'Comps', also called peer-group valuation, is a relative valuation approach with the basic premise that similar companies should have similar equity value. This approach can not be used for unlisted infrastructure investments mainly because:
Infrastructure companies are far more heterogenous in nature than, say, real estate companies, and thus finding similar companies is rarely ever possible. For example: two airports could be completely different depending on their business models or their geo-economic exposure.
Unlisted infrastructure companies trade very infrequently. So even if there are 'genuine comps' of a particular asset, the last traded valuation could be significantly outdated.
Things to consider
- 'Comps' approach works much better in Private real estate or Private equity transactions because of the sheer number of assets available and traded in the secondary market.
- In EDHECinfra methodology, other infrastructure asset prices are used to calibrate the models to the market based on an asset's financials and characteristics, but not to directly calculate a price.