The 2019 EDHECinfra/G20 survey of infrastructure investors is a detailed study of benchmarking practices amongst asset owners and managers and brought to light a significant issue with regard to the investment process in infrastructure: investors do know how much risk they are taking and they are not happy about it. More than 300 respondents took part in the survey, including representatives of 130 asset owners accounting for $10 trillion in AUM, more than 10 per cent of global AUM. This is largest survey ever undertaken of asset owners and managers active in the infrastructure space and is representative of the views of large sophisticated investors, with 50 per cent of respondents reporting more than $25 billion AUM and 30 per cent reporting more than $50 billion AUM. The article can be accessed here. Our recent paper on the factors that drive unlisted infrastructure equity valuations and recent market trends was highlighted in French Business Newspaper Les Echos, ahead of its key note presentation by Frederic Blanc-Brude at the Infrastructure Investor Global Summit in Berlin. The paper shows that systematic risk factors explain asset prices well in unlisted infrastructure markets and that the evolution of prices has been ‘rational’ over the past 10 years. Infrastructure is expensive because it is a low risk asset. The research paper also discusses the implications of its findings for asset pricing and fair value measurement. Read the article in Les Echos here (in French). The first ever study on ESG reporting and financial returns by Tim Whittaker and Silvia Garcia was highlighted by the Financial Times. “This paper challenges the oft-reported notion that better ESG ratings should somehow systematically increase or decrease returns,” said Tim Whittaker, research director at Edhecinfra. “The study examined 173 companies in Europe, the Americas, Australia and New Zealand that reported on areas including board gender diversity and energy efficiency between 2016 and 2018. Gresb assessed this against data on their returns tracked by Edhecinfra. The study is at odds with other research that shows that companies with better ESG credentials are stronger performers, based on the idea that issues such as poor governance and environmental problems damage profitability.” Read the story in the FT here. Infrastructure is a new asset class; numerous deals had to happen before buyers and sellers discovered a ‘fair price’.” “It is also important to note that valuations did not just increase rapidly due to a wall of cash chasing assets, but rather prices evolved to reflect the preferences of investors taking major risk factors into account.” EDHECinfra’s research paper “Which Factors Explain Unlisted Infrastructure Asset Prices?” is discussed in Infrastructure Investor. The bigger issue standing in the way of higher US infrastructure investment is the lack of homogeneity in financing and procurement across states. The US cannot be thought of as a single infrastructure market but rather 52 separate infrastructure markets.” For private investors to get comfortable with investing in US infrastructure, two things need to happen: investors must see a pipeline of investible infrastructure projects, and infrastructure projects and managers must improve the transparency in the reporting of performance and risk. EDHECinfra’s Sarah Tame is interviewed by IPE Real Assets. Without a proper taxonomy providing a set of criteria to define infrastructure it is hard for asset managers to structure the solutions investors need. The EDHEC Infrastructure Institute, as part of its work to build performance benchmarks for investors in private infrastructure debt and equity, has launched the Global Infrastructure Company Classification (GICCS) to do just that. EDHECinfra’s Sarah Tame argues that without a clear definition of what it is and what it can offer investors, the infrastructure sector does itself a disservice. EDHECinfra has now built the largest database of infrastructure investment data in the world. The data has been used to create performance benchmarks that are needed for asset allocation, prudential regulation and the design of infrastructure investment solutions. EDHECinfra’s Sarah Tame and Frederic Blanc-Brude write for Infrastructure Asia about the need for transparency and accurate performance measures within infrastructure investments. “EDHECinfra was created to address the knowledge gap faced by infrastructure investors. Investors need proper performance benchmarks for private infrastructure that allow them to understand infrastructure performance in a multi-asset class context.” “Without it, it’s hard to make asset allocation decisions, it’s hard to measure the performance of not only of your manager but your internal portfolio. It’s hard to report to your regulator about the risk you are taking and how that balances with the rest of your portfolio.” EDHECinfra’s Sarah Tame speaks to Alt Assets about EDHECinfra’s Global Unlisted Infrastructure Index. EDHEC has been gathering data from asset owners to produce indices that address the specific needs of the infrastructure asset class. It has sought to address two major issues: one, infrastructure assets are often large and heterogeneous, meaning you need to include a lot of assets before you can start to represent the market in its entirety; two, infrastructure assets are rarely traded, making it challenging to assess market pricing accurately and in a timely manner. EDHECinfra Global Unlisted Infrastructure Index is mentioned by IPE Real Assets. EDHECinfra Days conference is highlighted as a must attend event as speakers discuss the number of inadequacies with the current approach to infrastructure fund management, including those relating to costs, liquidity and time horizons. Keynote Mark Fawcett said “We need funds which have a very long horizon, aren’t going to be closed at any specific period and have liquidity points where we can put money in on a regular basis. We don’t need daily dealing, we don’t need monthly dealing, but we do need some line of sight.” Others, looking at asset owners shouldering the design and development of city train networks, see mostly outsized risks. “It’s the most concentrated bet they can possibly make,” … It’s like saying “‘forget about investing in a well-diversified stock portfolio. Just buy this one stock that we really like.'” EDHECinfra’s Frederic Blanc-Brude talks to Pensions and Investments about the broader infrastructure role. “The unlisted infrastructure sector is evolving rapidly to become more transparent and better benchmarked, so that large institutional investors such as GPFG will now be able to approach it on a completely different basis.” “Without adequate performance benchmarks infrastructure investors have found it challenging to make investments in infrastructure” “Using unique asset pricing technology, we are able to compute the metrics that investors and regulators need to understand private infrastructure in a multi-asset class context. “We are one of the first to measure the risk and risk-adjusted return of private infrastructure investment, an essential performance metric for investors and regulators.” EDHECinfra’s Sarah Tame is interviewed about EDHECinfra Global Unlisted Infrastructure Index by Institutional Real Estate for Institutional Investing in Infrastructure. “Although infrastructure is illiquid, our research shows that if you can measure the risk-adjusted performance effectively, investment becomes much less challenging. “You do see negative returns on some assets. But our benchmarks give a portfolio view and indicate that risks reduce considerably as they spread across the portfolio. The research also shows that infrastructure provided greater performance and lower risk compared to the stock market between 2000 and 2016. “There is an influx of institutional capital chasing the same trophy assets in Europe. But better data brings greater transparency and opens the decision about where to invest.” EDHECinfra’s Sarah Tame is interviewed in the The Times Future of Infrastructure supplement. “Infrastructure investors today use ad hoc benchmarks for unlisted infrastructure investment. EDHECinfra wishes to establish an industry standard for the infrastructure asset class – and we’ve made progress.” EDHECinfra’s Sarah Tame writes for Top1000Funds about establishing an industry standard for the infrastructure asset class. “Three-quarters of industry representatives said they would use an infrastructure investment benchmark to understand how assets are performing, according to an Edhec Business School study, which surveyed 200 infrastructure investors.” EDHECinfra data informs The Financial Times article about benchmarking infrastructure investment. “A majority of infrastructure investors agree that standardised performance data is needed to better judge returns, according to research from EDHECinfra, but they differ on how that information should be organised.” EDHECinfra’s research paper “Selecting Reference Indices for the Infrastructure Asset Class” is discussed in Infrastructure Investor. “Traditional geographic and sectoral categories used for capital markets benchmarks have been widely rejected by institutional infrastructure investors, according to a survey by EDHEC Infrastructure Institute.” EDHECinfra’s research paper “Selecting Reference Indices for the Infrastructure Asset Class” is discussed in IPE Real Assets. As infrastructure investment grows, the boundaries are being stretched by some asset managers investing in real estate-type assets with infrastructure value-add labels slapped on top. Investors are often confused as to what core, core-plus, value-add and super-core products encompass. Generally they are a way for managers to justify return targets. EDHECinfra’s Sarah Tame writes for IPE Real Assets about EDHECinfra’s Global Infrastructure Company Classification (GICCS). “The Argentinian presidency of the G20 opens this month and will be marked by a focus on infrastructure investment. The G20 and OECD have already announced a wide scale data collection initiative to create benchmarks to monitor the risk-adjusted financial performance of private infrastructure debt and equity investments.” EDHECinfra’s Frederic Blanc-Brude and Sarah Tame write for the World Bank PPP blog about building benchmarks for infrastructure investors. “The traditional asset managers are now having to operate in what they call the value-add space, where the asset might be brownfield but it has a greenfield element. This influx of Asian capital has changed the dynamics of the market.” EDHECinfra’s Sarah Tame provides insight on Asian investors interest in global infrastructure in Asian Venture Capital Journal. “Listed infrastructure, in its current form, cannot be called an asset class. Asset managers offering so called ‘infrastructure funds’ are misleading investors. It has been argued that the wrapper does not matter, but first impressions count.” EDHECinfra’s Frédéric Blanc-Brude went head-to-head with David Bentley, of GIP-backed ATLAS Infrastructure, in an Oxford-style debate at the Infrastructure Investor HK summit. “Some investors are happy to see infrastructure as a lower return/lower risk asset because they have a different balance sheet. That is, they are interested in long term value and do not intend to liquidate these assets”. EDHECinfra director Frederic Blanc-Brude provides insight on currency risk in Asia in Inframation. The latest Investor Perceptions of Infrastructure 2017 survey finds that investors do not require a greater risk premium to invest in greenfield projects compared to brownfield ones. EDHECinfra’s research paper “Investor Perceptions of Infrastructure 2017” is discussed in Inframation. “A new global survey of major international institutional investors has found strong investor demand for infrastructure, including record levels of interest in emerging market infrastructure with 37.5 per cent of all investors now active in these growing markets.” Frédéric Blanc-Brude doubles down on why he thinks listed infrastructure – in its current form should not be called a new asset class in Infrastructure Investor. “Support for infrastructure investment, the idea that asset owners should commit to long-term capital projects through a mix of debt and equity, is a powerful notion at the heart of several important public and investment policy areas. It has been much discussed. It has become a staple of high-level G20 and European Union meetings. It has travelled from obscure trade publications to the mainstream financial press. It has practically become fashionable.” “Singapore-based EDHEC Infrastructure Institute has called on the US Securities and Exchange Commission and the European Securities and Markets Authority to issue special regulations on the listed infrastructure market.” “Some active managers now they can deliver the infrastructure story, and because infrastructure is fashionable it sells. But all they really offer is old-fashioned stock picking, except now they are only going to pick stocks within certain codes, so they are even more limited than when they looked at the whole equities market.” “This report discusses two topics: first, what we see as a major achievement for the infrastructure market with the June publication by EDHECinfra research institute of its first set of indices on infrastructure equity and private debt in Europe. These detailed indices should significantly improve the transparency of the asset class, confirming that project finance is an asset class of its own.” Alternative asset classes all started off as exotic, undocumented propositions. Hedge funds, venture capital, commodities, even private real estate once were considered opaque forms of investments that only sophisticated asset owners would consider. Frederic Blanc-Brude writes for Inframation post and explains how the EDHEC Infrastructure Institute’s new infrastructure benchmarks measure performance, asset pricing, and are able to show the benefits of diversification for investors. Such data he says, will help the asset class to mature. EDHECinfra’s research paper “Searching for a listed infrastructure asset class” is the topic of debate in an Infrastructure Investor roundtable. “For the past 15 years infrastructure investment has been the preserve of large sophisticated investors. It is rapidly becoming more mainstream, and asset owners of all sizes are considering investing in it. Originally confined to private equity or debt strategies, the label “infrastructure” can now be found on numerous financial products. We argue that not all products labelled as such are adding value to the portfolio of an institutional investor. In particular, the fast-growing listed infrastructure sector is shown by peer-reviewed academic research to offer zero additional valueto an institutional portfolio. We call this fake infrastructure.” Noel Amenc and Frederic Blanc-Brude write about the dangerous rise of “fake infra” in The Financial Times. EDHECinfra plans to launch new indices that will enable life insurance companies to further increase their exposure to Asian infrastructure, director Frederic Blanc-Brude told InfraAsia. EDHEC Infrastructure Institute Singapore (EDHECinfra) is releasing 384 infrastructure debt and equity indices. The indices are designed to change how investors measure infrastructure investment performance and allow multitrillion dollar increases in allocation to infrastructure globally. “Listed infrastructure tends to be very high volatility, very highly correlated with the market; not at all what you think infrastructure should be like as an investment.” EDHECinfra director, Frederic Blanc-Brude provides insight on the listed infrastructure sector in Infrastructure Investor. 
Top 1000 funds: “infra risks misunderstood”
Les Echos: “Infrastructures: Why managers need not fear a bubble”
FT: ESG has no financial benefit for infrastructure groups, study finds
‘Double-digit returns are behind us’, claims EDHECinfra
Analysis: Can America build bridges (and roads)?
Why clearly defining infrastructure is critical
Building benchmarks for infrastructure investors
Better benchmarks to boost infrastructure investment in untapped markets
Building an asset class from the ground up
Infrastructure managers told to ‘raise game’ or miss out on DC pensions
New Zealand Super bids to build Auckland light rail network
EDHECinfra urges Norwegian government to reconsider exclusion of unlisted infrastructure from GPFG mandate
Success benchmarked: Initial forays into infrastructure investment benchmarks are producing results
The Future of Infrastructure
Towards an infrastructure asset class
Infrastructure investors seek better performance data
Wanted: better performance data
Read the full article here.
Infrastructure investors reject traditional sector segmentation
Infrastructure: Calling time on borrowed definitions
Are infrastructure funds all that they seem?
Asian LPs and infrastructure
Listed infrastructure funds should be ‘clearly labelled’
EDHECinfra’s Sarah Tame argues for stricter regulation of the listed infrastructure market in IPE Real Assets.
‘Is listed infra fake or real?’
Addressing currency risk in Asia
Survey casts doubt on greenfield risk premia
Infrastructure investors continue to attract global investors
EDHECinfra’s research paper “Investor Perceptions of Infrastructure 2017” is discussed in Institutional Asset Manager.
Listed infra is a sector bet
“Fake infra” threatens real deal
EDHECinfra’s Frederic Blanc-Brude writes for Top1000Funds about the dangers of “fake infra”.
EDHECinfra pleads for watchdog intervention on ‘fake infra’
Why listed infrastructure still divides opinion
EDHECinfra director Frederic Blanc-Brude provides insight on the listed infrastructure market in Inframation.
Indexation coming to infrastructure investment market
The launch of the EDHECinfra indices is featured in Societe Generale’s In the mood for loans.
Read the full report here.
Benchmarking: Measuring up
Private infrastructure is finally being brought out of its infancy, writes Frédéric BlancBrude in IPE Real Assets.
EDHECinfra benchmarks show the promise of portfolio diversification
Fake infra? They beg to differ
Listed infrastructure investment is a great story, but it is a fake
Singapore based EDHECinfra to launch Asia indices
EDHEC launches infrastructure debt and equity indices
Launch of the EDHECinfra indices featured in IPE Real Estate.
Listed infra: the asset class that wasn’t?
