TIDMINPP
RNS Number : 1960T
International Public Partnerships
23 November 2021
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
PORTFOLIO UPDATE
FOR THE PERIOD 1 JUNE 2021 TO 19 NOVEMBER 2021
23 November 2021
International Public Partnerships Limited ('INPP', the
'Company'), the FTSE 250 listed investment company which invests in
global public infrastructure projects and businesses, has today
issued the following portfolio update for the period 1 June 2021 to
19 November 2021.
OPERATIONAL HIGHLIGHTS
-- The Company continues to achieve strong and sustainable
performance from its investment portfolio of over 130 investments
in public and social infrastructure projects and businesses with
continued dividend growth
-- During the period, the Company invested a total of c.GBP183
million into the offshore transmission ('OFTO') and transport
sectors, including Rampion and Beatrice OFTOs and Angel Trains. The
Company continues to benefit from a high-quality pipeline of
near-term investment commitments
-- In line with previous forecasts, a first half-year 2021
dividend of 3.68 pence per share was declared on 9 September 2021
supported by a solid H1 2021 cash dividend cover of 1.3x(1)
-- During the period, the Company successfully completed an
oversubscribed capital raising of GBP135 million, demonstrating
strong demand from existing and new shareholders
-- The Company has now delivered a Total Shareholder Return(2)
since IPO in November 2006 to 19 November 2021 of 239.3% or 8.5% on
an annualised basis
-- The Company launched its inaugural Sustainability Report
reflecting its long-standing commitment to sustainability and the
Company continues to align its disclosures with the recommendations
of the Taskforce for Climate-Related Disclosures ('TCFD')
PORTFOLIO REVIEW
The portfolio continues to deliver essential services to all its
stakeholders, maintaining high levels of asset availability. The
section below provides a brief update on key investments where
there have been noteworthy developments since the Company's interim
results, for the six months ending 30 June 2021, which were
published on 9 September 2021.
Tideway, UK | SDGs 6, 9 & 11: Clean water and sanitation,
industry, innovation and infrastructure and making sustainable
cities and communities
Tideway is building a 25km 'super sewer' under the River Thames
to create a healthier environment for London by cleaning up the
city's greatest natural asset. As reported previously, in the
earlier part of 2021 Tideway had been working with its stakeholders
on a thorough review of the remaining activities to provide clarity
on the schedule and costs to completion. This is a review that is
commonly undertaken by major projects at this stage of delivery.
The results of this review were published by Tideway in August 2021
and confirmed the appropriateness of the existing schedule dates
with only a minor cost increase of c.1% with no material financial
impact on investors.
The impact of Covid-19 on both the cost and schedule of the
project was reported previously and it was noted that, in addition
to existing contractual and regulatory safeguards, Tideway has been
in discussions with Ofwat on a package of measures that would help
mitigate the financial impact of Covid-19 on Tideway (the Company
is a 16% shareholder in Tideway). In addition to the Covid-19
discussions, Tideway has also been in discussion with Ofwat
regarding the adverse impact that extraordinary macroeconomic
circumstances have had on Tideway's forecast revenues as a result
of the workings of the Financing Cost Adjustment ('FCA') mechanism
included within the licence (this mechanism is designed to mitigate
the impact of changes in the market cost of debt on Tideway).
Whilst constructive discussions with Ofwat are progressing and we
will provide a further update at the appropriate time, the Company
notes that such adverse impacts were largely reflected within the
30 June 2021 valuation. At the current date, the project is
slightly more than 70% complete.
Diabolo, Belgium | SDG 11: Making sustainable cities and
communities
Diabolo is a rail infrastructure investment which integrates
Brussels Airport with Belgium's national rail network. The majority
of revenues generated by Diabolo are linked to passenger use of
either the rail link itself or the wider Belgian rail network.
Diabolo has been impacted by the restrictions on international
travel and national lockdowns that have been implemented as a
result of Covid-19. As reported previously, in December 2020 the
Company invested an additional EUR10 million and made a contingent
commitment of a further EUR14 million in order to protect the value
of the Company's investment in Diabolo. The EUR14 million
commitment, which remains available, should provide sufficient
liquidity for Diabolo provided passenger numbers recover in line
with the latest forecast received from the Company's traffic
advisors. The extent and timing of any further cash injections will
depend upon the trajectory of this recovery. It is notable that the
project benefits from a contractual mechanism which permits an
adjustment to the passenger fee should passenger numbers and
returns fall below a certain threshold; this mechanism provides the
ability to influence revenues over the remaining 26 years of the
concession and the Company has entered into initial discussions
with Infrabel in respect of using the mechanism.
Cadent, UK | SDGs 7 & 9: Affordable and clean energy, and
industry, innovation and infrastructure
Cadent is the UK's largest gas distribution network managing
more than 130,000 kilometres of pipeline which transports gas to 11
million customers. The Company's investment in Cadent is the
largest by investment fair value. As previously announced, in March
2021 Cadent exercised its right to appeal Ofgem's final
determination in respect of the five-year regulatory period which
commenced in April 2021 to the Competition and Markets Authority
('CMA') as it believed this approach would best serve Cadent
customers' interests. The CMA published its final determination in
October 2021 and the findings will be modestly positive for the
Company's valuation of its investment in Cadent, as the Company's
30 June 2021 valuation prudently assumed no benefit from the CMA
appeal.
The publication of the UK Government's Hydrogen Strategy in
August 2021 marks the beginning of the next stage of the
development of the UK's hydrogen economy and is positive news for
Cadent. In addition, HyNet North West, Cadent's innovative low
carbon and hydrogen energy project, was selected for a share of
GBP1 billion government funding during the period. From 2025, HyNet
will produce, store and distribute hydrogen as well as capture and
store carbon from industrial businesses in the North West of
England and North Wales, which is seen as a key pillar of the UK's
Net Zero strategy.
INVESTMENT ACTIVITY
Since 1 July 2021 the Company has made new investments of
c.GBP183 million in the OFTO and transport sectors.
-- The Company reached financial close on its eighth and ninth
OFTO projects increasing the Company's contribution to the UK's
transition to a zero-carbon economy. These two OFTOs have the
ability to transmit green electricity equivalent to the needs of
approximately 800,000 homes, increasing the number of homes that
could be powered via the Company's OFTO portfolio to approximately
2.1 million.
o In July 2021, the Company reached financial close on its
eighth OFTO, investing c.GBP50 million, for the long-term ownership
and operation of the transmission link to the 588MW Beatrice
offshore wind farm, off the Caithness coastline in Scotland;
Scotland's largest offshore wind farm; and
o In November 2021, the Company reached financial close on its
ninth OFTO, investing c.GBP35 million for the long-term ownership
and operation of the transmission link to the 400MW Rampion
offshore wind farm off the Sussex coast.
-- In September 2021, the Company acquired a further c.5%
shareholding in Angel Trains providing it with further governance
rights through direct board representation. The Company invested
c.GBP98 million and the additional investment should, other things
being equal, result in Angel Trains being the third largest holding
in its portfolio. Since making its original acquisition in 2008,
Angel Trains has been a successful investment for the Company,
delivering both capital growth and yield. Angel Trains is the
largest rolling stock company in the UK, serving the passenger rail
sector with a diversified fleet of more than 4,000 vehicles. The
majority of its vehicles are electric multiple units and its
business plan supports the decarbonisation of the UK transport
system.
FINANCIAL HIGHLIGHTS
The Company's investment portfolio valuation is determined
semi-annually by the Directors after advice from the Investment
Adviser and is reviewed by the Company's auditors. This semi-annual
valuation is published within the Company's interim and annual
accounts, the last of which was published with the Company's
interim results for the six months ending 30 June 2021 on 9
September 2021, reporting:
-- The net asset value ('NAV') per share was 145.1 pence as at
30 June 2021 (31 Dec 2020: 147.1 pence)
-- The Company's underlying revenues continue to be underpinned
by strong inflation-linkage with a projected increase in return of
0.75% p.a. for a 1.00% p.a. increase in inflation (31 December
2020: 0.78% p.a.)(3) . Strong inflation linkage continues to
provide protection to the Company's projected returns in the event
of a higher inflation environment
-- A first half-year 2021 dividend of 3.78 pence per share was
declared on 9 September 2021 and was paid on 17 November 2021. This
dividend is in respect of the period 1 January 2021 to 30 June 2021
and represents a 2.7% increase on the dividend paid in the
corresponding period in the prior year
-- The Scrip Dividend Alternative Circular applicable to that
dividend was available to investors and the associated scrip
allotment or dividend payment was paid on 17 November 2021
-- The Company is currently maintaining its previously announced
dividend targets of 7.55 and 7.74 pence per share in respect of
2021 and 2022, respectively. This is in line with the current
targeted annual increase of c.2.5%(4)
-- As at 19 November 2021, the Company's GBP250 million
revolving credit facility was GBP108 million net drawn.
INVESTMENT ENVIRONMENT AND OUTLOOK
-- The Company's investment portfolio is expected to continue to
be resilient with risks being actively managed and mitigated
-- The UK Autumn Budget announced the GBP130 billion National
Infrastructure Strategy which will focus on low carbon schemes,
social and transport sectors. We believe there will also be a need
for private capital to support these ambitions and there is
significant appetite from investors to support new infrastructure
projects
-- The Company is monitoring the emerging requirements of The EU
Sustainable Finance Disclosure Regulation and EU Taxonomy
Regulation, and will support its investors with relevant
disclosures in line with anticipated timelines for compliance
-- The pipeline for the types of assets the Company invests in
remains strong and the Company continues to remain confident in its
ability to continue to source and develop quality, high-performing
opportunities, across the Company's target geographies, that
deliver long-term, predictable cash flows with strong
inflation-linkage that meet the Company's risk-return profile
Notes to Editors:
While it is no longer a requirement under the Disclosure and
Transparency Rules for the Company to issue Interim Management
Statements, the Board believes it is in the interest of
shareholders for the Company to provide quarterly updates in
addition to its half year reports.
1. Cash dividend payments to investors are paid from net
operating cash flow before non-recurring operating costs.
2. Source: Bloomberg. Share price appreciation plus dividends assumed to be reinvested.
3. In aggregate, the weighted average return of the portfolio
would be expected to increase by 0.75% per annum in response to a
1.00% per annum inflation increase over the currently assumed
inflation rates across the whole portfolio. Based on analysis as at
30 June 2021.
4. Dividend targets are targets and not profit forecasts and
there can be no guarantee they will be achieved. Projections are
based on the current individual asset financial models and may vary
in the future. There can be no assurance that these targets will be
met or that the Company will make any distributions at all. Whilst
we generally have good forward-visibility of cash flows generated
by the Company's investments, the current Covid-19 pandemic creates
additional uncertainty
ENDS.
For further information:
Erica Sibree/Amy Edwards +44 (0)20 7939 0558/0587
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
FTI Consulting
About International Public Partnerships (INPP):
INPP is a listed infrastructure investment company that invests
in global public infrastructure projects and businesses, which
meets societal and environmental needs, both now, and into the
future.
INPP is a responsible, long-term investor in over 130
infrastructure projects and businesses. The portfolio consists of
utility and transmission, transport, education, health, justice and
digital infrastructure projects and businesses, in the UK, Europe,
Australia and North America. INPP seeks to provide its shareholders
with both a long-term yield and capital growth.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists of over 150 staff who are responsible for the
management of, advice on and origination of infrastructure
investments.
Visit the INPP website at
www.internationalpublicpartnerships.com for more information.
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END
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