Japan’s ¥191trn (€1.22trn) Government Pension Investment Fund (GPIF) has hired EDHEC Infrastructure and Private Assets (EDHECinfra) to evaluate the fair value of its infrastructure portfolio.
EDHECinfra, which provides research on asset pricing and credit risk of private infrastructure investments, said it has been appointed to analyse the fair value of investments in unlisted infrastructure equity, with a particular emphasis on GPIF’s own portfolio.
The fair value of private assets needs measuring on an ongoing basis, using the latest market inputs, so investors can measure risk and make meaningful comparisons with other asset classes.
The approach developed by EDHECinfra solves the usual problem of not having enough “comparables” of recent transactions and allows robust and precise market valuations of illiquid companies.
Frederic Blanc-Brude, director of EDHECinfra, said the proper implementation of IFRS13, the fair value measurement, is essential for investors to ”trust the valuations of the investments they make in private assets, especially infrastructure companies that are seemingly unique and held for the long term”.
Blanc-Brude added: “Private assets are traded in a market and they have a market price, which has to be estimated on a given date. Anything short of that should not be good enough for serious investors.”
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