The case of Thames Water and the importance of discount rates in cash-flow driven investments
This webinar will provide an overview of the new research publication “Low Tide: What the Data Showed About Thames Water” and discuss the different red flags that investors could have seen in the data before investing in Thames that suggested that it was not going to perform well. Amongst these signals, the exposure of Thames to key risk factors suggested a significant increase in the discount rate and likely drop in value overt time that could have been recognised earlier.
The webinar will then address the importance of using the right discount rate in cash-flow driven investments like Thames water and other infrastructure companies, relative to any adjustments of the cash flows. This webinar will describe how the discount rate can be estimated as a combination of a systematic (private infrastructure market) components and various adjustments that are made by investors to reflect their views, including in the latest impairments by the current owners of Thames Water.
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