TIDMINPP
RNS Number : 4333G
International Public Partnership Ld
30 May 2017
INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED
PORTFOLIO UPDATE FOR THE PERIOD 1 JANUARY 2017 TO 26 MAY
2017
30 May 2017
International Public Partnerships Limited ('INPP', 'the
Company'), the listed investment company which invests in global
public infrastructure projects, today issues the following
portfolio update for the period 1 January 2017 to 26 May 2017.
OPERATIONAL HIGHLIGHTS
-- The Company's portfolio of 127 investments in regulated and
public infrastructure projects is performing fully in line with
expectations.
-- An additional GBP298.1 million of investments were made
during the period, including a GBP274 million investment into the
National Grid's gas distribution network, since re-branded
"Cadent".
-- Successful completion of a significantly oversubscribed
GBP330 million capital raising during the period, the proceeds of
which will be used in repayment of the Company's cash drawn portion
of its existing debt facility.
-- The portfolio currently has 10% of assets in physical
construction, providing opportunities for capital growth as those
assets progress to full operation.
-- The Company maintains an attractive pipeline of investment
opportunities across the UK, Northern Europe, Australia and North
America, and will continue to deploy capital to meet its existing
investment commitments to the landmark Thames Tideway Tunnel
project.
FINANCIAL HIGHLIGHTS
-- 9.2% increase in Net Asset Value ('NAV') per share to 142.2
pence for the twelve months to 31 December 2016 (Dec 2015: 130.2p)
and an estimated NAV at 31 March 2017 of not less than 140.5 pence
per share (1) .
-- The portfolio maintains a leading level of inflation-linkage
such that a 1.00% increase in inflation leads to a 0.89% increase
in return(2) .
-- A second half year 2016 dividend of 3.325 pence per share was
declared on 30 March 2017 and is expected to be paid on 7 June
2017.
-- A minimum target dividend for the 2017 and 2018 financial
years has been set at 6.82 and 7.00 pence per share, respectively;
in line with an average increase of c.2.5%(3) or greater each
year.
-- The Company has delivered a Total Shareholder Return
(comprising share price growth and aggregate dividends) since IPO
in November 2006 to 24 May 2017 of 166.90% or 9.76% on an
annualised basis(4) .
Rupert Dorey, Chairman of International Public Partnerships
Limited, said: "The successful completion of INPP's largest single
investment to date underpins our differentiated approach to primary
origination and active asset management, whilst growing the
Company's footprint in the large-scale regulated asset sector. The
significantly oversubscribed capital raise further endorses the
Company's investment strategy and demonstrates the growing appetite
from new and existing shareholders for INPP's predictable,
long-term and substantially inflation-linked return profile. We
continue to be confident in the growth prospects of the Company,
with a healthy pipeline of diverse regulated and government-backed
infrastructure investments in all of our key markets."
PORTFOLIO PERFORMANCE
The Company's portfolio of assets continues to perform well with
revenues and cash receipts in line with management forecasts and
levels of satisfaction remaining high amongst public sector
clients.
The portfolio currently has 10% of assets still in physical
construction. The weighted average investment life of the portfolio
is currently 35 years with a weighted average (non-recourse) debt
tenor of 34 years.
As at 31 March 2017, and taking into account the Group's
investment in the Wolverhampton BSF project which occurred in April
2017, the portfolio comprised economic interests in 127 projects
with a composition as detailed below:
Geographic Investment Sector Investment
breakdown Fair Value breakdown Fair Value
% %
---------------- ------------ -------------------- ------------
United Kingdom 76% Energy Transmission 22%
---------------- ------------ -------------------- ------------
Belgium 9% Education 21%
---------------- ------------ -------------------- ------------
Australia 6% Transport 16%
---------------- ------------ -------------------- ------------
United States 3% Gas Distribution 15%
---------------- ------------ -------------------- ------------
Germany 3% Waste Water 9%
---------------- ------------ -------------------- ------------
Canada 2% Health 5%
---------------- ------------ -------------------- ------------
Ireland 1% Courts 4%
---------------- ------------ -------------------- ------------
Italy <1% Military Housing 3%
---------------- ------------ -------------------- ------------
Other 5%
---------------- ------------ -------------------- ------------
Investment Investment Investment Investment
life Fair Value stake Fair Value
% % %
------------- ------------ ----------- ------------
<20 years 43% 100% 50%
------------- ------------ ----------- ------------
20-30 years 30% <50% 42%
------------- ------------ ----------- ------------
>30 years 27% 50% - 100% 8%
------------- ------------ ----------- ------------
Note: This breakdown is based on the fair valuation of the
Group's investments calculated utilising a discounted cash flow
methodology as stated in the valuation section later in this Update
and includes the Group's investment in the Wolverhampton BSF
project which occurred in April 2017.
Capital raising and debt facility, gearing and cash position
The Company successfully raised GBP330 million of capital
(before costs) through a Placing, Open Offer and Offer for
Subscription ('the Issue'). The Offer attracted significant
interest from new and existing shareholders, exceeding by three
times the original targeted capital raising of GBP250 million.
The proceeds of the Issue were used to fully repay the Company's
cash drawn portion of its existing debt facility amounting to
GBP255.5 million, leaving GBP69.6 million
The Company has utilised GBP86.5 million of the credit available
under its revolving credit facility, (taking into account its
future investment obligations including its investment commitments
to the Thames Tideway Tunnel project).
Investments
During the period since 1 January 2017, GBP298.1 million was
invested across the following three investments.
Cadent
The Company is part of a consortium which includes other leading
UK and international institutional investors which acquired a 61%
interest in the National Grid gas distribution network (now known
as Cadent). The Company invested GBP274 million into the project
for a 4.4% stake with the remaining risk capital funded by
consortium partners.
The investment comprises four networks, each covering a
geographic monopoly in the East and North West of England, North
London, and the West Midlands, respectively. The networks
distribute gas to approximately 50% of the country's connected
households through 130,000 km of gas pipeline. Cadent is made up of
well-established, predictable, and strong cash yielding businesses
whose characteristics are consistent with and complementary to the
other regulated and non-regulated assets in the Company's
portfolio.
Additional to the 61% interest acquired by the consortium, a
further 14% interest in the networks has also been negotiated with
National Grid and is subject to put and call options between
National Grid and the consortium. The consortium also has
pre-emption arrangements over the residual 25% investment that
National Grid would continue to hold after exercise of these
options.
Thames Tideway Tunnel
Since 31 December 2016 the Company has invested a further
GBP22.6 million into the Tideway project leaving GBP55.7 million to
be invested during the remainder of 2017 (currently supported by a
letter of credit).
Wolverhampton Building Schools for the Future
The Company acquired an additional interest in the Wolverhampton
Building Schools for the Future ("BSF") project (the "Project"),
committing a further GBP1.5 million to acquire Carillion Private
Finance's 8% indirect investment in each of phase I and phase II of
the Wolverhampton BSF scheme. The Company's existing 82% investment
in the Project grew to 90%.
Top Ten Investments
As at 31 March 2017, and taking into account the Group's
investment in the Wolverhampton BSF project which occurred in April
2017, the Top Ten Investments of the Company in terms of value were
as set out below:
Rank Asset Investment
Fair Value
%
------ ------------------------------ -------------
Cadent (gas distribution
1 network) 15.0%
------ ------------------------------ -------------
2 Lincs Offshore Transmission 9.9%
------ ------------------------------ -------------
3 Diabolo Rail Link 9.5%
------ ------------------------------ -------------
4 Tideway Tunnel 8.8%
------ ------------------------------ -------------
5 Ormonde Offshore Transmission 7.2%
------ ------------------------------ -------------
6 Angel Trains 3.9%
------ ------------------------------ -------------
7 U.S. Military Housing 3.3%
------ ------------------------------ -------------
8 Royal Children's Hospital 2.4%
------ ------------------------------ -------------
9 Benex Rail 2.1%
------ ------------------------------ -------------
10 Northampton Schools 1.7%
------ ------------------------------ -------------
VALUATION
The Company's investment portfolio valuation is revised
semi-annually by the Investment Advisor, and presented for approval
by the Directors and reviewed by the Company's auditors, EY. In
addition, the Company provides quarterly NAV guidance predominantly
based on movements over the period in the government bond yields of
countries where the Company holds investments and changes to
relevant foreign exchange rates.
This quarterly guidance does not include any changes (positive
or negative) in NAV arising from matters specific to individual
investments (e.g. changes in asset specific risks, timing
implications of delayed or accelerated cash flows, changes to cash
flow projections and assumptions, indexation adjustments due to
changes in inflation etc.), although any material
investment-specific issues occurring in the period can be expected
to be reported on separately in this quarterly update. The
Directors' valuations published with the Company's full and interim
results are reviewed by the Company's auditors and are updated to
reflect both investment-specific and macroeconomic factors.
The Company published an estimated NAV at 31 March 2017 of not
less than 140.5 pence per share in conjunction with the release of
its Prospectus dated 12 April 2017. Since that date government bond
yields in the majority of jurisdictions in which the Company
invests have increased. On a net basis and other things being
equal, the net increase in government bond yields could be expected
to have a negative effect on the Company's NAV.
Over the same period, the Sterling forward curve strengthened
against the Australian Dollar, the Canadian Dollar and the U.S.
Dollar but weakened against the Euro. The net change in the foreign
exchange rates of Sterling could be expected, other things being
equal, to have a negative effect on the Company's NAV.
In the course of its normal practice the Company also reviews
market based evidence (market intelligence and its own experience
of the secondary market for assets such as those owned by the
Company) in its assessment of NAV. Since 31 December 2016 the
Company has seen continued strong evidence of rising valuations for
assets of the type it owns. The extent of the positive impact which
this is likely to have on NAV is being considered and will be
reported on more fully at the time of the Company's interim
results.
DISTRIBUTIONS
On 30 March 2017, the 2016 second half year distribution of
3.325 pence per share was declared for shareholders on the register
as at 21 April 2017. This distribution was for the period 1 July
2016 to 31 December 2016 and was a c.2.5% increase on the
distribution paid in the previous corresponding period.
The Scrip Dividend Alternative Circular applicable to that
dividend was available to investors and the associated scrip
allotment or dividend payment is due to be made on 7 June 2017.
The Board of Directors have previously announced minimum targets
for the 2017 and 2018 distributions of 6.82 pence per share and
7.00 pence per share (respectively), providing additional guidance
to investors as to the Company's future intentions. The targeted
payments would represent a minimum c.2.5% increase on the preceding
distributions and would continue to be in line with the growth
target indicated at the time of the Company's IPO in 2006(2) .
INVESTMENT ENVIRONMENT AND OUTLOOK
The Company remains positive about its prospects both in terms
of the performance of its existing investments and the opportunity
to add high quality investments to the portfolio in the
short-to-medium term.
The Investment Adviser remains confident of a significant
investment pipeline for the Company. In addition to its existing
commitments including Tideway, the Investment Adviser has a
pipeline of other potential investment opportunities that are at an
earlier stage of development and, subject to further review, may be
progressed as investment opportunities for the Company.
Key areas of current activity for the Company and/or its
Investment Adviser (or associates) include:
-- A continued focus on large-scale opportunities in the UK regulated asset sector;
-- Further activities in the area of UK offshore transmission;
-- U.S. P3 and similar opportunities, particularly through the relationship with Amber/Hunt;
-- Other UK and European primary investment opportunities (for
instance in the healthcare and digital infrastructure sectors);
-- Acquisition of additional investments in projects where the
Company already has an investment. Typically these will arise under
pre-emption and similar rights.
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. Published in conjunction with the Prospectus dated 12 April 2017
2. In aggregate, the weighted average return of the portfolio
would be expected to increase by 0.89% per annum in response to a
1.00% per annum inflation increase over the currently assumed
inflation rates across the whole portfolio.
3. 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.
4. Source: Bloomberg, share price appreciation plus income.
ENDS.
For further information:
Erica Sibree +44 (0)20 7939 0558
Amber Fund Management Limited
Nick Westlake/Hugh Jonathan +44 (0)20 7260 1345/1263
Numis Securities
Ed Berry/Mitch Barltrop +44 (0) 20 3727 1046/1039
FTI Consulting
About International Public Partnerships (INPP):
International Public Partnerships ('INPP') is a listed
infrastructure investment company which invests in global public
infrastructure projects developed under the public private
partnerships ('PPP'), private finance initiative ('PFI'), regulated
asset and other similar procurement methods.
Listed in 2006, INPP is a long-term investor in 127 social and
transport infrastructure projects, including schools, hospitals,
courts, police headquarters, transport and utility and transmission
projects in the UK, Europe, Australia and North America. INPP seeks
to provide its shareholders with both a long-term yield and capital
growth through investment across both construction and operational
phases typically of 25-40 year concessions.
Amber Infrastructure Group ('Amber') is the Investment Adviser
to INPP and consists over 100 dedicated staff who manage, advise on
and originate investments for INPP.
Visit the INPP website at
www.internationalpublicpartnerships.com for more information.
This update does not constitute or form part of any offer to
issue or sell, or any solicitation of any offer to subscribe or
purchase, any investments nor shall it (or the fact of its
distribution) form the basis of, or be relied on in connection
with, any contract or commitment whatsoever.
The potential acquisition by the Company of any of the
investments referred to in this quarterly update is subject, among
other things, to those projects reaching legal completion and to
the Company having conducted satisfactory due diligence in relation
to such investments. Although the Company has a right of first
refusal for investments disposed of by the Amber group, any
acquisitions will be subject to agreement having been reached
between the Company and the relevant counterparty as to the terms
of the acquisitions. In addition, some of the investment
opportunities are those where Amber or the Company is currently
undergoing a bidding process. There is no guarantee that they will
be successful in any such bidding process. There is therefore no
guarantee that any of the investments will be acquired and if they
are on what terms.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document. Subject to their legal and
regulatory obligations, International Public Partnerships and its
Investment Advisor expressly disclaim any obligations to update or
revise any forward-looking statement contained herein to reflect
any change in expectations with regard thereto or any change in
events, conditions or circumstances on which any statement is
based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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