Infrastructure - levered or unlevered DCF
Anyone have any ideas on whether a levered of unlevered dcf is more suitable for infrastructure companies? (infrastructure in terms of highways)
Anyone have any ideas on whether a levered of unlevered dcf is more suitable for infrastructure companies? (infrastructure in terms of highways)
Career Resources
Levered.
Infra investors generally look at levered return as the key valuation metric.
Would a valid explanation also be that they usually take on a lot of debt to fund their infrastructure (highways) and so interest expense may be a large number that should definitely be factored into the calculations for FCF. (as well as the large amount of debt obligations from borrowings)
Levered. I actually look at effective distributions to equity holders (DDM) to account for cash traps, especially in a no-exit scenario (hold until concession expires).
In an exit scenario, when looking at the re-buyer IRR, this might be overly conservative since the asset might be more valuable in the hands of a potential buyer that might have a solution to that issue.
@nutry Would a valid explanation also be that they usually take on a lot of debt to fund their infrastructure (highways) and so interest expense may be a large number that should definitely be factored into the calculations for FCF. (as well as the large amount of debt obligations from borrowings)
Partially yes, but I insist that focusing on distributions is more important given timing of dividend recaps/capital reductions are critical to returns. For that, you need to analyze FCFE. This is even more pronounced if you are looking at a greenfield highway project.
Levered, when valuing a toll road/highway which are highly levered you are likely going to have to take on the debt or do a refi so the FCF and valuation is post interest expense
Sint aliquam exercitationem velit ad. Labore placeat nostrum repellat sequi accusantium optio. Dignissimos culpa quod autem similique dolore numquam voluptatum autem. Dolore mollitia et et nihil.
Alias culpa consectetur dolorem ipsam qui numquam. Exercitationem laudantium temporibus et quia. Sit laborum magni odio qui. Aperiam odit exercitationem non esse. Deleniti quod tenetur architecto nihil.
Unde quam doloribus qui voluptas officiis quidem optio. Sit doloremque sed vel a. Est minus veritatis non odit assumenda voluptas corrupti. Temporibus ut iste eius et ut eum.
Nam quis porro laudantium assumenda dolores. Dolore quia qui quis necessitatibus pariatur quasi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...