TIDMINPP
RNS Number : 4060H
International Public Partnerships
24 November 2022
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
PORTFOLIO UPDATE
FOR THE PERIOD 1 JULY 2022 TO 22 NOVEMBER 2022
24 November 2022
International Public Partnerships Limited ('INPP', the
'Company'), the FTSE 250 listed investment company which invests in
public or social infrastructure assets and related businesses
internationally, has today issued a portfolio update for the period
1 July to 22 November 2022.
KEY HIGHLIGHTS
-- The Company's portfolio of over 140 projects and businesses
has continued to perform well during the period.
-- The portfolio continues to deliver essential services to its
stakeholders, maintaining high levels of asset availability.
-- In line with previous forecasts, a first half-year 2022
dividend of 3.87 pence per share was declared on 8 September
2022(1) representing a c.2.5% year-on-year increase.
-- The Company's dividend continues to be supported by a robust
H1 2022 cash dividend cover of 1.2x.
-- The Company has delivered a Total Shareholder Return (2)
since IPO in November 2006 to 22 November 2022 of 228.5% or 7.7% on
an annualised basis.
-- During the period, the Company invested c.GBP42 million in a
follow-on accretive investment into Tideway.
-- The Company has investment commitments and a near-term
investment pipeline totalling over GBP200 million in the transport,
offshore transmission, and social infrastructure sectors, and has a
strong overall pipeline of future investment opportunities which
match the Company's investment criteria.
FINANCIAL HIGHLIGHTS(3)
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
half-year results ending 30 June 2022 on 8 September 2022. This
reported that:
-- The net asset value ('NAV') per share was 157.3 pence as at 30 June 2022.
-- The cash flows generated by the Company's investment
portfolio continue to be underpinned by strong inflation-linkage (a
1.0% increase in assumed inflation rates across all assets is
projected to result in a 0.7% increase in portfolio returns(4)
).
-- The Company previously announced full-year dividend targets
of 7.74 and 7.93 pence per share for 2022 and 2023, respectively.
This is in line with the current targeted annual increase of
c.2.5%(5) .
-- As at 22 November 2022, the Company's GBP250 million
revolving credit facility was undrawn, with c.GBP17 million
committed via letters of credit for near-term pipeline
investments.
INVESTMENT ACTIVITY
Since 1 July 2022, the Company invested a total of c.GBP42
million and completed a divestment from its commitment to the
National Digital Infrastructure Fund ('NDIF'). Please see more
information below.
-- In September 2022, the Company increased its holding in
Tideway, London's new "super sewer", to approximately 18% following
the investment of approximately GBP42 million of additional
capital. The project is a key investment for the Company given its
attractive financial proposition, positive future impact on the
environment and strong engagement with local communities, which
closely reflects the Company's own values as a responsible
investor.
-- In September 2022, the Company noted the sale of
NextGenAccess ('NGA') which owns and operates a network of
ultrafast wholesale fibre broadband infrastructure across England
and Wales. INPP was invested in NGA via its commitment to NDIF,
part of the UK Government's Digital Infrastructure Investment Fund
which has successfully accelerated investment into fibre-optic
based broadband networks and related businesses to build the next
generation of digital networks in the UK.
-- In November 2022, Ofgem published a notice under Section 8A
of the Electricity Act 1989 relating to the East Anglia One OFTO.
This is a key step towards reaching financial close on the
investment that the Company expects to make in the project. The
Company expects to invest c.GBP105 million into the project upon
financial close, anticipated to be in December 2022. The project
will be the Company's tenth OFTO investment, and under a
well-established regulatory licensing regime, connects the 714MW
offshore wind farm located c.50km off the coast of Suffolk. The
East Anglia One OFTO has the capacity to transmit enough renewable
electricity to power the equivalent of over 600k homes.
CURRENT MARKET ENVIRONMENT - VALUATIONS AND LEVERAGE
-- The Company notes the increase in interest rates and
government bond yields over recent months, and sets out below the
elements of the Company's investments that could primarily be
impacted as a result:
o the discount rates applied to the forecast cash flows in order
to determine the portfolio's valuations;
o the amount of interest earned from cash held; and/or
o the cost of any new or replacement debt that needs to be
procured.
-- The Company notes that discount rates have not historically
moved in lockstep with government bond yields and that demand for
infrastructure assets remains very strong. The Company also notes
that increased cash flows resulting from higher inflation
expectations, foreign exchange gains derived from the weakening of
sterling, and greater interest earned from cash balances may play a
mitigating role in any potential future discount rate valuation
movements. The Company will formally review the discount rates used
to value its investment portfolio as part of the 31 December
year-end reporting.
-- There is no material refinancing risk within the Company's
PPP or OFTO investments as these investments typically benefit from
fixed-rate senior debt entered into at Financial Close which
amortises to nil over the relevant concession or licence period.
These collectively represent approximately 60% of the portfolio's
investment fair value.
-- There are other investments in the portfolio which do not
have a pre-determined concession term or licence period, and hence
will contain an element of refinance exposure. This statement
applies principally to Cadent, Tideway, Angel and BeNEX.
-- These companies have various tranches of debt with different
maturity dates, and there is no immediate need to refinance any
material portion of debt in the four companies referenced. The
increases in the cost of debt have a limited impact on current debt
costs (as the vast majority of debt is either fixed rate or hedged)
but could impact these businesses when existing debt is refinanced.
However, (i) the regulated revenues earned by Cadent and Tideway
are frequently adjusted by the regulator to compensate for changes
in the market cost of debt, and (ii) businesses such as Angel and
BeNEX that operate in industries with high barriers to entry would
typically expect to be able to pass on a majority of changes in
their cost base to counterparties.
OUTLOOK
-- The Company's portfolio has proven its resilience thanks to
the high quality of underlying cash flows which are underpinned by
regulated or contracted government-backed cash flows. This
generates consistent and predictable returns benefiting from strong
levels of inflation indexation.
-- Competition and demand for the types of investments the
Company invests in remains high and the Company has a strong
pipeline of attractive investment commitments and future
opportunities covering the social accommodation, health, offshore
transmission and transport sectors located in the Company's target
geographies.
-- Governments continue to acknowledge the key role
infrastructure spending will play in driving economic recovery,
creation of jobs and addressing challenges such as climate
change.
-- As previously announced, the Company is now categorised as an
Article 8 financial product and the Company and its Investment
Adviser will continue to monitor the emerging requirements of the
EU SFDR and EU Taxonomy Regulation.
Notes to Editors:
While it is no longer a requirement under the Disclosure
Guidance 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. The H1 2022 dividend was paid on 18 November 2022.
2. Source: Bloomberg. Share price appreciation plus dividends assumed to be reinvested.
3. For the six months to 30 June 2022 unless stated otherwise.
4. Calculated by running a 'plus 1.0%' inflation sensitivity for
each investment and solving each investment's discount rate to
return the original valuation. The inflation-linked return is the
increase in the portfolio weighted average discount rate.
5. Future profit projection and dividends cannot be guaranteed.
Projections are based on current estimates and may vary in
future.
S.
For further information:
Erica Sibree/Amy Edwards +44 (0) 7557 676 499 / (0) 7827 238
355
Amber Fund Management Limited
Hugh Jonathan +44 (0)20 7260 1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 7703 330 199 / (0) 7807 296
032
FTI Consulting
About International Public Partnerships (INPP):
INPP is a listed infrastructure investment company that invests
responsibly 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 140
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 growing dividends and the potential for capital
appreciation.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists of approximately 170 staff who are responsible
for the management of, advice on and origination of infrastructure
investments.
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END
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