In this article, looking at determining fair value in the digital space, the EDHEC Infrastructure & Private Assets Institute explains how it approaches the subject.

“Digital assets derive their value from intellectual property, user base and growth potential,” says Jack Lee, deputy head of data at the EDHEC Infrastructure and Private Assets Institute. “Traditional valuation metrics, such as book value, may not fully capture their worth.”

“We apply modern financial theory to value each infrastructure investment using the observed transactions in the secondary market and their exposure to common risk factors, including size, leverage, profitability, capex, country risk and sector-specific premia,” says Abhishek Gupta, EDHEC’s head of product development. “It is an objective and consistent approach to value infrastructure investments that has been created with academic rigour and produces robust valuation estimates of the infrastructure market.”

Read the full article here.