Key Takeaways
- • Barings is systematically reallocating capital from private equity toward value-add infrastructure, positioning the asset class as a superior risk-adjusted alternative that delivers private equity-like returns with greater downside protection.
- • Infrastructure generates contracted, inflation-linked revenues anchored by physical assets with substantial replacement costs, enabling the strategy to outperform during inflationary periods while maintaining defensive cash flow characteristics.
- • Barings launched a partnership with the Maryland State Retirement and Pension System over a year ago to target smaller direct infrastructure deals, signaling institutional confidence in scaled deployment across public pension allocations.
- • Institutional investor appetite for infrastructure is accelerating: Marsh research indicates 50.7% of asset owners plan to increase infrastructure allocations in 2026, driven by favorable macroeconomic conditions and capital deployment tailwinds.
- • Private equity faces structural headwinds—deal volume and count have declined while asset valuations remain at historically depressed levels—creating a relative performance gap favoring infrastructure for allocators.
Summary
Barings is executing a deliberate strategic pivot away from traditional private equity toward value-add infrastructure, reflecting a broader reassessment of risk-adjusted returns across alternative asset classes. According to Mina Pacheco Nazemi, Barings' head of infrastructure secondaries and solutions, the firm is "seeing more of an opportunity set for infrastructure" and notably observing "private equity returns within infrastructure." This positioning reflects a multi-year capital reallocation by Barings that has trimmed private equity exposure while building infrastructure capabilities.
The appeal of infrastructure as an alternative to private equity centers on three structural advantages. First, infrastructure generates inflation-protected returns through contracted revenues and inflation-linked cash flows, insulating portfolio performance during inflationary regimes. Second, the asset class delivers substantial downside protection relative to private equity, anchored by physical assets carrying significant replacement costs that establish valuation floors. Third, infrastructure offers the capital appreciation potential associated with private equity while maintaining the defensive characteristics of stable, contracted cash flows. Pacheco Nazemi's commentary underscores this risk-return profile as demonstrably superior to traditional buyout strategies in the current environment.
Market data corroborate Barings' strategic thesis. Marsh research published in 2026 reveals that 50.7% of institutional asset owners plan to increase infrastructure allocations in the current year. Garvan McCarthy, chief investment officer of alternatives at Marsh, attributed this momentum to "positive forces that are supporting deployment," noting that "infrastructure is almost uniquely placed to balance the defensive characteristics of regular cash flows, inflation sensitivity, but also benefit from some of the capital gains that will come through economic growth in certain parts of the cycle." This dual benefit—defensive cash flow generation paired with cyclical capital appreciation—explains infrastructure's net performance advantage over private equity.
The timing of Barings' infrastructure pivot is strategically sound given private equity's current headwinds. Deal volume and transaction counts have declined materially over recent years, while portfolio companies and fund assets have traded at historically depressed valuation multiples. For allocators reassessing capital deployment across alternatives, infrastructure offers both immediate deployment opportunity and superior risk-adjusted return visibility relative to a private equity market constrained by deal scarcity and compressed valuations. Barings' Maryland partnership exemplifies this institutional confidence at the scale of public pension systems.
The appeal of infrastructure as an alternative to private equity centers on three structural advantages. First, infrastructure generates inflation-protected returns through contracted revenues and inflation-linked cash flows, insulating portfolio performance during inflationary regimes. Second, the asset class delivers substantial downside protection relative to private equity, anchored by physical assets carrying significant replacement costs that establish valuation floors. Third, infrastructure offers the capital appreciation potential associated with private equity while maintaining the defensive characteristics of stable, contracted cash flows. Pacheco Nazemi's commentary underscores this risk-return profile as demonstrably superior to traditional buyout strategies in the current environment.
Market data corroborate Barings' strategic thesis. Marsh research published in 2026 reveals that 50.7% of institutional asset owners plan to increase infrastructure allocations in the current year. Garvan McCarthy, chief investment officer of alternatives at Marsh, attributed this momentum to "positive forces that are supporting deployment," noting that "infrastructure is almost uniquely placed to balance the defensive characteristics of regular cash flows, inflation sensitivity, but also benefit from some of the capital gains that will come through economic growth in certain parts of the cycle." This dual benefit—defensive cash flow generation paired with cyclical capital appreciation—explains infrastructure's net performance advantage over private equity.
The timing of Barings' infrastructure pivot is strategically sound given private equity's current headwinds. Deal volume and transaction counts have declined materially over recent years, while portfolio companies and fund assets have traded at historically depressed valuation multiples. For allocators reassessing capital deployment across alternatives, infrastructure offers both immediate deployment opportunity and superior risk-adjusted return visibility relative to a private equity market constrained by deal scarcity and compressed valuations. Barings' Maryland partnership exemplifies this institutional confidence at the scale of public pension systems.
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