Q1 2020 Index Release: Covid-19 lockdown highlights the importance of understanding risk in unlisted infrastructure investments

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Q1 2020 Index Release: Covid-19 lockdown highlights the importance of understanding risk in unlisted infrastructure investments

2 minutes
April 15, 2020 2:20 pm

Q1 2020 Release of the EDHECinfra Indices

Infrastructure businesses are usually impacted by the tail end of recessions: demand for essential services flags, public counterparty risks increase and even long-term financing may become hard to come by.

This crisis is different. Like a well-prepared military assault, it began by taking out all key transport infrastructure. The impact of the oncoming economic recession on infrastructure assets will only come later.

The Q1 2020 release of the EDHECinfra unlisted equity indices catches the impact of the Covid-19 lockdown on hundreds of unlisted infrastructure companies in 22 countries as of March 31st 2020.

The Infra300 equity index, which is designed to capture the structure of the investable universe, is down at -6.37% on the quarter, very close to the Global Unlisted Equity Index which reports a weighted average return of -6.34%.

Both index includes a substantial exposure to the ‘merchant’ business risk bucket (TICCS-BR2) which was the most directly impacted by Covid-19 lockdown. The Merchant Infrastructure Equity Index returned -9.15%, while the Advanced Economies Unlisted Airport Index (equal weights) further slumped at -10.16% quarterly returns. The Unlisted Road Index (equal weights) reaches -13.67% for 2020Q1.

Despite lower base rates in most countries, discount rates (IRRs) have jumped by more than 80bp on average (50th centile) up to close to 250bp for the top of the distribution. The average unlisted infrastructure risk premia now stands at 6.84%, substantially higher than at the end of 2019 .

The EDHECinfra equity style indices, which can report the performance of portfolios built by size quantiles for example, show that larger infrastructure assets have suffered more than smaller ones (which tend to be of the contracted type). The equally-weighted index for smaller size bucket is down by -3.5% this quarter while the larger size bucket index (4th quartile) is down -8.8% over the same period.

To produce these results, the EDHECinfra team of analysts conducted a firm-by-firm review of the impact of the Covid-19 lockdown on the future revenues of all major infrastructure affected by the crisis especially Merchant (TICCS/BR2) and Transport (TICCS/IC60) companies. The EDHECinfra asset pricing technology allowed estimating the quarter-on-quarter increase in risk premia from available market inputs in order to produce a mark-to-market assessment of the value of each index constituent.

Future releases of the EDHECinfra indices will continue to capture the Covid-19 fallout. From the consequences of a recession on power sector valuations to the evolution of transport business models and the role and risks of tomorrow’s data infrastructure, multiple transformations can be expected. Thanks to TICCS®, these transformations will be clearly documented.

To know more you can join the EDHECinfra team for a webinar on April 28th at 10am GMT. Register here.

Useful links

  • Sign up for the EDHECinfra index platform here (it’s free!).
  • Read more about the assumptions used to estimate the impact of Covid-19 lockdown on the revenue forecasts of infrastructure companies here.
  • Find out about the EDHECinfra asset pricing methodology here.
  • Find out about the TICCS® taxonomy of infrastructure investments here.
  • 2020Q1 Release Notes available here.


  • The infra300 is the new EDHECinfra flagship equity index and is available free of charge on the platform and through Bloomberg.
  • From 2020-03-31 the EDHECinfra Broadmarket Indices (equity and debt) are only available to index data licence holders.