TICCS(tm) - EDHECinfra

EDHECinfra Index Methodology

EDHECinfra indices and benchmarks aim to provide the representative, risk-adjusted performance of investments in unlisted infrastructure equity and private debt.

EDHECinfra produces calculated (as opposed to contributed) indices: our data and technology allows re-pricing hundreds of individual assets through time, using actual transaction prices to recalibrate expected returns (and discount rates).

This approach uses market inputs, thus avoiding the smoothing of returns caused by appraisal valuations and providing a genuine fair value assessment of performance.

Unlike other private indices, which only report an average performance, EDHECinfra indices include the effect of diversification and provide advanced risk metrics such as volatility, value-at-risk and risk factor prices. The index calculation method is summarised below in four key steps.hs.

TICCS: The Infrastructure Company Classification Standard

ICCS is a common classification standard that can be used by asset owners and managers, regulators, banks and other investors across the various stages of the infrastructure investment value chain including consultants and researchers. It is designed to help investment and research professionals:

Take into account the evolution of the infrastructure procurement landscape in space and time;
Compare sectoral and business risk exposures of investor portfolios with broad market benchmarks;
Document investible infrastructure markets;
Analyse the contribution of individual categories of companies to an infrastructure portfolio;
Design consistent sector and business risk-driven investment strategies in infrastructure globally.

ICCS is a four-pillar multi-criteria company classification system designed to capture the characteristics of infrastructure investments. It consists of:

3 classes and 5 sub-classes of business risk
8 industrial super-classes, corresponding to 30 industry classes of specific industrial activities and 68 industrial asset-level sub-classes
4 geo-economic classifications
2 corporate governance classes and 4 sub-classes

Companies are classified on the basis of individual qualitative and quantitative criteria including their contractual and regulatory structure and environment, their source of revenues and their type of industrial activity including the complexity and level of uniqueness of the relevant infrastructure both from a construction and an operational perspective. Their financial and corporate structure is also taken into account.

Robust - Built on the basis of academic research about the financial economics of infrastructure companies.
Global - The range of categories available ensure that any private infrastructure company worldwide can be integrated in this framework, be it a regulated utility or a solar project company.
Risk focused - While TICCS aims to categorise companies on the basis of their prima facie characteristics, it focuses on groupings that are relevant to understand risk and play a role in asset pricing and portfolio construction.
Dynamic - Infrastructure companies evolve over their life-cycle and with changes in national and sector regulation. The evolution of these characteristics play an important role in infrastructure investment and can be reflected consistently and homogeneously over time.

TICCS is built in the context of the EDHECinfra database of private infrastructure investments, the largest of its kind, which tracks the financial performance of hundreds of infrastructure companies globally.

Each national market included in the EDHECinfra universe is analysed in detail including all the relevant aspects of infrastructure procurement history and regulation in order to match this classification.

TICCS is also reviewed regularly as new markets and companies are added to the EDHECinfra universe. The design of this universe is described in the Infrastructure Index Methodology Standard document available on the EDHECinfra website.

Private infrastructure investment is developing rapidly as a global asset class. This evolution requires a clear and robust classification of the individual infrastructure companies that equity investors can acquire or debt investors lend to. The Infrastructure Company Classification Standard (TICCS) was created by EDHECinfra to provide investors with a frame of reference to approach the infrastructure asset class.

It offers an alternative to investment categories that were inherited from the private equity and real estate universe (e.g. 'Core' vs. 'Core+') which may not be the most informative when trying to group infrastructure investments and design strategies or simply document the structure of the sector. TICCS is designed to be compatible with other standard investment classification schemes but also uses fundamental insights from the academic literature to create a classification that embodies some of the key aspects of infrastructure businesses' risk profiles.

The 2019 TICCS Consultation is Open!

Current TICCS documents

TICCS Governance

TICCS is reviewed once a year in the context of a global consultation and the expert advice of the TICCS Review Committee:

Andrew Knight (RICS) – Chairman
Avi Turetsky (Landmark Partners) – Secretary
Mark Blair (OTPP)
Patrick Boylan (BlackRock)
Anne-Christine Champion (Natixis)
James Davies (OPTrust)
Christophe Dossarp (SOURCE)
Marie Lam-Frendo (Global Infrastructure Hub)
Trevor Lewis (Asian Development Bank)
Christoph Manser (Swiss Life)
Laurence Monnier (Aviva Investors)
Petya Nikolova (New York City Comptroller’s Office)
Paul Shantic (CALSTRS)
Marija Simpraga (LGIM)
Nicholas Tan (Clifford Capital)
Rick Walters (GRESB)