Q4 2021 quarterly valuation update for the energy and infrastructure sector

Q4 2021 quarterly valuation update for the energy and infrastructure sector

Thu 03 Mar 2022

Welcome to the Q4 2021 edition of our quarterly valuation update, which provides a snapshot of some of the main publicly available valuation trends across the energy and infrastructure sector, covering both debt and equity metrics.

This quarter we continue to look at trends in debt and equity metrics relying primarily on publicly available information. In relation to the equity trends, we use the Mazars indices of listed infrastructure funds and listed renewable energy funds, compiled on the basis set out in Appendix 1 to this update.

In addition, this quarter we have included a spotlight on traditional valuation methodologies such as the Capital Asset Pricing Model (CAPM), asking two main questions:

  • How closely do the results of this method align with transactional discount rates observed in the market?
  • Which approach is the better basis for valuation of energy and infrastructure assets?

Three trends from Q4 2021

  • Infrastructure and energy assets have continued to see cost of debt at relatively low levels, notwithstanding rising inflation and interest rate expectations.
  • The investment environment for infrastructure and energy assets remains strongly positive, and this has continued to be a significant driver for asset valuations.
  • In an environment of rising theoretical cost of capital indicators but also strong transactional drivers, the gap between implied and applied discount rates may continue to grow. In our view, insight into how the market is valuing assets in practice becomes ever more important in this context.

Download our quarterly valuation update for Q4 2021

To see the valuation update for Q3 2021, go here.

Webinar: Valuation trends – market vs theoretical approach to discount rates

The webinar hosted by Mazars on 1 March 2022 focused on valuation trends in the infrastructure and energy sector:

  • Debt valuation trends
  • Equity valuation trends
  • Spotlight on market vs. theoretical approach to discount rates

To watch the webinar on demand, go here.

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