Investment Insights Why Private Infrastructure in 2026: Investing Through Volatility and a Rapidly Evolving World May 2026

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May 2026 6 minute read James Cunningham David McNellis Sign up to subscribe to the latest insights from KKR As Raj Agrawal notes in his 2026 Infrastructure Outlook, we are operating in a world of more persistent inflation, greater macro and geopolitical volatility, and rapid technological change. In this Regime Change environment, stocks and bonds can come under pressure simultaneously, rendering 60/40 allocations less effective at delivering returns and “shock absorption” amidst volatility. Greater market concentration, combined with higher financing costs, is likely to put pressure on public market returns. We think the environment we are describing calls for diversification outside of public markets, as well as exposure to durable global investment themes. It also favors strategies that can deliver both portfolio resilience and attractive returns, particularly those aligned with a hard asset, low-obsolescence (“HALO”) framework: businesses with collateral-backed cash flows, providing critical services in a rapidly evolving world, and meaningful upside potential. We believe private infrastructure can deliver these attributes and warrants increased investor attention. The asset class captures structural growth, capital preservation, and ownership of assets with relatively low risk of obsolescence, even in the face of AI disruption.

Amid elevated geopolitical and economic uncertainty, demand for Infrastructure remains notably durable. In our view, the world is entering a prolonged investment cycle driven by digitalization, electrification as well as an increasing need for energy security and supply-chain reconfiguration. Assets tied to power, data, energy, logistics, and connectivity are no longer mere economic enablers, but rather increasingly strategic in nature, shaping competitiveness and resilience at both the corporate and national level. Importantly, many of these assets benefit from relatively low obsolescence risk, as they underpin the essential building blocks of economies. What Is Driving the Surge in Demand for Infrastructure? Growth in cloud computing, data consumption, and AI is driving a step change in computing requirements, with global contracted data center capacity projected to increase by more than 200% from 2025 to 2035, according to Data Center Dynamics. At the same time, the International Energy Agency estimates that global electricity demand could rise by at least 40% over the next decade, which would require substantial incremental investment in generation, transmission, distribution, and grid resiliency. Meeting these demands will require substantial investment: global infrastructure needs are projected to exceed $106 trillion by 2040.1 With public balance sheets constrained by higher debt burdens, aging populations, and rising security commitments, private capital is likely to play a central role in closing this gap. Through all of this, persistent geopolitical and macro volatility are shifting the investment landscape. Taken together, sustained demand, paired with an aging asset base in need of replacement, underpins what we view as a compelling long-term investment opportunity in Infrastructure. EXHIBIT 1: Demand for Data and Power Is Durable Across Economic Conditions EXHIBIT 2: Demand for Data and Power Is Durable Across Economic Conditions

As noted above, the current global backdrop represents a step change from prior investment cycles, defined by structurally higher inflation and interest rates, heightened geopolitical tension, and a more uneven global expansion with greater dispersion of growth rates across regions and sectors. Recent market action reinforces that message, as persistent geopolitical tension drives an inflation risk premium, credit is normalizing from exceptionally easy conditions, and investors are rapidly re-underwriting entire industries and expressing views on where AI is additive versus disruptive. These shifts are particularly important for portfolio construction. Stocks and bonds are increasingly moving together, which reduces the reliability of traditional diversification and limits the ability of government bonds to act as consistent shock absorbers during periods of stress. Said differently, the efficient frontier is flatter, the margin for error is smaller, and investors need to be more deliberate about asset allocation and where they take risk. Against this backdrop, we believe portfolios can benefit from incorporating more diversified return streams available in private markets, particularly those anchored in collateral-based cash flows, where value is underpinned by hard assets and revenues are closely tied to essential services and often have strong contractual predictability. In a world where traditional diversification is less reliable and inflation is stickier, allocators are increasingly focused on assets that can preserve capital during periods of stress while still compounding over time. Private infrastructure has consistently exhibited these characteristics (Exhibit 3). Its exposure to essential assets (those that provide critical, everyday services including power, transport, logistics, communications, and water, for example), often supported by contractual revenues and long-duration investment horizons, has historically contributed to more stable performance through downturns and inflationary episodes. At the same time, the upside is not just defensive: secular tailwinds and the ongoing need for investment in power, energy, logistics, and digital infrastructure have supported attractive risk-adjusted returns across cycles. EXHIBIT 3: Strong Historical Track Record of Attractive Risk-Adjusted Returns In our view, Infrastructure’s resilience, essential nature, and durable demand, combined with constrained public funding, create a compelling long-term investment runway. Together, these factors position the asset class to be among the stronger performers over the next two decades for long-term allocators (Exhibit 4). EXHIBIT 4: We Expect Private Infrastructure to Be Among the Best-Performing Asset Classes in Both the Short and Long Term

Private infrastructure offers a differentiated mix of both growth and defensive characteristics. We think this combination is particularly valuable in an environment where we are seeing rapid technological change, inflation is more persistent and bouts of volatility more frequent. This reinforces the appeal of what some market participants call “HALO” exposures: heavy, asset-backed investments with low obsolescence risk. Infrastructure sits squarely within this framework. A key component of infrastructure’s HALO characteristics is its inherently low obsolescence risk. Unlike many sectors exposed to rapid technological disruption, infrastructure assets provide the essential services, such as power and data transmission, which remain critical regardless of how underlying technologies evolve. While innovation may occur at the application layer, demand for the physical backbone enabling that innovation continues to grow. This combination helps anchor returns in durable, asset-backed cash flows, reducing the risk of obsolescence even in a rapidly changing environment. Further, while inflation has moderated in some areas recently (e.g., shelter inflation), we do not expect overall CPI to return sustainably to the benign pre-pandemic run-rate (Exhibit 5). Recent energy price pressures have only underscored this dynamic. Historically, Infrastructure has delivered attractive outcomes across both low- and higher-inflation environments, though for different reasons (Exhibit 6). In lower inflation periods, returns were often supported by stable cash flows, organic growth and favorable financing conditions. In higher inflation and higher volatility periods, the ballast comes more from contractual revenue frameworks, CPI escalators, and the essential nature of the underlying assets, which can help protect real cash flows and dampen drawdowns during periods of stress. Taken together, this ability to perform across regimes reinforces Infrastructure’s HALO-like characteristics (Exhibit 7). EXHIBIT 5: Regime Change for Inflation Often Leads to Volatility Along the Way. We Expect Core CPI to Settle around a 2.5% Run-Rate, Above the 1.6% Average Seen From 2014–2019 EXHIBIT 6: Private Infrastructure Has Delivered Consistent Performance Across Inflation Regimes with Relatively Low Volatility EXHIBIT 7: Private Infrastructure Remains Resilient, Even During Market Downturns This balance is becoming even more relevant as investors navigate uncertainty tied to technological disruption. As AI investment continues to scale, we expect sustained capital deployment across power, connectivity, and data-related assets. In this context, infrastructure provides exposure to the same structural drivers but with a fundamentally different risk profile. Assets such as data centers, and power infrastructure offer returns anchored in long-duration, contracted cash flows rather than dependent on valuation expansion or adoption cycles. In our view, infrastructure can capture transformative growth themes while embedding capital preservation. Its return drivers, rooted in real assets and essential services, differ from those of most equities and bonds, which has historically resulted in low-to-moderate correlations with both equities and bonds. As such, infrastructure can enhance portfolio resilience and should increasingly be viewed as a core building block of portfolios, not just a diversifier (Exhibit 8). EXHIBIT 8: Select Asset Class Correlations: Private Infrastructure Provides Diversification Across Major Asset Classes

Despite its defensive characteristics, infrastructure is not immune to dispersion. Outcomes can vary meaningfully across managers, driven by differences in asset selection, structuring, operational execution, and value-creation capability (Exhibit 9). In fact, the benefit of avoiding bottom-quartile managers in infrastructure can be nearly as significant as it is in private equity, an important reminder that resilience at the asset-class level does not automatically translate into resilience at the portfolio level. As such, disciplined manager selection and underwriting remain essential. EXHIBIT 9: Manager Selection in Private Markets Notwithstanding all the strong attributes outlined above, investing in Private Infrastructure as an asset class is not without risk. At a broad level, KKR’s approach to investing is risk-based, focusing on assets with secured inputs (e.g., power, labor), conservative capital structures supported by contractual protections, investment in jurisdictions with strong rule of law, and partnerships with best-in-class operators.

Against this backdrop, private infrastructure’s role in portfolios is evolving into that of a core building block. In an environment characterized by persistent inflation, tighter fiscal conditions, and rising geopolitical fragmentation, investors are increasingly prioritizing assets that offer stability, real yield, and exposure to structural growth. Ultimately, infrastructure exemplifies a HALO investment: offering high potential upside while intentionally managing downside risk through asset-backed, durable cash flows. Infrastructure sits at the intersection of durable demand, contracted or regulated cash flows that support inflation resilience, and differentiated return drivers that can enhance portfolio stability. At the same time, it offers exposure to the transformative forces reshaping the global economy including digitalization, electrification, and energy security, but through collateral-backed, long-duration assets rather than speculative bets. As such, we think private infrastructure should be viewed as a core portfolio building block, with the potential to be among the stronger-performing asset classes over both the near and long term. REFERENCES 1 Source: McKinsey & Company. Infrastructure DISCLOSURES The information in this presentation is only as current as the date indicated and may be superseded by subsequent market events or for other reasons. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. This presentation should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. The information in this presentation may contain projections or other forward-looking statements regarding future events, targets or expectations regarding the Funds or the strategies described herein and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different from that shown here. The information in this Presentation, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein is as of the date posted, unless otherwise indicated, and KKR assumes no obligation to update the information herein. Unless otherwise indicated, the information in this article reflects the current market view, opinions or expectations of the authors based on their historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied on as such. The portfolio companies mentioned in the above Presentation represent relevant examples of companies that show our investment approach and philosophy, including our approach to investment selection, value creation, and operations. The specific portfolio companies identified are not representative of all of the securities purchased, sold or recommended for advisory clients, and it should not be assumed that the investment in the companies identified was or will be profitable. References to “KKR Capstone” or “Capstone” are to all or any of KKR Capstone Americas LLC, KKR Capstone EMEA LLP, KKR Capstone EMEA (International) LLP, KKR Capstone Asia Limited and their Capstone-branded subsidiaries, which employ operating professionals dedicated to supporting KKR deal teams and portfolio companies. KKR acquired KKR Capstone effective January 1, 2020. References for operating executives, operating experts, or operating consultants are to such employees of KKR Capstone. In this document, views and other statements regarding the impact of initiatives in which KKR Capstone has been involved are based on KKR Capstone’s internal analysis