Crossing the Rubicon – how ESG now has a real effect on valuations

By Ben Morris

Wednesday 19th July 2023

Webinar by Dixon Grant & Ben Morris

Cost of debt has settled in a new range, and asset owners are having to adapt to this. Long-dated gilt yields indicated a relatively stable trend over the past quarter, which therefore crystallises the rising yields experienced in H2 2022. Private debt transactions are still taking place, but asset owners are having to accept the higher cost.

High levels of competition for energy and infrastructure assets; transactional discount rates have remained high. Strong competition for energy and infrastructure assets has limited the extent of increases on asset discount rates to date. But the capital markets are expecting more to come.

ESG considerations are increasingly impacting on asset valuations, although the reasons for this are complex. ESG impacts on investment appetite, and therefore liquidity and pricing. It also impacts on specific risks that would in any case need to be considered in a valuation exercise. It may not need to be separated out explicitly, but ESG can’t be ignored by a valuer.