As schemes seek resilient income and greater diversification, infrastructure debt is emerging as a compelling way to access long-term returns while helping to manage portfolio risk
Infrastructure debt has become an increasingly important asset class for Local Government Pension Scheme (LGPS) investors seeking stable income, portfolio diversification and downside protection.
It offers a compelling combination of predictable cashflows, low correlation to public markets and exposure to essential assets that support long-term economic growth – qualities that align closely with LGPS objectives around liability matching and risk management.
At Fiera Capital, our infrastructure debt team has invested in mid-market infrastructure projects since 2005, launching dedicated funds in 2017 and 2021. We’ve deployed approximately $1.5 billion across North American infrastructure, primarily in renewable and clean energy – wind, solar, biomass and renewable natural gas – alongside digital infrastructure such as data centres and fibre networks, and sustainable infrastructure including battery storage and waste-to-energy facilities.
We act as an alternative to traditional lenders such as banks and life insurers, providing project-level debt, mezzanine financing, construction loans and, selectively, development-stage capital, while remaining disciplined about credit quality and avoiding unproven technologies.
The opportunity in the lower mid-market
A key differentiator of our strategy is a focus on the lower mid-market: projects costing $50 million to a few hundred million, where we typically commit $20–50 million as sole lender. This segment is relatively underserved. Large infrastructure funds increasingly need to deploy hundreds of millions per transaction, while banks and life insurers often find smaller deals uneconomical to pursue.
The result is a market inefficiency that benefits specialist lenders. We can access projects with strong fundamentals and robust credit characteristics while earning additional return through transaction-size and illiquidity premiums. For LGPS investors seeking long-term returns without significantly increasing portfolio risk, this segment can be a valuable source of enhanced risk-adjusted performance.
Accessing proprietary opportunities
Our approach is built on long-standing relationships with sponsors, developers, advisers and financial institutions across the infrastructure market. These relationships give us access to directly originated transactions that rarely appear in public markets or broadly syndicated processes – deals that often require flexible capital solutions sitting outside the traditional lending models of banks and life insurers.
A recent example is our financing of the Starlight Alberta solar portfolio. The transaction required a creative development-capital structure and, at under $50 million, was below the threshold of many larger lenders. Working closely with the sponsor and arranger, we structured a solution designed to deliver attractive risk-adjusted returns while supporting the project’s development objectives. For LGPS funds, this origination advantage – access to deals that larger, less flexible capital simply can’t reach – is one of the most important drivers of value in our strategy.
Infrastructure debt is generally secured against tangible assets with contracted revenues, providing greater visibility into future cashflows.
Why infrastructure debt is defensive
Infrastructure debt is widely regarded as a defensive asset class, and for good reason. The underlying assets typically provide essential services and benefit from long-term contractual revenue streams, high barriers to entry and predictable demand. A renewable energy project operating under a long-term power purchase agreement, for instance, generates stable cashflows that are largely insulated from broader economic cycles – the asset continues to produce and sell electricity regardless of market volatility.
This distinguishes infrastructure debt from broader private credit, where much of today’s concern centres on sponsor-backed leveraged buyouts, elevated valuation multiples and growing exposure to cyclical sectors such as technology. Infrastructure debt is generally secured against tangible assets with identifiable values and contracted revenues, providing greater visibility into future cashflows and stronger downside protection. For LGPS investors, this translates into predictable income, reduced portfolio volatility and less dependence on public market performance – all directly relevant to funding and liability-matching objectives.
Why the opportunity remains strong
We believe the case for infrastructure debt is supported by both current conditions and long-term structural trends. Amid geopolitical uncertainty, economic volatility and evolving rate expectations, infrastructure debt offers exposure to essential assets with contracted revenues and historically low correlation to equities and other private market asset classes – diversification benefits that are highly relevant for LGPS funds balancing return generation with risk management.
The asset class can also offer attractive yields relative to traditional fixed income, particularly in the mid-market where transaction-size and illiquidity premiums remain available. Meanwhile, the global infrastructure funding gap continues to widen: modernising ageing infrastructure, supporting the energy transition and expanding digital networks all require significant investment. Particularly attractive opportunities exist across renewable energy, sustainable infrastructure and digital assets such as data centres, where AI and cloud computing growth is driving substantial demand for power generation, transmission and grid capacity.
For LGPS investors, infrastructure debt offers a compelling combination of stable income, diversification, downside protection and exposure to long-term growth themes. In a market environment where resilience and predictability are increasingly valued, the asset class is well positioned to play a growing role in LGPS portfolios.