Announcements and Press Releases

There is no listed infrastructure asset class

5 July 2016 – EDHEC Infrastructure Instiittute-Singapore (EDHECinfra) has released a new paapper entitled “Searching for a Listed Infrastructure Asset Class” establishing that listed infrastructure securities cannot be considered a unique asset.

Using mean-variance spanning tests for 22 different proxies of listed infrastructure that were added to the portfolio of a well-diversified investor, the authors find no conclusive evidence of a “listed infrastructure asset class” that was not already spanned by a combination of capital market instruments and alternatives or a factor study tests for such effects in global, US and UK markets after the global financial crisis of 2008.

Several reasons motivate this study: Public investment universe, including for benchmarking purposes, but academic research so far provided no conclusive evidence. Index providers have managers present investing in ”listed infrastructure”

Co-author and EDHECinfra Director, Dr Frédéric Blanc to as “listed infrastructure” is neither an asset class, nor a unique combination of market factors and cannot be used as an adequate benchmark of private infrastructure investments.

Dr Blanc-Brude said, “This new study is unique in its scope and methodology and shows that infrastructure investments with thematic (industry importance of developing benchmarks of unlisted infrastructure investments, which is on EDHEC.

This new paper can be downloaded here.

 

EDHEC/LTIIA Research Chair 2016-2019

EDHEC Infrastructure Institute has entered into a partnership with French bank Natixis for a second research chair on “Private Infrastructure Equity Benchmarks.” The research chair will run from 2016-2019.

This project follows the completion of the EDHEC/Meridiam/Campbell-Lutyens Research Chair (2013-2016). The Long-Term Infrastructure Investor Association, which was created by the original sponsors of the Chair, brings its support to the creation and population of a global infrastructure equity cash flow database.

This database is being built by the EDHECinfra from investor contributions and primary documentation (financial statements, project documentation etc), will cover thousands of investments globally, and will allow the production of infrastructure equity benchmarks.

Over the 2016-18 period, the Chair aims to produce three types of empirical benchmarking analyses of infrastructure equity investments:
• Infrastructure equity benchmarks in an asset allocation context (risk/return);
• Infrastructure equity in a liability-driven investment context;
• Infrastructure equity returns and the ESG characteristics of infrastructure projects.

The Research Chair was officially launched at the EDHECinfra Forum in London on March 16th, 2016.
Two LTIIA members, Campbell-Lutyens and the Club of Long-Term Investors provide additional support to this project.

The first EDHEC/MERIDIAM/Campbell Lutyens Research Chair 2012-2015 made a number of valuable contributions to infrastructure equity investment. The work of the Chair has also been instrumental in informing and educating investors about infrastructure project debt and its characteristics.
Regular and important contributions to the prudential regulatory debate, especially the adaptation of the Solvency-II framework to work towards a clearer definition of infrastructure investment and dedicated prudential treatment for infrastructure.

The Chair has also been involved in the policy-setting process in various fora, including at the G20 level and in regional fora such as the OECD, the EU and APEC. The Chair contributed directly to the definition of a data collection standard for asset pricing and the calibration of risk models, which is currently being discussed as an output of the G20 Investment and Infrastructure Working Group (IIWG) in 2015.

Finally, the Chair’s work led to significant applied research outputs:

• the development of a dedicated asset pricing technology for privately-held infrastructure equity investments;
• the definition of a parsimonious data collection and reporting template;
• the calibration of models of default frequency and correlation using new data collected by EDHEC and providing of the sole sources of empirical knowledge on these issues.
Founded in 2014 by investors and for investors, Long Term Infrastructure Investors Association works with a wide range of stakeholders, including infrastructure investors, policy-makers and academia, on supporting long-term, responsible deployment of private capital to public infrastructure around the world.

In 2009 Caisse des Dépots, Cassa Depositi e Prestiti, the European Investment Bank and Kreditanstalt für Wiederaufbau created the Long-Term Investors Club (LTIC). Today the Long-Term Investors Club gathers 18 major financial institutions and institutional investors mainly from G20 countries, representing a combined balance sheet total of USD 5.4 trillion.

EDHEC/Global Infrastructure Hub Survey 2016-2017

EDHECinfra will partner with the Global Infrastructure Hub to conduct a survey of institutional investors’ perceptions and expectations of infrastructure investment. The survey will be conducted in 2016 and will be repeated in 2017.

EDHECinfra and GIH aim to bring more clarity about what role infrastructure investments can play to existing investors in infrastructure, and to the numerous potential new investors in this area. The results of these surveys will support the development of the most relevant investment solutions by asset managers who have access to a pipeline of underlying infrastructure deals.

To this day, the debate around the role of infrastructure in asset allocation decisions has focused mainly on the implied characteristics of the underlying asset (e.g. predictable cash flows are expected to be useful in a liability-driven investment context).

The GIH/EDHECinfra survey of investment practices in infrastructure will help make the reasons for such investment decisions more explicit, and help create the next generation of investment solutions using infrastructure assets to help investors meet their own goals.

Establishing the Hub is a significant and practical initiative by the G20 to drive progress on its infrastructure agenda and to move engagement with the private sector beyond business as usual.

EDHEC/NATIXIS Research Chair 2016-2019

EDHEC Business School has entered into a partnership with French bank Natixis for a second research chair on “Private Infrastructure Debt Benchmarks”. The research chair will run from 2016 to 2019.
This project follows the completion of a first Research Chair (2012-2015). Natixis brings its support to the creation and population of a global infrastructure debt cash flow database.

This database is being built by the EDHEC Infrastructure Investment Institute from lender contributions and primary documentation (financial statements, bond documentation etc), will cover thousands of investments globally, and will allow the production of infrastructure debt benchmarking studies.
Over the 2016-18 period, the Chair aims to produce three types of empirical benchmarking analyses of infrastructure debt:

• Infrastructure debt benchmarks in an asset allocation context (risk/return);
• Infrastructure debt in a liability-driven investment context (duration vs. performance);
• Infrastructure debt performance and the ESG characteristics of infrastructure projects.

The Research Chair was officially launched at the EDHECinfra Forum in London on 16 March 2016.
The first EDHEC/NATIXIS Research Chair 2012-2015 made a number of valuable contributions to infrastructure debt investment. The work of the Chair has also been instrumental in informing and educating investors about infrastructure project debt and its characteristics.
Regular and important contributions to the prudential regulatory debate, especially the adaptation of the Solvency-II framework to work towards a clearer definition of infrastructure investment and dedicated prudential treatment for infrastructure.

The Chair has also been involved in the policy-setting process in various fora, including at the G20 level and in regional fora such as the OECD, the EU and APEC. The Chair contributed directly to the definition of a data collection standard for asset pricing and the calibration of risk models, which is currently being discussed as an output of the G20 Investment and Infrastructure Working Group (IIWG) in 2015.

Finally, the Chair’s work led to significant applied research outputs including:

• the creation of important new empirical knowledge about construction risk, risk pricing and portfolio construction with infrastructure debt;
• the development of a dedicated asset pricing technology for project finance debt;
• the calibration of models of default frequency and correlation using new data collected by EDHEC and providing of the sole sources of empirical knowledge on these issues.

For over 20 years, Natixis has assisted its sponsor and investor clients in achieving their infrastructure financing objectives throughout the world. Over the years the team has advised on, arranged or financed more than 300 projects in 60 countries.

MAS provides funding for EDHECinfra

The Monetary Authority of Singapore has granted five years of funding to EDHEC Business School Asia-Pacific to start the EDHEC Infrastructure Institute Project in Singapore. The project involves the development of the EDHECinfra database and the creation of new investment benchmarks for infrastructure investment solution design and prudential regulation calibration.

The Monetary Authority of Singapore is the central bank of Singapore. Its mission is to promote economic growth, to conduct integrated supervision of financial services, to manage the official foreign reserves and to develop Singapore as an international financial centre.

Tharman Shanmugaratnam, Deputy Prime Minister of Singapore: “EDHEC will create usable investment benchmarks for infrastructure investors.”

Ravi Menon, Managing Director, Monetary Authority of Singapore: “EDHEC’s infrastructure performance benchmarks will provide investors with a valuable tool to evaluate their infrastructure investments, and help to support the growth of infrastructure as a mainstream asset class.”

EDHECinfra/World Bank infrastructure investment masterclass

EDHECinfra held its first infrastructure investment masterclass on infrastructure equity and debt investment on 21 October 2015 in Singapore. Around 50 participating staff of the World Bank Global Infrastructure Facility attended the one day event.

The masterclass included several lectures on the fundamentals of infrastructure investing, asset pricing and risk measurement, as well as detailed case study analyses and interactive work sessions during which participants are asked to address some of the practical challenges encountered by infrastructure investors, regulators and investment managers.

The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the ordinary sense but a unique partnership to reduce poverty and support development.

EDHECinfra releases ‘Infrastructure Valuation’ with PEI Media

EDHECinfra is pleased to announce the release of its book “Infrastructure Valuation”, published by PEI media.
The book is a guide to the valuation of privately held infrastructure equity and debt. Investors considering investing in infrastructure need to form return and risk expectations to make allocation decisions. Written by Frederic Blanc-Brude and Majid Hassan of EDHECinfra, Infrastructure Investor’s Infrastructure Valuation guide develops asset valuation methodologies and data collection templates that aim to contribute to the effective benchmarking of privately held infrastructure debt and equity.

Buy the book here

EDHEC/Meridiam/Campbell Lutyens Research Chair 2013-2016

EDHEC Business School will partner with infrastructure fund manager Meridiam and placement agent Campbell Lutyens for a research chair on “Private Infrastructure Equity Investments” from 2013 to 2016.

The objective of the Chair is to provide a better understanding of the nature and investment profile of equity investment in infrastructure assets and to allow investors to assess the different opportunities within the asset class and contribute to the implementation of policy reforms that will help to shape the infrastructure investment industry.

In particular, it aimed to contribute to the ongoing work undertaken by the European financial regulators to assess the consequences of the coming Solvency II framework for long-term investment by insurers, EIOPA, the European regulator’s initiatives in relation to such investment by pension plans, and the European Commission Green Paper on long-term investment.

Meridiam is a global investor and asset manager specializing in public and community infrastructure with a long-term view. Founded in 2005 by current CEO Thierry Déau, the company is an independent player committed to aligning the interests of all stakeholders.

Campbell Lutyens is an independent advisory firm founded in 1988 focused on fund placement and secondary advisory. The firm has offices in London, New York and Hong Kong and a broad-ranging expertise in the private equity, infrastructure and private debt sectors.

The Chair was extended for 3 years with the support of the Long-Term Infrastructure Investors Association (LTIIA) in March 2016.

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