Why Fair Value matters and how to price assets using the latest market data

The Market Price of Unlisted Infrastructure Investments

During the session, we will describe why estimating the fair market value of infrastructure investments is important and how it can be done better using infraMetrics in a DCF setting.

Plan of the webinar:

1. Identifying the challenge

1.1 Why knowing the right price really matters:

a. for new investments including understanding the bid-ask spread, adjusting bid prices and ranking/selecting investments in a list of potential deals.

b. for existing investments to estimate realistic exit values, assess risk for risk management and regulatory purposes e.g., PRIIPs, to report NAVs in DC plans, etc.

2. Understanding the problem

2.1 Illustration with real examples of new transactions for the same asset repeating over time -> different investors paid different prices for the same asset and got diff. returns

2.2 illustration of the misleading effects of using discount rates that are not representative of the risks of the investment for existing assets

3. infraMetrics solutions: improving a DCF forecast step by step.

3.1 If the future cash flows are known / predictable, show the impact of picking the correct risk discount rate

a. Using current practices: CAPM
b. Using infraMetrics and adjusting the yield curve to the horizon and the risk premia to the asset risk profile
c. Using a WACC

3.2 If the cash flows are not easily known / predictable -> additional layer of uncertainty

a. Using a base case and ad hoc sensitivity analyses
b. Using infraMetrics to create a robust cash flow model or simulation

4. Infrastructure remains a great asset class even after measuring risks

Speakers: Frederic Blanc-Brude, CEO of EDHECinfra and Abhishek Gupta, Head of infraMetrics Product Development

Register here.