The concession ran for forty years; the investment committee’s patience ran for about ten. The asset was sound, the operator competent, and the price — after two competing bidders had finished with it — heroic. The fund asked us to check its own enthusiasm.

Pricing the patience

We modelled the concession as what it was: a bond with weather. At the prevailing bid price, returns cleared the hurdle only if traffic, inflation, and refinancing all behaved for four decades. The one-page memo reduced the case to a single question — is this the best use of a decade of illiquidity?

The discipline of no

The fund declined to raise its bid and lost the auction, to visible relief in the room. The capital was redeployed across two smaller positions within two quarters. The winning bidder issued a profit warning eighteen months later; the memo is now circulated to new committee members.