TIDMINPP
RNS Number : 1759H
International Public Partnerships
26 July 2023
MARKET UPDATE, REALISATION AND CAPITAL MARKETS DAY
26 July 2023
International Public Partnerships Limited ('INPP', or the
'Company'), the listed infrastructure investment company, which
invests in public and social infrastructure assets and related
businesses internationally is pleased to provide a market update
and to announce a date for a Capital Markets Day.
Market Update and Macroeconomic Protections
During the first six months of 2023, the Company's assets
continued to perform strongly and in line with expectations. The
level of actual cash receipts remained in line with the Company's
projections, enabling the net operating cash flows to more than
cover the Company dividend. The portfolio's resilience in
challenging macroeconomic conditions is largely attributable
to:
High levels of protection to increasing base rates
-- As at 31 December 2022, 90% of INPP's portfolio by fair value
benefits from mitigations in relation to changes in base rates.
This is either due to the asset-level debt having been hedged for
the full term at the original close of each investment
(representing 61% of the portfolio by fair value) or because the
assets benefit from mechanisms as part the regulatory regimes in
which they operate, where the regulator includes a revenue
allowance for the cost of debt (29% of the portfolio by fair
value).
-- For the remaining 10% of INPP's portfolio by fair value,
increased debt costs are typically able to be recovered from the
end user. For example in the Company's UK and German train leasing
company investments (which together constitute 8% of the portfolio
by fair value), increased costs are expected to be passed through
to the client at the relevant re-leasing point.
High levels of inflation correlation
-- The investment portfolio generates strongly inflation-linked
cash flows such that a 1.0% increase in assumed inflation rates
across all assets is currently projected to result in a 0.7%
increase in portfolio returns.
Predictability of operational cashflows
-- Since its IPO in 2006, the Company has delivered average
annual dividend growth of c.2.5% and has increased the dividend for
15 consecutive years. The Company has reaffirmed its future
dividend targets of 7.93 and 8.13 pence per share for 2023 and 2024
respectively, representing additional c.2.5% [i] annual
increases.
-- The projected cash receipts from the Company's existing
portfolio of over 140 investments are such that even if no further
investments are made, INPP would be able to continue to meet its
existing progressive dividend policy for at least the next 20
years.
The Board remains confident that the high quality and long tenor
of the Company's cash flows continues to demonstrate its
differentiated investment thesis. Notwithstanding this, the
Investment Adviser and the Company's Board fully recognise that its
shares remain at a discount to the Company's last published net
asset value ('NAV').
The Company will publish its interim results on 7 September
2023. This publication will include a revised NAV as at 30 June
2023.
As with previous periods, this revised NAV will reflect changes
to the macroeconomic environment that have occurred since 31
December 2022. These changes will include adjustments to the
discount rates used to value the forecast cashflows (expected to
have a negative impact on NAV) as well as changes to the forecast
cashflows themselves to reflect the latest inflation rate and
deposit rate expectations (expected to have a positive impact on
NAV). Overall, the Board believes the combined effect will be to
have a modestly negative impact on the 31 December 2022 NAV.
The Board and its Investment Adviser continue to believe the
discount to NAV at which the Company's shares are trading
materially undervalues the Company. The principal current actions
taken by the Board in consultation with the Investment Adviser to
address this issue include:
-- A strong focus on efficient balance sheet management and, in
particular, minimising to the extent possible use of the Company's
revolving credit facility ('RCF');
-- Realisation of value from specific existing investments where
it is prudent to do so and utilising the proceeds to reduce
corporate indebtedness. The sale of Airband, referred to below, is
a first step; and
-- In addition to the reduction of the RCF through additional
realisations (further announcements are expected to follow in Q4
2023), further tools, such as share buy-backs and a review of
dividend policy remain available for consideration by the Board if
the circumstances so justify.
These actions are consistent with the Company's established
approach. Moreover, the Board and the Investment Adviser are firmly
committed to the creation and delivery of long-term shareholder
value. The continued strength and long duration of the Company's
future anticipated cash receipts provide the Board and the
Investment Adviser with confidence to continue to meet the
Company's investment objectives.
Balance Sheet and Realisation
The Company maintains a strong liquidity position. INPP's GBP350
million RCF is currently c.GBP125 million utilised (including
c.GBP17 million committed by way of letters of credit) and is
available until June 2025, following the refinancing earlier in
2023. Current fund level leverage therefore constitutes c.4% of the
Company's 31 December 2022 NAV.
It is also the Company's intention to repay c.GBP20 million of
the RCF before the end of July utilising a combination of free
cashflow and the proceeds from the sale of its remaining investment
[ii] in one of its digital infrastructure assets, Airband, in
respect of which a sale was recently agreed and which is expected
to reach completion shortly.
Airband is a fibre to the premise and fixed wireless access
network operator which, since INPP's investment in 2018, has rolled
out up to 1GB speed broadband to over 290,000 homes, businesses and
industries in rural and hard-to-reach areas in the UK.
Notification of Date of Interim Results and October Capital
Markets Day
The Board is also pleased to announce that in addition to its
interim results presentation expected to be held on Thursday 7
September 2023, it intends to host a Capital Markets Day for
investors on the morning of Wednesday 4 October 2023 in central
London.
The Capital Markets Day will include a panel with
representatives from portfolio companies together with members of
the Investment Adviser's team.
Institutional investors and sell-side analysts who wish to
register in advance of either event can do so via
investorrelations@amberinfrastructure.com. Further details
including timings and access to both events will be released via
RNS at a later date.
ENDS.
For further information:
Erica Sibree
Amber Fund Management Limited +44 (0) 7557 676 499
Hugh Jonathan
Numis Securities +44 (0)20 7260 1263
Ed Berry/Mitch Barltrop +44 (0) 7703 330 199 / (0)
FTI Consulting 7807 296 032
About International Public Partnerships:
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 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, New Zealand 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 approximately 180 staff who are responsible
for the management of, advice on and origination of infrastructure
investments.
[i] Future profit projections and dividends cannot be
guaranteed. Projections are based on current estimates and may vary
in the future.
[ii] Held through the National Digital Infrastructure Fund which
INPP is invested in alongside the UK Government.
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END
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