New research shows that infrastructure credit spreads are fair

A new paper drawn from the Natixis/EDHECinfra research chair sheds new light on the drivers of returns in private infrastructure debt. Infrastructure credit spreads remain twice as high today as in 2008, but this new research shows that only 30bps of this increase cannot be explained by changes in systematic risk factor prices.

No financial pain or gain for ESG management and reporting

New EDHECinfra research finds there is no financial penalty or gain (based on Return on Assets) for infrastructure firms to implement ESG management and reporting.A new paper drawn from the EDHECinfra/LTIIA Research Chair shows that Environmental, Social and Governance (ESG) scores are not negatively or positively correlated with the financial performance of unlisted infrastructure firms.

New EDHECinfra study shows that ‘peak infra’ may be behind us

New EDHECinfra research documents the factors behind the evolution of unlisted infrastructure prices over past 15 years. London – 30 January 2019 – A new paper drawn from the EDHECinfra /LTIIA Research Chair shows that common risk factors found in numerous asset classes explain the evolution of unlisted infrastructure secondary market prices. It also shows that after a long period of prices increases, “peak infra” may already be behind us. Unlisted infrastructure prices have increased considerably over the past decade. Was it a bubble or a normal phenomenon? In a new ground-breaking paper, EDHECinfra shows that systematic risk factors can largely explain the evolution of average prices but also that valuations have shifted to a higher level. Author and Director of EDHECinfra Frederic Blanc-Brude said: “The worries about a bubble were driven by the constant increase in prices since 2008. In fact, the process of price discovery happened in slow motion. Infrastructure businesses are expected to deliver steady and predictable cash flows and, to the extent that this is the case, they should be expensive. In a very illiquid market, it took 10 years for investors’ views on fair value to express themselves.” Because private infrastructure is a very illiquid market and assets seldom trade, just looking at average reported prices is insufficient and biased. The paper uses actual transaction prices and advanced statistical techniques to estimate unbiased factor effects and apply these to a much larger group of companies …

Bad procurement creates systematic risk for investors, says latest research from EDHEC Infrastructure Institute

Singapore, 10 April 2018 – A case study of 10 Spanish toll road projects shows that ill-designed procurement can lead to pro-cyclical infrastructure investment risk and significant losses for private investors. EDHEC Infrastructure Institute – an academic research organisation building performance benchmarks for investors in private infrastructure – shed new light on the risks encountered in infrastructure project investment with new research examining the failed Spanish toll roads that the government just took over and intends to retender to private investors later this year. The paper – Tome La Siguiente Salida (Take the Next Exit) – A Case Study of Road Investments Gone Wrong, Spain, 1998-2018 – is based on detailed financial data on each of the concession companies as well as in-depth interviews with individuals representing the public and private sector directly involved in the collapsed projects. Despite the discipline of project financing and the presence of a blanket government guarantee in case of bankruptcy, equity investors were wiped out and their lenders booked losses of 90 cents on the dollar. How and why did these projects fail? The detailed analysis of the events that led to the bankruptcy of all but one of the nine toll road concessions shows how case studies can be a valuable tool for understanding risk for investors. Governments can procure privately financed infrastructure projects in ways that magnify moral hazard and create systematic risk for investors. In the case of the Spanish toll …

EDHECinfra reveals industry standard for unlisted infrastructure benchmarks

Singapore, 30 January 2018 – Based on preferences expressed by major institutions in a new survey, EDHECinfra is releasing a taxonomy of global indices and sub-indices to structure the infrastructure asset class.

EDHEC calls on regulators to take measures against “fake” listed infrastructure

Singapore – 9 October 2017: In open letters to the chairman of the European Securities and Markets Authority (ESMA) and the chairman of the Securities and Exchange Commission (SEC) in the United States, EDHEC has called on regulators to take measures against the risks of investment in so-called `listed infrastructure’.

Game changer infrastructure indices to create multi-trillion dollar sector

Singapore – 13 June 2017 – EDHEC Infrastructure Institute-Singapore (EDHECinfra) is releasing 384 infrastructure debt and equity indices that will change the way investors measure infrastructure investment performance and allow multi-trillion dollar increases in allocation to infrastructure globally. The new EDHECinfra private debt and equity indices cover 50% of the broad market capitalisation of 14 European markets, and provide investors with metrics that have been unavailable to them until now, going back to 2000. Global market coverage is planned to be achieved by 2020. The academic research behind these indices has benefited from the support of NATIXIS and the Long-Term Infrastructure Investors Association (LTIIA) since 2012. EDHECinfra indices are built using asset-level, hand-collected investment data, including infrastructure projects and so-called ‘infrastructure corporates’. The infrastructure investment data depository created and maintained by EDHECinfra covers hundreds of firms, thousands of debt instruments and millions of cash flows and balance sheet items. It is the largest, most comprehensive such database in the world. Thanks to a unique, peer-reviewed private asset pricing technology, previously unavailable metrics such as time-weighted and risk-adjusted returns, value-at-risk, duration, cash yields and a dozen other performance measures of private infrastructure debt and equity investments are now available to investors. According to Frédéric Blanc-Brude, EDHECinfra’s Director: “Our benchmarks will change the way investors approach and manage their infrastructure investments. Key asset allocation, prudential regulation or performance attribution questions can now be answered, and trillions of dollars could now be allocated …

Appetite for infrastructure investment outpaces perceived investment opportunities

SYDNEY, AUSTRALIA // 29 July, 2016: The Global Infrastructure Hub (GI Hub) and EDHEC Infrastructure Institute-Singapore (EDHECinfra) have released the results of study of more than 184 infrastructure investors and advisors, representing approximately USD 8 trillion of global assets under management.

There is no listed infrastructure asset class

“Listed Infrastructure Asset Class” establishing that class.

EDHEC/LTIIA Research Chair 2016-2019

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