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The Rise of Digital Infrastructure
In 2024, as climate disruptions and geopolitical tensions tested economies, digital infrastructure—data centres, fibre-optic networks, and telecommunications—emerged as a cornerstone of economic resilience. Sovereign wealth funds, recognising connectivity as the lifeblood of modern societies, invested $9.4 billion across 53 deals, with $5.4 billion channelled into digital infrastructure, a 54% surge from 2023. This strategic pivot from 2023's deep tech focus reflects a broader vision: to build robust, sustainable systems that ensure operational continuity and drive economic transformation. From India’s Digital India Mission to Italy’s fibre-optic networks, sovereign wealth funds are leveraging digital infrastructure to fortify portfolios, combat climate risks, and lead the charge toward a hyper-connected future.
Building on Past Insights: From Deep Tech to Digital Infrastructure
In last year’s IFSWF Annual Review, we highlighted how sovereign wealth funds focused on deep tech investments in the section A New Frontier: The Industrial-Technology-Energy Transition Nexus. In 2023, sovereign wealth funds allocated $6 billion across 68 deals in industrial-tech sectors, such as advanced robotics and battery storage, to advance the energy transition. Additionally, they invested $12.6 billion in digital themes, with $8.4 billion directed toward software and services. In 2024, sovereign wealth funds shifted their focus, investing $9.4 billion across 53 deals, with digital infrastructure leading at $5.4 billion, up 54% from $3.5 billion in 2023, as shown in Chart 3.1.
Chart 3.1 Sovereign Wealth Fund Direct Investments in Digital Sub-Sectors
Source: IFSWF Database as of April 2025
The findings of the 2024 IFSWF-OPSWF Climate Change Report highlights the importance sovereign wealth funds are placing on digital tools in their operations: 78% of sovereign wealth funds now prioritise digital tools to manage climate risks, up from 55% in 2023, illustrating how sovereign wealth funds are evolving from hardware-focused deep tech to understanding how digital infrastructure can enhance economic and operational resilience.
Why Digital Infrastructure Matters: Strengthening Resilience
Digital infrastructure bolsters economic resilience by ensuring connectivity and operational continuity during climate events, cyber attacks or power outages. Investments in telecommunications networks and data centres, such as the NIIF’s $200 million in iBUS Network and Infrastructure, support the Digital India Mission and enable communities to stay connected during disasters. Software solutions, though reduced to $2.5 billion in 2024, remain vital, with 42 deals in AI, cloud computing, enabling predictive analytics for climate risk management and energy grid optimisation. The World Economic Forum estimates that digital technologies could reduce global emissions by 20% by 2030 through improved efficiency. By prioritising digital infrastructure, sovereign wealth funds enhance their portfolios’ resilience while supporting global sustainability goals.
ADIA’s co-investment in the €18.8 billion acquisition of Telecom Italia’s FiberCop Spa (formerly NetCo) in 2024 underscores the critical role of digital infrastructure in driving economic progress. The transaction exemplifies a well-known approach among sovereign wealth funds to investing in vital infrastructure alongside trusted partners, undeterred by the complexities of politically sensitive sectors. ADIA, co-investing as a limited partner with private market giant KKR and Canada Pension Plan Investment Board (CPPIB), secured a 17.5% stake in NetCo, Italy’s extensive fixed-line telecommunications network. For ADIA, backing assets that underpin economic transformation aligns with its mandate to achieve sustainable, long-term returns. Digital infrastructure, with its stable cash flows and resilience, is a prime target. By co-investing with KKR, a seasoned infrastructure investor, and CPPIB, ADIA mitigates risks while leveraging collective expertise to navigate Italy’s intricate regulatory landscape.
The deal supports Italy’s digital ambitions, with data centre investments in the country projected to reach €10 billion by 2026, although concerns linger over Telecom Italia’s debt load and broadband affordability for consumers. Italy’s government is protective of NetCo as a national asset and has imposed oversight through its “golden power” and involved state-backed Cassa Depositi e Prestiti (CDP) to safeguard interests.
Visualising the Trend: The Data Tells the Story
Charts 3.1 and 3.2 illustrate sovereign wealth fund investments in digital themes from 2020 to 2024, capturing the number of deals and equity value ($ billion) across four categories: Digital infrastructure, hardware, software and services, and telecom carriers. Chart 3.2 shows how the digital infrastructure overtook for the first time the amount invested in software, in 2024, sovereign wealth funds invested $9.4 billion across 53 deals, with $5.4 billion in the digital category and $2.5 billion in software & services (covering AI, cloud computing, and Internet of Things solutions). This marks a shift from 2023, when software & services dominated with $8.4 billion across 27 deals. Digital investments grow from $3.5 billion to $5.4 billion, reflecting sovereign wealth funds’ increasing focus on digital infrastructure. The chart also shows a decline in hardware investments from $6.5 billion in 2021 to $1.5 billion in 2024, aligning with the 2023 IFSWF fund review's emphasis on deep-tech hardware shifting to other areas such as industrials rather than classic technological hardware. These trends highlight sovereign wealth funds’ strategic pivot towards digital infrastructure as a foundation for resilience.
Chart 3.2 Sovereign Wealth Fund Direct Investments in Digital Sub-Sectors
Source: IFSWF Database
Linking to Climate Resilience
Digital infrastructure is a linchpin for climate resilience, ensuring connectivity and enabling data-driven adaptation. In 2024, the $5.4 billion sovereign wealth funds invested in digital networks complemented the $10 billion they allocated to resilient infrastructure, maintaining communication during disruptive events, including natural disasters and conflicts. Software solutions, with $2.5 billion across 42 deals, powered AI-driven climate risk analytics and smart grids, aligning with $8 billion in mitigation investments. Singapore’s GIC backed MioTech’s 2024 financing round, leveraging its AI-powered ESG platform to quantify portfolio risks and adapt to extreme weather. In the Middle East, ADQ’s $180 million Jasr Fund, co-launched with Oman Investment Authority, supported digital infrastructure like data centres to enable real-time climate monitoring, helping Gulf states manage heatwaves and water scarcity. The 2024 IFSWF-OPSWF Climate Change Report notes 78% of sovereign wealth funds now use digital tools for climate risk management, up from 55% in 2023. Telecommunications networks, such as those enabling real-time data transmission from river gauges and sensors in India and Bangladesh for Google’s AI-based flood forecasting system, facilitated flood monitoring in Asia, while data centres, powering machine learning models like Long Short-Term Memory networks on Google’s Flood Hub platform, supported predictive modeling for accurate flood forecasts.
By integrating digital infrastructure with climate strategies, sovereign wealth funds are building portfolios that are future-proof and sustainable, paving the way for a resilient global economy.
Looking Ahead: Building a Resilient Future
In 2024, sovereign wealth funds spearheaded a surge in digital infrastructure, investing $9.4 billion across 53 deals to strengthen resilience against climate risks and economic challenges. By championing robust digital networks and innovative software, sovereign wealth funds enhance connectivity, drive climate adaptation—such as the €400 million ($460 million) partnership between Italy’s Cassa Depositi e Prestiti and the African Development Bank Group, which, through the Growth and Resilience Platform for Africa, boosts sustainable infrastructure, food security, and SME growth—and propels sustainable growth. This strategic shift from deep tech to scalable digital solutions, as highlighted in prior IFSWF reviews, meets soaring global demand for data-driven systems. Sovereign wealth funds can play a key role in advancing new technologies, addressing cybersecurity risks, and supporting global sustainability objectives. By taking strategic steps, they can contribute to a resilient and connected global economy prepared for future challenges.