June 18, 2026

Artificial intelligence (AI) is reshaping the economy, but its growth depends on something far more tangible: physical infrastructure. As demand rises for power, data capacity, transportation, and industrial systems, investors are increasingly recognizing the value of essential, hard-to-replicate assets that are essential to the next phase of expansion.

Where digital growth meets physical limits

Broader capital market dynamics are increasingly favouring Heavy Assets, Low Obsolescence (HALO) investments—essential, infrastructure-like assets with durable cash flows—as investors reassess business model resilience in an AI-driven environment. While AI is often framed as a digital transformation, its deployment is fundamentally constrained by physical infrastructure. Power systems, data infrastructure, transportation infrastructure and industrial capacity are becoming the limiting factors to growth. As a result, scarce, hard-to-replicate infrastructure assets are increasing in strategic importance.

The bottleneck in any system governs its growth and therefore is the system’s most scarce and valuable component. As AI becomes ubiquitous, and the cost of many knowledge-intensive tasks across the economy declines, the bottleneck in the system increasingly becomes the physical infrastructure required to support growth. This is already evident in power markets, where electricity demand is rising meaningfully due to AI, cloud computing, and electrification, while grid capacity and generation remain constrained. Data centres alone are expected to account for approximately 5–10% of United States (US) electricity demand by the end of the decade, up from roughly 4% today, while overall electricity demand growth has more than doubled over the past decade. Meeting this demand is expected to require significant incremental generation and grid investment.

Similar dynamics are also emerging across transportation, logistics, and industrial systems, where the buildout of digital infrastructure and reshoring of supply chains are driving incremental demand for physical capacity. The basic infrastructure that regulates and enables growth in an AI-driven world will become increasingly valuable.

Scarcity, infrastructure and the AI buildout

We are already observing these dynamics across our infrastructure holdings. For example, increasing demand for industrial and energy infrastructure is supporting growth across our transportation platforms, while rising electricity demand continues to reinforce the long-term value of our power generation assets. These trends are consistent with our experience investing in and actively managing infrastructure assets that are deeply embedded within the economies and communities they serve.

These developments have important implications for capital allocation. Certain capital-light and knowledge-intensive business models may face increasing disruption risk, while infrastructure assets that provide essential physical capacity are comparatively insulated. These HALO assets continue to exhibit long lives, high barriers to entry, entrenched market positions, and stable, contracted cash flows, characteristics that are increasingly scarce and, in our view, more valuable in the current environment. 

Infrastructure demand extends beyond AI

This theme extends beyond AI. Demand for infrastructure is also being driven by energy security concerns, geopolitical uncertainty, and industrial policies focused on reshoring critical supply chains and expanding domestic capacity. These forces reinforce the importance of critical, hard-to-replicate infrastructure assets and support sustained long-term investment.

Our infrastructure portfolio is well-positioned within this environment. It is comprised of high-quality, essential infrastructure assets that align closely with these characteristics, including low obsolescence risk, strong contractual protections, and exposure to long-term demand drivers. It also provides indirect exposure to AI-driven growth through ownership of the physical infrastructure that powers and enables these systems, while maintaining a focus on stability and downside protection.

Infrastructure’s role in diversified portfolios

More broadly, diversification is becoming more challenging for investors. Traditional shock absorbers, such as bonds, are no longer providing the same reliable offset when equity markets decline, prompting investors to look elsewhere for protection as correlations rise. At the same time, the US equity market is becoming more concentrated, with a small group of mega-cap technology companies accounting for an outsized share of total market capitalization and index performance.

Incorporating alternative assets in your portfolios – such as hedge strategies, real estate and infrastructure – allows for less correlation to traditional investments and offers the possibility of improving returns. For example, adding infrastructure as an asset class has the potential to lower the volatility of a balanced portfolio by limiting exposure to economic cycles, while providing partial protection against inflation (as certain revenues are linked to consumer price inflation); generating stable cash flow and long-term capital growth.

CC&L Private Capital’s infrastructure strategy

Our Private Client Infrastructure Portfolio has been designed to perform across market cycles given our focus on high-quality infrastructure assets that provide essentiality, scarcity, and durability that underpin long-term value creation, without relying on speculative growth assumptions. The investment team is focused on deploying capital across both traditional infrastructure assets (such as transportation and social infrastructure), as well as renewable energy infrastructure assets (wind, solar, and hydro power generation projects), and digital infrastructure assets.

The CC&L Infrastructure Strategy holds over $7.5 billion in gross assets under management in over 100 individual infrastructure projects in Canada and other creditworthy jurisdictions¹. The strategy focuses on investments in high-quality, mid-sized infrastructure assets, targeting equity investments of up to $250 million and enterprise values of up to $1 billion. Our portfolio is designed to generate long-term capital appreciation and stable cash flows through investments in essential infrastructure projects with strong underlying fundamentals.

The benefit of direct investment in alternative assets

Direct investment in alternative assets via pooled funds is how large institutions typically choose to invest. This offers the full diversification benefits associated with alternative assets—unlike buying publicly-traded vehicles such as real estate investment trusts (REITs), exchange-traded funds (ETFs) or other mutual funds that offer proxy access, which are all more closely correlated to stock market movements. Our alternative investment portfolios provide ownership of the underlying assets – an opportunity historically available only to large institutional investors – which makes them a good proposition for the qualified investor. 

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