Infrastructure investment is often viewed as a public sector responsibility, heavily influenced by political priorities. However, the growing need for new infrastructure projects – coupled with the urgent renewal of aging assets – has made private capital, particularly from institutional investors, an increasingly vital component. Founded in 2013, infrastructure manager Infranode has pioneered a collaborative approach by partnering with local authorities and mobilizing capital from both institutional investors and public bodies to help build resilient, sustainable infrastructure that serves the long-term needs of society.
Before founding Infranode, the three co-founders – Philip Ajina, Christian Doglia, and Leif Andersson – identified two critical gaps in the Nordic infrastructure universe that lacked a connection. “On the one hand, there was a massive infrastructure investment need across the Nordics – at the municipal, regional, and national levels,” explains Founding Partner Philip Ajina. “On the other hand, Nordic institutional investors were significantly under-allocated to infrastructure as an asset class,” he continues. “We saw two sides with clear investment needs but no bridge to connect them. That was the gap we set out to close.”
“On the one hand, there was a massive infrastructure investment need across the Nordics. On the other hand, Nordic institutional investors were significantly under-allocated to infrastructure as an asset class.”
Bridging the Nordic Infrastructure Investment Gap
Despite the Nordic region being widely regarded as advanced in many aspects of society –including strong infrastructure – the need for investment stems from two underlying dynamics. “There’s a bit of a conundrum,” says Ajina. “Even with relatively high tax rates across the Nordic countries, the public sector has consistently underfunded reinvestment in infrastructure.” Much of the existing infrastructure, he explains, was built in the 1960s and 1970s and is now approaching or exceeding its technical lifespan.
“Even with relatively high tax rates across the Nordic countries, the public sector has consistently underfunded reinvestment in infrastructure.”
Ajina also highlights that, on paper, the Nordic countries are well positioned to fund such investments. “From a debt-to-GDP perspective, the region has been fiscally sound for many years. Municipalities and regions have their own taxation rights and relatively strong credit profiles and can access capital markets,” notes Ajina. But despite all that, there simply has not been enough investment to keep pace with the natural wear and tear. “The need for renovation remains significant.”
At the same time, the onset of the energy transition in recent years has further intensified the demand for infrastructure investment. “With the Nordics becoming the bedrock of the transition to a more sustainable society, it created two extremely powerful investment drivers,” says Ajina. “That, in turn, has increased the resource pressure on the public sector.” These two forces – the urgent need to renew aging infrastructure and the accelerating energy transition – remain the primary reasons why alternative sources of capital, particularly from institutional investors, are essential. “On top of this, a more recent third force is driving infrastructure investment demand – the geo-politically related resilience of our Nordic countries,” continues Ajina, saying that infrastructure investments in this area also play a key role to strengthen society, for instance, Sweden’s commitments linked to the NATO membership. “These are the same fundamental drivers across all the Nordic countries,” Ajina emphasizes.
“With the Nordics becoming the bedrock of the transition to a more sustainable society, it created two extremely powerful investment drivers.”
Ajina goes on to emphasize that virtually all areas of infrastructure require investment –particularly within the traditional sectors of energy, transportation, digital infrastructure, and social infrastructure, which form the core of Infranode’s investment focus. “Typically, we look for regulated businesses – electricity distribution being a good example – where regulation grants an exclusive concession to operate,” says Ajina. “It’s a protected environment, but also one where the regulator determines how you’re allowed to charge your customers.” He further notes other types of infrastructure that function as natural monopolies. “These businesses often have very high barriers to entry, mainly because infrastructure is a very capex- and balance sheet-heavy sector.” Long-term contracts is also a typical feature in infrastructure investing. “Inflation-linked long-term contracts are quite common in the infrastructure sector.”
Political Realities and Collaborative Investment Models
The founding team at Infranode early on identified a key challenge in the Nordics: despite the substantial investment needs and limited resources – both in terms of capital and sector expertise – fully privatizing critical infrastructure remains highly politically sensitive. “Perhaps the main differentiator between infrastructure and other asset classes is that you’re investing in assets closely tied to society, involving not just citizens but also politicians,” Ajina explains. Because of this dynamic, Infranode aimed to develop a model that enables co-ownership of assets alongside local and regional governments, including municipalities and regions.
“Perhaps the main differentiator between infrastructure and other asset classes is that you’re investing in assets closely tied to society, involving not just citizens but also politicians.”
“This approach has proven to be very effective,” Ajina explains. “Most of the deals we do start with identifying investment needs within the public sector and actively sourcing opportunities. We see that this model is also politically viable for decision makers.” Infranode’s strategy centers on making the majority of its investments contribute to building a stronger society – whether through climate action, social development, or digital innovation. The investments, therefore, are highly attractive both to investors and to society at large, including the decision makers. “This co-ownership model has been essential in unlocking these opportunities,” says Ajina. “As a result, Infranode has become synonymous with being a trusted partner to the public sector.”
A Local Partner Across the Nordics
Infranode also fully owns infrastructure investments by acquiring assets directly from private infrastructure owners and developers. “But what truly sets us apart is our ability to build strong partnerships with the public sector and the trust we have established,” Ajina explains. Because local infrastructure investments inevitably involve politics, Infranode has made a deliberate decision to be a local partner throughout the Nordic region. “We don’t see ourselves merely as a Swedish manager operating in the Nordics; we are a Nordic manager serving the entire region,” he adds. Infranode early on recognized the importance of being perceived as a local partner in each country. “That’s why we have established offices and local teams in every Nordic country.”
Infranode’s infrastructure funds are supported by institutional investors such as KPA Pension, Folksam, Keva, Kyrkan Pension, AP4 and many others. According to Ajina, “this type of capital is very welcome back into society.” Not only do the beneficiaries of these institutional investors gain from the attractive characteristics of infrastructure investments –such as solid long-term returns, inflation protection, and portfolio diversification – but they also benefit from the tangible, real-world infrastructure these investments help build and maintain. “When these investors consider infrastructure investments through us, they appreciate the sound financial rationale. But they also recognize the added value of returning pension capital to strengthen the local communities where their customers and pensioners live and work. Instead of investing in a port in Sydney, why not invest closer to home, outside of Stockholm?”
“…they also recognize the added value of returning pension capital to strengthen the local communities where their customers and pensioners live and work.”
Building on the appeal to institutional investors, Ajina draws a comparison between infrastructure and real estate returns, noting that the range of return varies depending on the risk profile. “If you look at strategies focused on scaling infrastructure companies, it’s similar to private equity-style investing, where you might expect mid-teen percentage returns,” he explains. “On the other hand, the lower the risk you take, the lower the expected returns.”
Infrastructure is particularly well suited to deliver cash yield returns, making it comparable to a fixed income-like investment strategy. “If you invest in lower-risk infrastructure, a significant majority of your returns will come from steady cash flows. This means you are less dependent on exiting the investment to realize returns, which provides an additional layer of diversification,” further highlights Ajina. He points out that this is especially relevant today, given the current market dynamics where private equity exits are not unfolding as planned.
Whereas in the previous low-interest-rate environment capital was abundant but quality asset opportunities in infrastructure were limited, the balance has now shifted, concludes Ajina. “Now the situation is somewhat reversed, there are more infrastructure needs and investment opportunities than available capital.”
This article features in the “2025 Private Markets” publication.
