Regulation & Policy
Infrastructure is almost always the object of public policy and regulation. They play an essential role by enabling private investment is what is often delivered as a public service. They also aim to manage the risks created by the monopolistic behaviour of the firm (whether it is public or private) and create the conditions for fair and efficient tariffs and prices to be set. Since infrastructure has become a fully-fledged asset class, it has also become a topic of interest to prudential regulators especially when it comes to the capital requirements of insurers, pension funds and banks. Our research on risk and private asset pricing is often relevant to regulators and is used to respond to various call for evidence and comments for regulators.
This supplement examines the shortcomings of private asset valuation methods, the systematic underestimation of volatility in unlisted infrastructure investments, developments in valuation regulation, and the tendency for private asset valuations to understate realized exit prices.
An analysis of 333 private equity and infrastructure exits finds that reported valuations systematically understate realised exit prices, raising important fair value, fiduciary and regulatory questions.
Private asset valuation is no longer being treated as a back-office technicality. Regulators are increasingly addressing it as a front-line investor-protection, market-integrity and product-governance issue.
A credible valuation regime, grounded in procedural clarity and technological capability, is indispensable to investor fairness, systemic resilience, and the legitimacy of private markets.
This supplement highlights shortcomings in the valuation of infrastructure assets and suggests improvements, presents an innovative model based on real transaction data for private company valuation, explores underlying risk factors in private equity, and assesses the impact of fund scale on performance.
In this supplement, we identify governance gaps in infrastructure asset pricing and propose reforms, introduce a dynamic, transaction-based valuation model, examine systematic risks in private equity, and analyse how fund size influences performance.
In an open letter addressed to Chief Executive Officer of Ofwat, the UK water regulator, the EDHEC Infrastructure & Private Assets Research Institute has expressed deep concern about the regulator’s role in the mispricing of Thames Water’s cost of capital. The letter, penned by Professor Noël Amenc, Dr Frederic Blanc-Brude and
As part of the government’s policy to promote economic growth, the UK Department for Work and Pensions (DWP) wants to build an evidence base around how defined benefit (DB) pension schemes could increase the amount invested in productive asset classes including infrastructure. In its response to DWP, EDHEC Infra & Private
In recent years, the European Insurance and Occupational Pensions Authority has made considerable efforts to improve the integration of climate risk into the assessment of the solvency of pensions and insurance institutions, notably with the first stress tests on the occupational pensions sector conducted in 2022 and the publication of
The high level of tolls on privatised highways is a sensitive matter in French politics. This research paper on the adequate level of tolls on French roads is prominently featured in a report released by the Senate Investigative Committee on the control and regulation of highway concession contracts and highlights
Cette publication, dont les conclusions sont reprises dans leur intégralité par le rapport de Commission d’enquête du Sénat sur « le contrôle, la régulation et l’évolution des concessions autoroutières » publié le 18 Septembre 2020, met en lumière l’archaïsme de la réglementation des péages dans les concessions d’autoroutes en France.
This paper, based on detailed financial data as well as in-depth interviews, provides a detailed analysis of the events that led to the bankruptcy of all but one of the nine toll road concessions and shows how case studies can be a valuable tool for understanding risk for investors.