Revenue and Dividend Payout in Privately Held Infrastructure Investments

by Frédéric Blanc-Brude, Majid Hasan, Qi Wang, Tim Whittaker
Abstract:
This study makes use of the EDHECinfra infrastructure database. To date, with data for hundreds of investments over 15-20 years, it is the most comprehensive database of infrastructure cash flows currently available for research.This dataset is one of the early outputs of a substantial effort launched at EDHEC to collect private information and document the investment characteristics of infrastructure investments, and create a global database of infrastructure cash flows spanning several decades.

This is the largest study of this kind ever undertaken and the authors’ findings suggests that infrastructure firms exhibit a unique business model in terms of revenues and profits dynamics compared to a large control group of public and private firms. Infrastructure firms have significantly lower volatility of revenues and profits and pay a much higher proportion of their revenues much more frequently to their owners, independent of the business cycle.

Such findings have important ramifications for investment management and prudential regulation: they confirm that the project to build benchmarks of the risk-adjusted of private infrastructure investments is worth-while and can had tremendous value to the investment sector insofar as it can help improve price discovery and, in turn, asset allocation decision to long-term illiquid assets like infrastructure.

Publication focus:

Academic finance
some
Risk Management
not much
Asset pricing
not much
Maths
not much
Stats
mostly
part of the EDHEC/Meridiam/Campbell Lutens Research Chair 2013-2016
Reference:
Revenue and Dividend Payout in Privately Held Infrastructure Investments (Frédéric Blanc-Brude, Majid Hasan, Qi Wang, Tim Whittaker), In EDHEC Infrastructure Institute Publications, volume March, 2016.