Ratio in Infra M&A

Depends on the exact type of business / situation / project you are looking at —

Given the nature of the sector long-term definite life assets or in some cases effectively perpetual life assets, there is a lot of debt that businesses will take on so key debt metrics (Debt / EBITDA, FFO / Debt, CFO pre-wc / debt) are all frequently looked at.

For utilities the most important trading metric tends to be P/E (due to rate base / regulatory constructs) whereas for for a renewables company, it’s EV / EBITDA

Other industry specific metrics include CAFD yield, lfcf yield, contracted cfs (EBITDA and revs also considered) as a % of total, weighted average contract life remaining, etc…

For non-operating assets, you will spend a lot of time looking at build multiples / payback ratios — in my experience, investors tend to focus on the contracted payback given it provides significantly more certainty for a downside case than when including merchant.

Non-operating projects will also focus a lot on the assumptions around raising debt or tax equity (implied interest rates, DSCRs on a contracted and merchant basis, forecasted capacity factors, etc…).

Realize this is a long-winded answer to a fairly simple question, but the reality is each niche of infra can be slightly different in terms of the key metrics around certain assets / sub-industries. There are plenty of other metrics some people will also look at, but this hopefully gives a good base.