santiphotois | iStock | Getty Images

To understand what transportation will look like in 2039, follow the big money. Long-term investors who control tens of billions of dollars—private-equity firms, sovereign wealth funds, public pensions and the like—aren't betting on the proverbial jet pack of tomorrow. Instead, they hope to make substantial returns by focusing on more immediate—and boring—needs, like fixing bridges, redesigning airports and tweaking road and car technology.

Deals like Industry Funds Management's purchase of London Stansted Airport in 2013; Fortress Investment Group's ongoing development of Florida East Coast Industries, a regional rail system from Miami to Orlando; and Global Infrastructure Partners' recent sale of its stake in the Port of Brisbane to Canadian pension La Caisse de dépôt et placement du Québec show how private investors will have a big part in shaping the evolution of transportation over the next 25 years. "History has shown that the public and broader market forces will look for the most efficient form of transportation available, and for the foreseeable future this probably means a reliance on current technologies using existing forms of infrastructure," said Dale Bonner, chairman of infrastructure developer Plenary Group USA.

"Current modes of surface, air and water transportation are likely to remain with us for the foreseeable future," added Bonner, the former California secretary of business, transportation and housing. "Most investors are betting on this also, since so much of the investment is in technologies designed to improve rather than replace these modes and the complex systems they rely upon."

Of course, many novel transportation technologies are in development. Sub-orbital flight, backed by Richard Branson, Jeff Bezos and others, could cut a 15-hour plane trip to two hours. Gas and electricity are likely to increasingly power cars and trucks, as Tesla has successfully pioneered. And driverless vehicles, like the prototypes that Google recently trotted out, are entering the realm of serious discussion. Read MoreWhy today's transport stocks will still matter

Huge need

The need for contemporary transportation fixes is jarring. McKinsey estimates that $57 trillion of infrastructure investment is needed by 2030 to support economic growth expectations. A big chunk, $23.8 trillion, is from transportation-related projects: roads ($16.6 trillion), rails ($4.5 trillion), seaports ($0.7 trillion) and airports ($2 trillion). After all, the global population is expected to hit 9 billion by 2050, which could mean 3 to 4 times as much passenger travel and 2.5 to 3.5 times as much freight movement as in 2000, according to the International Transport Forum. The situation in the U.S. is no different. As Fortress Investment Group has noted publicly, an estimated $3.6 trillion will be required to repair existing infrastructure in the U.S. Much of that represents roads ($1.73 trillion) plus airports ($135 billion) and rails ($100 million). "Our current infrastructure deficit is an economic drag on businesses and consumers alike, and further investment is crucial to fostering economic growth, creating jobs and keeping us competitive in the global economy," BlackRock chairman and CEO Larry Fink said in July about a new White House initiative to fund American infrastructure rejuvenation with the help of private capital.

There's also tremendous opportunity in getting more out of existing transportation infrastructure. A 2013 report by McKinsey estimated that the world could save $1 trillion a year from 2013 to 2030 by improving current infrastructure through better project selection, streamlined construction, and operational improvements of existing roads, seaports and other assets. All this would improve productivity by 60 percent.

"Getting the most out of existing assets is becoming a critical imperative as many forms of infrastructure hit capacity constraints that cannot be resolved simply by building more," McKinsey noted. Read MoreGovernments 'plug funding gap' in major projects



Big funds lined up

Investors are well aware of that need and their ability to step in where governments can't. Municipal bond issuance is down sharply since 2010, and federal and local governments often struggle to find funding for large infrastructure projects. Benjamin Gordon, an industry expert and founder of mergers and acquisitions–focused BG Strategic Advisors, estimates that private-equity firms alone will invest at least $100 billion in the next five to seven years on transportation.

"Private equity will be vital to shaping transportation over the next 25 years," Gordon said.

Top 10 transport-only investment funds Fund Name Fund Manager Fund Size<br> ($m) Target size <br>($m) Final Close Geographic<br> focus Country<br> focus GS Infrastructure

Partners II Goldman Sachs Principal Investment Area 3,100.00 7,500.00 3/1/2010 Global N/A J.P. Morgan Global

Maritime Investment

Fund JP Morgan Asset Management 780.33 750 6/1/2012 Global N/A Airline Credit

Opportunities II Castlelake 605.5 400 2/1/2011 Global N/A Transportation Recovery

Fund WL Ross & Co. 562 500 6/1/2014 Global N/A Piramal Roads Infra Ashok Piramal Group 300 300 11/1/2011 Asia-Pacific India China Resources

Urban Car Park

Investment Partnership China Resources Capital 265 265 2/1/2013 Asia-Pacific China Brasil Portos e

Ativos Logísticos

FIP BRZ Investimentos 259.62 227.14 7/1/2012 Latin America Brazil JPMorgan

AIRRO India

SideCar Fund JP Morgan Asset Management 230 - 5/1/2012 Asia-Pacific India TIIC Fund Transport Infrastructure Investment Company 188.23 684.47 4/1/2010 Global N/A SIDVC Wuzhong

Infrastructure Industry

fund Suzhou International Development Venture Capital Holding Co., Ltd. (SIDVC) 161.21 161.21 6/1/2013 Asia-Pacific China





Top 10 infrastructure investment funds that include transportation Fund Name Fund Manager Fund Size<br> ($m) Target size<br> ($m) Final Close Geographic focus Global Infrastructure

Partners II Global Infrastructure Partners 8,250.00 6,000.00 10/1/2012 Global Brookfield

Infrastructure

Fund II Brookfield Asset Management 7,000.00 5,000.00 10/1/2013 Global Alinda Infrastructure

Fund II Alinda Capital Partners 4,100.00 5,000.00 1/1/2010 Global Macquarie European

Infrastructure Fund 4

(MEIF 4) Macquarie Group 3,764.57 2,737.87 5/1/2013 Pan-European GS Infrastructure

Partners II Goldman Sachs Principal Investment Area 3,100.00 7,500.00 3/1/2010 Global Brookfield

Americas

Infrastructure

Fund Brookfield Asset Management 2,700.00 1,500.00 9/1/2010 North America EQT Infrastructure

Fund II EQT 2,642.05 2,053.40 1/1/2013 Global Highstar

Capital IV Highstar Capital 2,000.00 3,500.00 5/1/2012 North America CPG China

Infrastructure

Fund I CPG Capital Partners 2,000.00 2,000.00 11/1/2009 Asia-Pacific Gulf One

Infrastructure

Fund I Gulf One 2,000.00 2,000.00 2010 Middle East/Africa

Kathryn Leaf Wilmes, a partner at $28.8 billion private-equity-fund investor Pantheon, agreed. "Private-sector capital will play an increasingly critical role in funding the transportation projects of the future. The public sector can't afford to shoulder the cost alone," Wilmes said. "This is a steep bill for budget-constrained governments who will need to look to the private sector to help bridge the funding gap," she added. "The good news is that there is significant investor demand for high-quality transportation projects."

Read MorePrivate equity sees opportunity in all things that crumble

The number of investors who fund large transportation projects have proliferated over the last 10 years. Today, large banks and private-equity firms, such as Carlyle, JPMorgan, Morgan Stanley, KKR, Goldman Sachs and Citi, compete with large public pensions, like CalPERS, Ontario Teachers' Pension Plan and the Teacher Retirement System of Texas for the best deals.

"There currently exists a tremendous global opportunity to deploy private capital in partnership with traditional financiers," said Jim Barry, head of infrastructure at BlackRock. "Infrastructure debt and equity has seen significant growth in recent years as pension and insurance capital explores opportunities in lending for roads, rail and shipping facilities."

Top 10 institutional investors active in transportation infrastructure Investor Type Country Funds under<br> Mgmt<br> (mn) Funds under<br> Mgmt<br> (Curr) Current Allocation<br> to Infrastructure<br> (%) OMERS Public

Pension

Fund Canada 65116 CAD 24.07 National Pension Service Public

Pension

Fund South Korea 436000000 KRW 2.6 Corporación Andina

de Fomento

(CAF) Government

Agency Venezuela 26816 USD 42 CPP

Investment

Board Public

Pension

Fund Canada 219100 CAD 4.58 APG - All

Pensions

Group Asset

Manager Netherlands 375000 EUR 2 AustralianSuper Superannuation

Scheme Australia 75000 AUD 14 Ontario Teachers'

Pension

Plan Public

Pension

Fund Canada 140800 CAD 6.82 QIC Asset

Manager Australia 77360 AUD 10.32 Future Fund Sovereign

Wealth

Fund Australia 97573 AUD 7.9 CDP Capital -

Private Equity

Group Asset

Manager Canada 200100 CAD 3.39 Asian

Development

Bank Bank Philippines 163500 USD 3.82

Not all private-capital appetite for transportation investing lines up perfectly with need. "One of the challenges facing investment in transportation is that there is a mismatch between where the capital is most needed and where infrastructure investors are looking to invest," Pantheon's Wilmes said. "Most infrastructure investors are risk averse, which means they have a strong bias to invest in existing, operating assets as opposed to funding new development, which is a higher-risk opportunity." The potential solution, according to Wilmes, is public-private partnerships, whereby governments combine with private funds to finance long-term projects. "Greater government support for greenfield projects ... will be critical to help unlock private-sector capital over the near term," she said.

Top 10 Transportation Deals, All Time Asset Transaction<br> Date Industry Country Total Deal<br> Size (mn) Investors<br> (Firms) Qatar Railways

Development

Company 11/1/2009 Railroads Qatar 17000.00 EUR Deutsche Bahn, Qatar Investment Authority Heathrow (BAA) 6/1/2006 Airports UK 10300.00 GBP CDP Capital - Private Equity Group, Ferrovial, GIC SEA High

Speed Railway

Line 6/1/2011 Railroads France 7800.00 EUR Ardian, CDC Infrastructure, Meridiam Infrastructure, VINCI Concessions ASF 12/1/2005 Toll Roads France 9100.00 EUR VINCI Concessions Itinere

Infraestructuras 12/1/2008 Toll Roads Spain 7880.00 EUR Bilbao Bizkaia Kutxa, Caixa Galicia, Caixanova, Cajastur, Citi Infrastructure Investors Guarulhos

International

Airport 2/1/2012 Airports Brazil 16200.00 BRL Construtora OAS, FUNCEF, PETROS, PREVI, Unidentified Investor/s SANEF 2/1/2006 Toll Roads France 7791.00 EUR Abertis, Ardian, CDC Infrastructure, CNP Assurances, Crédit Agricole Assurances-Prédica, FFP Intercity

Express

Programme 7/1/2012 Rolling Stock UK 5800.00 GBP Hitachi, John Laing North West

Rail Link 6/1/2014 Railroads Australia 8300.00 AUD John Holland, Leighton Contractors Infrastructure, MTR Corporation, Plenary Group, UGL Limited Angel Trains 8/1/2008 Rolling Stock UK 3600.00 GBP Access Capital Advisers, Amber Infrastructure Group, AMP Capital Investors, Arcus Infrastructure Partners, Deutsche Bank





Driverless cars and spaceflights?

To be sure, some investments could mean big transportation changes by 2039.

One example is computer-driven cars and trucks. "The driverless vehicle technology that can complement and be integrated with existing technologies and systems seem most likely to catch on over the next couple of decades," said Bonner of Plenary.

"Automated autos and trucks are also a serious possibility within the next 25 years, assuming the liability issues can be dealt with," added Bob Poole, director of transportation policy at the Reason Foundation. Read MoreTake the wheel please, I'm done driving Another possibility is suborbital flight. "I see great potential for intercontinental suborbital flight services evolving from today's early efforts to provide suborbital tourist flights," Poole said. "Intercontinental ballistic flights have been a staple of science fiction since the 1950s, but they are a logical extension of today's emerging suborbital tourist flights."

A final example is new transportation fuel sources. "The structural implications of the fracking phenomenon means natural gas and its derivatives, like electricity and fuel cells, will make substantial inroads into transport over the next 25 years," BlackRock's Barry said.

While those novel systems are possible, transport appears more likely to be shaped by incremental improvements. "What ever happened to the flying cars, the supersonic passenger jets and other technologies that have been talked about for many decades but never commercialized?" asked Bonner. "Many of the revolutionary technologies talked about today would require entirely new forms of infrastructure, systems and regulation. Although some angel investors, venture funds and private-equity investors are working on discrete elements of some of the new technologies, none can be shown to yield substantial cost, capacity or time benefits." Read MoreFuture of flight: Changes coming in 2039 A 2014 report by the World Economic Forum and the Boston Consulting Group on transportation in 2025 focused on technology-driven improvements to current means of transportation, as opposed to entirely new technologies. Among the visions were electronic visas and identification for easy border crossings and security checks; dynamic traffic control by providing drivers with automated updates and alternate routes; and virtual logistics helpers to keep travelers and cargo on time.

"The solutions will allow us to revolutionize travel and transport," John Moavenzadeh, senior director of mobility industries at the World Economic Forum, said in releasing the report. "The tremendous benefits they can provide to public and private sector are clear. What is needed to realize those benefits is for the relevant stakeholders to come around the table to work together on bringing them to life."

Returns not always high