The role of private credit in infrastructure financing is undergoing a major expansion, with large managers including Ares and Blackstone pivoting into the sector, according to a new Fitch Ratings research report.

The report, titled 'The Future of Infrastructure Finance: Convergence, New Capital and Investor Appetite', identified that infrastructure finance is being reshaped by a convergence of corporate debt, project finance, and structured finance. While publicly-financed infrastructure has historically concentrated in social infrastructure, transport, and power generation, private credit lenders have been more likely to target non-utility infrastructure, including renewables, battery storage, and digital sectors — resulting in greater asset diversification than is typical in public markets.

Insurers and pension funds are among the most significant structural sources of infrastructure capital, the report found. EMEA insurers in particular are leading the shift toward infrastructure debt, partly to substitute for reduced US and government bond exposure. Fitch noted that insurers increasingly prefer infrastructure debt over equity for liability-matching and capital efficiency under Solvency II and risk-based capital frameworks, though deal flow and manager access remain constraints for mid-size insurers.

Pension funds, meanwhile, remain one of the most established institutional allocators to infrastructure investment. Infrastructure's long asset lives, contractual cash flows, and inflation-linked revenue structures support the objective of generating returns to fund current and future pension obligations, according to the report.

"Institutional demand is broadening as insurers, pension funds, sovereign wealth funds and family offices increase their focus on infrastructure," said Monsur Hussain, head of markets research at Fitch. "Insurers are showing growing appetite for private infrastructure debt, supported by liability-matching needs and capital efficiency under solvency and risk-based capital regimes."

The findings reflect a structural shift in European private credit markets, where infrastructure debt is emerging as a core allocation alongside traditional corporate direct lending. For GPs, the convergence of financing structures creates opportunities to deploy capital across a broader set of assets, while for LPs, infrastructure debt offers an attractive risk-return profile with built-in inflation protection — qualities that are increasingly valued in the current rate environment.