers who had matured, emerging as industry leaders due to their size and performance. During this period, the fundraising equation became exponential – a similar number of funds but larger amounts raised overall. These large funds began to consolidate their influence, attracting substantial capital and shifting the focus towards size and scale. As they attracted more capital, smaller and mid-sized funds faced longer fundraising timelines.
Enter Infrastructure 3.0. Today, the larger managers have established their market position, but we see both the need and the demand for new managers to address the gap in the small and middle market.
Where is the market headed?
We believe Infrastructure 3.0 will be characterised by an increasing number of emerging managers and spinouts, including niche players focused on specialised sectors.
We believe Infrastructure 3.0 will represent a more dynamic, competitive fundraising environment in which both established mega funds and new players can coexist and contribute to a broader, and perhaps more balanced, infrastructure investment ecosystem.
May the best managers win.
Peter Larsen, managing director of Real Assets Investment Team, Hamilton Lane
