Animal Spirits Podcast Talk Your Book: How Infrastructure Funds Work
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Oct 13, 2025 Scott Litman, Managing Director at GCM Grosvenor, dives into the fascinating world of infrastructure investing. He discusses the surging demand for data centers, emphasizing the unique risks and opportunities they present. Scott also explores the divide between energy and digital infrastructure, forecasting a 15–20 year build-out phase. He reveals different access points for investors and the role of leverage in infrastructure deals. With insights on cash flows, yields, and deal sourcing, Litman provides a comprehensive look at why advisors are increasingly including infrastructure in alternative portfolios.
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Data Center Demand Is Just Beginning
- Data center demand is in very early stages with potential for 4x–10x capacity growth as AI adoption rises.
- Location and access to power will determine which projects succeed over the next decade.
Seek Long-Term Hyperscaler Contracts
- Prefer data centers backed by long-term hyperscaler contracts for cash flow certainty.
- Avoid speculative builds that depend on finding tenants after construction unless you accept higher risk.
Energy Versus Digital Infrastructure
- Energy and digital infrastructure overlap but are distinct: energy means generation and storage; digital means data centers, fiber, and towers.
- Power sourcing can be grid, on-site batteries/solar, or dedicated built-for-purpose supply contracts.