Valuing assets near the end of their life

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In our Q3 2024 quarterly valuation update for energy and infrastructure, we give a snapshot of the main publicly available valuation trends across the sector, covering debt and equity metrics, with our views on them.

The spotlight topic this quarter is the end of an asset’s life, when the link between risk and return can break down. We make the case for an approach that differs from the standard use of discounted cash flow (DCF), where discount rates rise as perceived risk rises. It is relevant to any asset manager with a project nearing the end of its natural life or with large expected decommissioning liabilities.