The infraMetrics asset pricing model was developed to allow the best possible estimation of the equity risk premia and discount rates required to calculate the fair value of private, unlisted infrastructure equity investments.

infraMetrics is designed to reflect the principles of IFRS 13, which are also repeated in the IPEV valuation guidelines: to derive a market risk premia and discount rate for individual infrastructure assets that genuinely reflects current market conditions and the risk exposure of each individual investment in the market for unlisted infrastructure equity.

The infraMetrics asset pricing is used to estimate prices for hundreds of infrastructure assets in the private infrastructure universe. We show that on average, at the market segment level, these predictions are very close to average exit prices (also at the segment level). It follows that infraMetrics can be used to produce market-level metrics of value, risk and performance because in aggregate (on average), it predicts accurate market exit prices.

This is why the infraMetrics asset pricing model is used to create market indices, custom benchmarks and investment and valuation comparables.

This document discusses:

• Traditional approaches to unlisted infrastructure asset pricing which produce stale values that do not reflect the true risk or the latest market price of these investments.
• The use of the infraMetrics asset pricing model as an alternative approach to calibrate the price of equity risk using private market transaction prices which is genuinely aligned with the IFRS 13 standard and industry guidelines.
• The robustness of this approach and its superiority to a traditional CAPM-based discounted cash flow model.
• An application of such a model to build robust valuation “Anchors” for private infrastructure equity investments.