EDHEC Infrastructure and Private Assets (EDHECinfra) is pleased to announce a new commercial agreement with the Government Pension Investment Fund of Japan. Following an open, public market consultation, GPIF has commissioned EDHECinfra to analyse the fair value of investments in unlisted infrastructure equity, with a particular emphasis on GPIF’s own portfolio.
The fair value of private assets needs measuring on an ongoing basis, using the latest market inputs, so investors can measure risk and make meaningful comparisons with other asset classes.
Infrastructure companies, while unique, are exposed to a number of common risk factors, including cross-asset class factors like inflation and nominal rates, as well as infrastructure-specific factors such as the presence of contracted, merchant or regulated revenues. Adequate typologies, methodologies and up-to-date market inputs reflecting the latest price of risk and yield curve allow measuring the price and risk of unlisted infrastructure investments, even if they seldom trade.
The approach developed by EDHECinfra solves the usual problem of not having enough “comparables” of recent transactions and allows robust and precise market valuations of illiquid companies.
“We are very proud to be working for GPIF on this important topic,” said Frederic Blanc-Brude, Director of EDHECinfra. “The proper implementation of IFRS13 is essential for investors to trust the valuations of the investments they make in private assets, especially infrastructure companies that are seemingly unique and held for the long term. Private assets are traded in a market and they have a market price, which has to be estimated on a given date. Anything short of that should not be good enough for serious investors.”
EDHECinfra, which created the infraMetrics platform in 2019, is a regulated provider of market indices, benchmarks, and valuation analytics for investors in the unlisted infrastructure equity and private debt sector.
EDHECinfra has created and maintains the largest database of financial information on unlisted infrastructure investments in the world and uses state-of-the-art valuation methods that include the estimation of the market risk premia of individual equity investments, reflecting their expected returns at the time of valuation. EDHECinfra produces market valuations for hundreds of infrastructure companies and thousands of private infrastructure debt instruments on a monthly basis.
Japanese public pension schemes adopt a pay-as-you-go-system, and pension reserves supplement the shortage of pension premiums amid declining birthrates and an aging society. As a public pension fund in Japan, GPIF manages this pension reserves stably and efficiently from a long-term perspective, solely for the benefit of future pension beneficiaries, thereby contributing to the stability of pension finance. GPIF has approximately JPY190 trillion AUM, investing in a globally diversified portfolio, in order to exercise its fiduciary duties to most people in Japan except for public workers.
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Director of Investor Outreach