The purpose of the Meridiam Infrastructure/Campbell Lutyens “Infrastructure Equity Investment Management and Benchmarking” research chair is to provide a better understanding of the nature and investment profile of equity investment in infrastructure assets. It will focus on fostering data collection and aggregation from investors and on improving the benchmarking of return distributions for direct and indirect investment in infrastructure equity by developing an academically-validated and industry-recognised index.
EDHEC-Risk Institute, Meridiam Infrastructure and Campbell Lutyens are committed to bringing further knowledge to institutional investors, financial regulators and governments while the infrastructure world and financial regulations have dramatically evolved in the past decade.
The chair will involve a research team made up of three senior researchers (professors and engineers) from EDHEC Risk Institute—Asia for a period of three years.
The results of the chair will 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 will 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 upcoming European Commission Green Paper on long-term investment.
Initial results focusing on the Solvency II treatment of project finance equity were presented on March 27, 2013, at the EDHEC-Risk Days Europe conference in London.
[Press release announcing the creation of the research chair: 15/01/13]
The Valuation of Privately-Held Infrastructure Equity Investments: Theoretical Framework and Data Collection Requirements
Frédéric Blanc-Brude, Majid Hasan
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. [Press release announcing the publication of the research: 02/04/15]
Towards Efficient Benchmarks of Infrastructure Equity Investments
This paper highlights a recent research quandary with respect to infrastructure equity investment which has also been a source of interrogation for final investors: while the economics of underlying infrastructure investment suggest a low and potentially attractive risk profile, the experience of investors and available research evidence have been different and rather mixed. The paper explains why this has been the case and what new research and benchmarking efforts are necessary to create investment solutions that align expectations and observed investment performance of infrastructure equity.
These are the challenges that the Meridiam/Campbell Lutyens research chair will address in 2013-14.
Founded in 2005, Meridiam is an independent investment firm specialised in the development, financing, and management of long-term public infrastructure projects.
With offices in Paris, New York, Toronto and Istanbul, Meridiam is the leading investor in public infrastructure in Europe and North America.
Currently managing EUR2.8 billion (USD3.5 billion) of assets, the firm has to date invested in 33 projects.
Designated Global Infrastructure Fund of the Year for the third time in 2012, Meridiam was also the first investor and asset manager to receive ISO 9001 certification.
Meridiam is a founding member of the Long Term Infrastructure Investors Association.
Campbell Lutyens is an independent private equity advisory firm founded in 1988 focused on private equity and infrastructure fund placements and provides specialist advice on the sale or restructuring of portfolios of private equity fund or direct investments.
The firm has offices in London, New York and Hong Kong and comprises a team of over 80 international executives, advisors and staff with global and broad-ranging expertise in the private equity and infrastructure sector.