“Investors should recognise that the risk premia used to discount the future cash flows has increased for the troubled sector, say Frederic Blanc-Brude, director at EDHECinfra, and Tim Whittaker, associate research director at EDHECinfra.” In this article, Frederic and Tim take the view on the valuation of unlisted infrastructure with a focus on airports in the context of the global pandemic 2020.

“The impact of COVID-19 lockdowns on the airport sector highlights a fundamental issue about how investors should approach the valuation of infrastructure assets. There have been two frequent interpretations. On the one hand, there has been a clear, large shock to revenues that cannot leave the value of a company unchanged. On the other hand, airports retain value because they are expected to pay dividends for another 30 or 50 years, and so losing a few quarters of revenue may not be that material.”

Read the story here.