• Equity investment: With infrastructure companies, 'equity' must include shareholder debt.
  • Debt Investment: Term loans and bonds are the only relevant infrastructure debt instruments to consider. 

The unit of account (UoA) is the level of aggregation at which an asset is recognised for the purpose of the valuation exercise, that is, whether assets are valued in aggregate or at the individual-instrument level.

The choice of unit of account should reflect effective ownership and control rights, so that instruments can be aggregated consistent with the financial, legal, and economic reality that fair value is meant to represent. %highest/best-use/in-use (SFAS 157)

Explicit UoA guidance is absent from IFRS 13 or ASC 820. Still, the choice of UoA should be congruent with how market participants would transact, that is, either purchase or sell an entire or a large share of the investment or transact instrument by instrument.

In the case of unlisted infrastructure investments, firms and their debt are exchanged in transactions involving few buyers and sellers, usually exchanging large controlling stakes. These assets can thus be evaluated in aggregate when data permits.

We can differentiate between three different units of accounts, corresponding to three types of transactions for investors in unlisted infrastructure: broad equity, mezzanine debt, and senior debt.

For the purpose of building broad market indices of unlisted infrastructure investments, EDHECinfra produces fair-value estimates for AIE and SID investments only.

Our analysis of the global investable private infrastructure sector covering more than 5,000 transactions over the 1990-2018 period in 120 countries confirms that the immense majority of secondary unlisted infrastructure transactions are made by a single buyer and a single seller (median values) and relate to stakes between 70% (mean) and 100% (median) of the firm's equity capital.

This is especially the case in very active markets such as the UK, the US, or the European Union.