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The Valuation of Privately-Held Infrastructure Equity Investments: Theoretical Framework and Data Collection Requirements

Author: Frédéric Blanc-Brude, Majid Hasan
Date: January 2016

This paper proposes a valuation framework for privately-held and very illiquid assets such as equity stakes in infrastructure projects. Such a framework is one of the key steps identified by EDHEC-Risk Institute as part of a roadmap to design long-term infrastructure investment benchmarks that can take into account the nature of such assets as well as the paucity of available data. Indeed, the design of an academically validated valuation framework, while necessary to ensure adequate performance measures, is constrained by the practical limitations of collecting private information that is scattered amongst many investors and is often confidential in nature. The approach taken by the authors aims to balance the objective of using academically sound pricing models with that of requiring a parsimonious data input, thus making the necessary data collection process cost-efficient and realistic.

Geography: Global

Type of study: Academic working paper

Relevant for: LPs, GP All, GP Mid-market, GP LBO, FoF, Associate

Source: EDHEC Risk Institute