Where Stonepeak Sees Opportunity in Infrastructure

Jack Howell

With trillions of dollars expected to be invested into digital infrastructure over the next decade, real assets and infrastructure specialist investment manager Stonepeak Partners L.P. has been at the forefront of trends defining the sector.

Jack Howell, a co-president of the approximately $84 billion asset manager, discussed with CIO the attractiveness of the infrastructure asset class and where Stonepeak is positioning itself as an investor in the sector.

“We’ve been investing in infrastructure since 2011, focusing on three main sub-sectors: energy—which includes traditional energy, as well as renewable energy and energy transition,” Howell says; “digital infrastructure—including cell phone towers, data centers and fiber networks; and also transportation and logistics—for example, shipping companies, toll roads.”

The value of the asset class, Howell says, is clear.

“I think of infrastructure as lower-risk private equity,” Howell says. “You have less volatility and more predictable cash flows supported by hard assets and inflation-linked assets. The yield component on infrastructure investments is quite compelling, too, for both institutional investors and retail investors.”

Infrastructure is newer to the portfolios of U.S. institutional investors than other alternative investments like private equity. U.S. institutional investors had an average 3% allocation to the asset class, the lowest of their peers across all geographies, according to an April 2025 report from Macquarie Asset Management.

Canadian and Australian allocators have traditionally invested in infrastructure through direct investments and reported the highest allocations, at 10.1% and 6.7%, respectively, according to Macquarie.

Infrastructure is “a younger asset class than traditional private equity, and in some areas of the world, you have allocations as high as 15% to infrastructure,” Howell says. “In other places, like the U.S., allocations are much lower than that, and those allocations are either stable or growing, which brings more capital to the table and makes for an easier fundraising environment, relative to other asset classes.”

Stonepeak often identifies and capitalizes on mismanaged and distressed assets. Its portfolio value-creation team aims to provide operational support to companies that are financially and operationally distressed.

“One of the tactics we found over the years that allows us to generate significant alpha is going into infrastructure businesses that are not being run optimally and need an operational revamp,” Howell says. “With … the expertise of our operating partners, we’re able to underwrite deals that others maybe wouldn’t underwrite because they don’t have the right operational capabilities.”

Data Centers and Energy

Stonepeak began investing in digital infrastructure and data centers in 2017, with its acquisition of a majority stake in Cologix Inc., a North American data center company. With Stonepeak also a significant investor in power generation, Howell sees the capital requirements for the buildout of digital infrastructure going hand in hand with its energy investing business.

“We’ve looked at data centers through the lens of investing in power as well,” Howell says. “Power has come to the forefront for the broader investment community more recently, just given the exponential demand for data centers and data center capacity, and the ongoing need for electrons to help satiate that demand for data. The capital required for both data centers and power are very much interrelated.”

McKinsey & Co. in 2025 estimated that by 2030, global spending on data centers could reach $7 trillion, including $1.3 trillion for power generation and transmission, cooling, and electrical equipment. Howell notes that it will be challenging to raise the capital needed to support artificial intelligence developments, but it can be done with a mix of investments from private investors and governments. To meet the power demand, Howell sees both traditional and renewable energy sources as key.

“The way we have approached energy and power is with an all-of-the-above approach,” Howell says. “We invest in both traditional energy and renewable energy, and our view is the industry is going to need all of these electrons to make this tie together.”

Renewables

Rising interest rates in 2022 put pressure on renewable assets, but Howell notes that this and other headwinds have created the opportunity to buy at significant discounts.

“We feel very good about where our renewables portfolio sits today. Recent policies have disrupted the renewables sector, and in our opinion, this disruption has created a lot of very compelling opportunities in the renewable space,” Howell says. “Renewables [are] an area where valuations got out of control in the 2020 to 2021 time frame. … We have found that the best time to invest in these sub-sectors is when everyone else is running for the hills. That tends to be when you get the best pricing and can make the best returns.”

The timing and approach, Howell says, came in part from strategy first employed elsewhere.

“It’s very similar to what we’ve done in the traditional energy space,” Howell says. “During the downturns the industry experienced, starting in 2014, … we realized strong returns [by] buying assets and investing in businesses below intrinsic value. Then again in 2020 as well, because it was a sector that was left for dead, and you could go get great deals.”

Some of the manager’s recent deals in renewables include its 46.3%, $360 million stake in a total of 777 MW Texas- and New Mexico-based solar and battery storage portfolio with energy partner Repsol S.A.

in April 2025 and a $252.5 million deal with Repsol in December 2025 for a solar project in Texas that began commercial operation in August 2025.

“Now the tables have turned a bit: Traditional energy assets are being well-bid on at the moment, but renewable assets—nobody wants to touch them,” Howell says. “Again, that creates a great opportunity for investing.”

Iran Conflict’s Effect on Energy Infrastructure

The Iran war has sent shockwaves throughout global energy markets, pushing the price for Brent crude to more than $105 per barrel and putting significant strains on global supplies of liquified natural gas and other energy commodities.

With the conflict introducing headwinds for energy markets, Howell says Stonepeak’s energy portfolio is geographically well positioned.

“We are a North America-focused infrastructure investor, and I do think [the geopolitical situation] increases the value of energy assets in the U.S.,” Howell says. “If you look at North America’s traditional energy sources—natural gas, crude oil and [natural gas liquids]—we have substantial resources across the U.S. and Canda, obviously with good military security as well in North America, and I believe the value of those assets is being highlighted right now. … When you think about investing in different economies, North America is self-sufficient on the energy side. North America is not a big energy importer, like Europe is, and that goes to underlying value in the North America market.”

Howell notes that a continued conflict in the Middle East will weigh heavily on energy markets, especially with gas fields, export terminals and maritime access impaired across the region.

“Stonepeak has significant investments in the [liquified natural gas] sector in the U.S., both on the pipeline, as well as the LNG export facility side,” Howell says. “As people think longer term and focus on diversifying their sources of energy, North America feels like a pretty good place to have exposure, specifically if you are an importer.”