Canada’s infrastructure edge

Infrastructure has become a strategic asset class reshaping global capital flows. From energy transition to digital connectivity, the scale of investment required is unprecedented, and private capital is stepping in where governments can no longer go it alone. Yet in Canada, despite having some of the world’s most sophisticated pension funds, a significant portion of institutional capital continues to be deployed abroad.

Why? Because the domestic pipeline of investable infrastructure assets remains limited - constrained by policy, permitting, and project readiness. This disconnect between capital availability and asset accessibility is not just a missed opportunity; it’s a strategic vulnerability.

A global surge in infrastructure demand

Infrastructure investment is no longer just about replacing aging assets. It’s about enabling the future - digitization, energy transition, and economic resilience. Globally, institutional investors are stepping in to finance profitable infrastructure projects that generate their own revenue streams, such as data centres, airports, and LNG terminals.

A recent report from Allianz Research projects that nearly US$4.2 trillion is required to modernize global transport, energy, and digital infrastructure by 2035. The rise in unlisted assets under management in private capital, from US$25 billion in 2005 to US$1.5 trillion in 2024, underscores the pivotal role private capital players now have in global infrastructure finance.¹ These players are no longer just filling gaps but are becoming essential pillars of the financing structure.

In markets like the UK and Australia, privatization has opened the door for pension funds to own and operate critical infrastructure. These assets are attractive not only for their long-term returns but also for their alignment with ESG goals and national development priorities.

Why Canadian executives should care

Canada is at a crossroads. Budget deficits are limiting the government’s ability to fund infrastructure projects, while pension funds are actively seeking long-duration, revenue-generating assets. The disconnect? Many of these assets are not readily available domestically due to policy constraints, permitting challenges, and a lack of market-ready projects.

If Canada can unlock its infrastructure potential, it could redirect billions in institutional capital back into the country - fueling economic growth, job creation, and sustainable development.

Challenges, opportunities, and solutions

To address the current challenge and the potential opportunities, here are a set of considerations for the various stakeholders:

Policy enablement
Governments must reassess ownership models for infrastructure. For example, most Canadian airports remain publicly owned, unlike their counterparts in Europe and Australia. Privatization or public-private partnerships (PPPs) could unlock significant investment.

Revenue-generating models
Emphasis must be put on projects that generate their own revenue streams. This makes them viable for private capital and reduces reliance on taxpayer funding. Government can support funding when externalities justify these contributions.

The baseline demand for regular public infrastructure replacement is now being extended with new investments fueled by energy transition objectives and the digitization requirements associated with the expansion of artificial intelligence (AI). This shift is creating a profitable and attractive sector for institutional investors, as many large infrastructure projects can now rely on their own revenues. The private sector can build, finance, and reap the benefits from these operations, making it a lucrative investment opportunity.

Social license and Indigenous participation
As seen in the evolving energy sector, gaining community and Indigenous support is critical. Projects that integrate these perspectives are more likely to succeed and attract investment. Indigenous equity participation is a mechanism to ensure alignment, and it is also an area where private institutional capital and thoughtful government support can open up new sources of capital.

Project scale and risk diversification
With infrastructure projects now exceeding $10 billion - and some pipeline initiatives reaching $30 billion - collaboration among multiple capital providers is essential. Banks alone cannot shoulder this scale and concentration of single borrower risk; institutional investors must be part of the equation.

Global lessons, local application
Canada can learn from global markets where private infrastructure delivery has catalyzed investment. Applying these lessons domestically could create a more robust pipeline of investable assets.

Calls to unlock infrastructure investment

For policymakers: Revisit regulatory frameworks to enable private ownership or PPP models for infrastructure assets. Prioritize permitting reforms and accelerate project readiness.
For institutional investors: Engage proactively with governments and developers to shape investable projects. Advocate for policy changes that support long-term investment horizons.
For infrastructure developers: Design projects with clear revenue models and ESG alignment. Build partnerships with Indigenous communities and local stakeholders to strengthen social license.
For industry associations: Facilitate dialogue between public, Indigenous and private sectors. Promote best practices from global markets and support capacity-building for Canadian infrastructure development at scale.

How can we help

KPMG in Canada offers a multidisciplinary team that is uniquely positioned to support stakeholders and rightsholders across the infrastructure investment ecosystem. We bring extensive experience to support with:

Infrastructure strategy and policy advisory: Helping governments and agencies design frameworks that attract private capital.
Project finance and risk structuring: Assisting developers and investors in structuring deals that balance risk and return.
ESG and Indigenous engagement: Guiding organizations in building inclusive, sustainable infrastructure projects.
Global market insights: Leveraging our international network to bring best practices and investment intelligence to Canadian clients.

As Canada faces a pivotal moment in its infrastructure journey, the time to act is now. By aligning policy, capital, and community interests, we can build a future that is resilient, inclusive, and prosperous.

Reach out to our team to discuss your needs.