Infrastructure investors need to reevaluate risk in the face of geopolitical ructions that have led to national security and deglobalisation concerns, said panellists at last week’s AVCJ Private Equity Forum 2025 in Hong Kong.

The perception of infrastructure as a stable and predictable asset class is increasingly being challenged amid rising nationalism, said Anthony Muh, Asia Chairman at Morrison, a global infrastructure manager with USD 30bn assets under management.

“Countries are now more inward-looking and less open to global trade and foreign investment,” he said.

Ironically, core infrastructure will be the most vulnerable, despite being viewed as “risk-averse” thanks to stable revenues and no exposure to price or volume risk, Muh said.

The view was shared by Amy Zhu, Investment Director at IFM Investors, a global private assets manager with USD 92.1bn in infrastructure equity and debt assets under management.

Zhu predicted a future in which cross-border transactions will not proceed or settle as a result of geopolitical risk. Despite an enlarged buyer universe, the realm of “actually actionable” buyers is limited by the global macroeconomic backdrop, she said.

Alex Ovchar, managing director at Australia and New Zealand-focused manager Pacific Equity Partners (PEP), questioned if there might be a world in which Canadian or Middle Eastern sovereign wealth funds are suddenly blocked from buying assets in Australia.

However, he is yet to see that scenario materialise and still sees processes involving non-Australian global buyers for assets considered “quite core” to national security. “Clearly it’s a spectrum,” he said.

The topic isn’t new. Australia has been asking itself for years whether a 99-year lease of the Darwin Port, sold 10 years ago to Chinese private firm Landbridge, is appropriate.

“Given the ongoing tensions with China, it is an unacceptable national security risk to have Chinese state-owned and state-linked enterprises involved in our universities (including Confucius Institutes) and our strategic infrastructure,” a 2021 parliamentary committee report said.

Ultimately, Australia feels relatively defensive to geopolitical shocks and trade tensions, thanks to an economy that is largely driven by domestic trade with exports accounting for just 20% of GDP, Ovchar said. “We haven’t seen protectionism as much as elsewhere. But naturally we will be dragged to whichever way the winds go,” he said.

Speaking on the event sidelines, one of the panellists agreed that the world has divided in two camps between the West and China. “You’ve got to pick your camp now,” they said.

The defining issue is where capital ultimately comes from, the panellist said. “You have to ensure that your sources of capital are acceptable to the local government [of the investment target],” they said.

For example, Chinese money cannot invest into the US and vice versa, the panellist said, adding that capital provenance is being questioned a lot more now compared to six or seven years ago.

Australia isn’t the only country fighting over ports control. Among this year’s highest-profile deals was CK Hutchison’s proposal to sell ports to a BlackRock consortium for USD 22.8bn. The deal included a 90% interest in the ports of Balboa and Cristobal along the Panama Canal, control of which US President Donald Trump had said should be reclaimed by the US.

The deal sparked the ire of Beijing, with Hong Kong media slamming it as ignoring China’s national interest. Chinese state-backed firms, including China Cosco, have since held talks to acquire a stake in the portfolio after the intervention of Chinese regulator State Administration for Market Regulation (SAMR).

The unfortunate reality is that the geopolitical environment has made infrastructure investing a lot more restrictive, one of the panellists, who preferred not to be named, told Infralogic.

Although infrastructure assets will involve increasing layers of regulatory approvals, super core is where the opportunity is, given how crowded the rest of the market is, said another of the panellists on the sidelines.​​

Infrastructure investors, facing stiff competition higher up the risk spectrum, may need to refocus on core and super core assets. Brookfield is an example of a manager diversifying into the area, having raised more than USD 13bn for an open-ended super core infrastructure fund.

“The market is quite crowded. Twenty years ago, there were only a handful of dedicated infrastructure managers. Today, every major PE firm is now involved in infrastructure,” Muh said.

According to data compiled by Infralogic, private equity investment in infrastructure has jumped 70% to USD 373bn globally from 2020 to 2025 year to date.

The panellists agreed that, as private equity converges with infrastructure, the market for growth assets in digital and energy transition has seen increasing competition. Although the pie has grown, multiple investors chasing after a handful of value-add opportunities increases the price bidders need to pay, they said.

Speaking on DigitalBridge’s underbid for AirTrunk, Principal Tejinder Singh said his firm was happy to lose as it shows underwriting discipline. “Our LPs are pleased with the way we behaved during the process,” he said.

A Blackstone-led consortium ended up winning the auction for the Australian data centre operator in an AUD 24bn (USD 16.1bn) deal.

With more private equity convergence to come, the trick for fund managers lies in finding a niche to differentiate themselves and add value, the panellists said.

DigitalBridge, a digital infrastructure-dedicated manager with USD 108bn AUM, enjoys sector expertise and operating experience, putting it in a “special position” to negotiate private deals, he said.

“Having that knowledge and edge is very important for telecom companies with whom we’re talking for carveout discussions,” he said.

Luv Parikh, managing director and Co-Head Private Infrastructure Asia at Partners Group, said value creation is important. He approaches core-plus and value-add investing by staffing teams with specialist industry experts to guide management teams. The strategy is especially relevant when building platforms from single assets, he said.

Ovchar had a word of advice to private equity managers seeking to invest in infrastructure. “Monitor the space and see if there’s a low-risk way you can explore it and whether the thematic makes sense before embarking on that journey,” he said.

“Don’t do it just because you see an opportunity,” he said.