Regulated assets: trends and investment opportunities
Deloitte Infrastructure series, Issue 2, July 2011: Focus on energy assets
One area of regulated assets alone – the energy sector – is fuelling the need for capital expenditure in the order of more than $139.5 billion nationally over the coming decade. This represents a compelling investment opportunity for fund managers and other potential investors to consider.
This paper, the second in Deloitte Corporate Finance’s Infrastructure series, explores the key areas of capital expenditure which relate to regulated assets or infrastructure assets with similar characteristics.
Key questions investigated include:
- Whether the required rate of return of a regulated infrastructure asset should be lower than that of an unregulated infrastructure asset of a similar type
- Whether there are compelling reasons for these assets to support price-to-regulated asset base (RAB) multiples greater than one.
The final section of the paper looks at the energy sector specifically across key areas of required capital expenditure: distribution and transmission networks and renewable and gas-fired generation.