TIDM3IN
RNS Number : 6790G
3i Infrastructure PLC
31 March 2022
31 March 2022
3i Infrastructure plc - Pre-close update
Portfolio performing strongly; on track to meet dividend target,
up 6.6% year-on-year
3i Infrastructure plc ('3i Infrastructure' or the 'Company') is
an investment company whose purpose is to invest responsibly in
infrastructure, delivering long-term sustainable returns to
shareholders and having a positive impact on our portfolio
companies and their stakeholders. This statement relates to the
period from 1 October 2021 to 30 March 2022 (the 'Period').
Highlights
-- Strong level of investment in new platforms and existing portfolio companies:
- On 17 November 2021, 3i Infrastructure agreed to invest c.$512
million to acquire 100% of Global Cloud Xchange ('GCX'). GCX is a
leading global data communications service provider and owns one of
the world's largest private subsea fibre optic networks. Additional
acquisition debt was raised in March 2022, reducing the Company's
equity commitment to c.GBP300 million. The transaction is due to
complete in Summer 2022
- On 14 December 2021, 3i Infrastructure completed the c.GBP191
million acquisition of a 92% stake in SRL Traffic Systems ('SRL'),
the market leading traffic management equipment rental company in
the UK
- On 16 December 2021, the Company invested a further c.GBP21
million into Valorem through a capital increase to fund its growth,
raising the Company's stake in Valorem to c.33%
- On 1 February 2022, 3i Infrastructure completed a further
GBP258 million investment in ESVAGT, the market leader in service
operation vessels for the offshore wind industry, doubling its
equity stake to 100%
- On 14 February 2022, the Company invested a further GBP33
million in DNS:NET to fund the next step of its fibre roll-out,
increasing 3i Infrastructure's stake in DNS:NET to 64%
-- Successful realisation of Oystercatcher's four European
terminals: On 29 October 2021, the Company completed the sale of
its 45% stakes in four European liquid storage terminals for
proceeds of c.EUR55 million after debt repayment. 3i Infrastructure
continues to hold a 45% stake in Oiltanking Singapore.
-- Sale of the European projects portfolio: On 29 March 2022,
the Company agreed to sell its European projects portfolio to 3i
European Operational Projects Fund ('3i EOPF') for c.GBP100
million. This transaction is expected to reach completion by June
2022.
-- Portfolio performing strongly: The portfolio overall has
delivered strong operational and financial performance over the
Period, in most cases ahead of the expectations we set in September
2021.
-- Income as expected in the Period: Total income and non-income
cash was in line with expectations at GBP86 million in the Period.
This compares with GBP69 million of income and non-income cash
received in the same period last year.
-- On-track to meet the FY22 dividend target of 10.45 pence per
share, a year-on-year increase of 6.6%. The dividend is expected to
be fully covered.
-- Efficient balance sheet: In January 2022, 3i Infrastructure
obtained an additional one-year credit facility of GBP400 million
from existing lenders. As a result, the Company's aggregate credit
facilities total GBP1 billion, giving ample liquidity to fund
existing commitments and bid for new investment opportunities.
Phil White, Managing Partner and Head of Infrastructure, 3i
Investments plc, Investment
Manager of the Company, commented: "We are delighted with the
new investment commitments we have made, both in new businesses and
in companies we already know well, and with the successful
realisations at attractive prices of Oystercatcher's European
terminals and the European projects portfolio. Our engaged asset
management approach has continued to drive performance from the
portfolio, ahead of our expectations."
Changes to management team
3i Group plc has today announced that Phil White is stepping
down from his role with effect from 1 July 2022. Scott Moseley and
Bernardo Sottomayor will be appointed as Co-Heads of European
Infrastructure.
Richard Laing, Chair of 3i Infrastructure plc, said: "Phil has
contributed enormously to 3i Infrastructure's success over many
years. During his 8 year tenure as Managing Partner, the Company's
returns have consistently been ahead of the FTSE-250 benchmark - a
major achievement. In addition, under his leadership the management
team has increased in number and depth, and is therefore well
positioned for the future. All of us on the Board will miss Phil's
experience, wisdom and commitment and are extremely grateful for
all that he has done. We know Scott and Bernardo well, having
worked with them over many years, and are confident that the team
will continue to provide excellent management of the Company."
Portfolio update
Overall, the portfolio has performed strongly in the Period,
with performance, in most cases, ahead of the expectations set in
September 2021.
Neither 3i Infrastructure, nor any of its portfolio companies,
has any direct exposure to Russia or Ukraine. In two portfolio
companies, Ionisos and Infinis, there are or have been commercial
relationships with Russian-owned companies which, when ceased,
would have only minor consequences for those portfolio companies
pending replacement by third parties. Further detail is provided
below.
There are actual and potential indirect effects on portfolio
companies of the Russian invasion of Ukraine and the imposition of
sanctions on Russia and Russian businesses, including increasing
cost and wage inflation, availability of resources and disruptions
to normal market activities. However, the impact to date on
portfolio companies has been limited.
DNS:NET, in which the Company first invested in June 2021, is
performing overall in line with our expectations. As anticipated at
the time of investment, 3i Infrastructure injected a further GBP33
million of capital in the Period to support further fibre network
roll-out in and around the Berlin area.
Attero has enjoyed strong operational and financial performance
in the Period, supported by high waste volumes, gate fees and power
prices. The Company closed an additional debt raise of EUR81
million and refinanced EUR19 million of existing bank debt in the
Period, on favourable terms.
At Oystercatcher, our terminal in Singapore has performed in
line with our expectations in the Period and ahead of prior year,
supported by increasing oil prices, although the current
backwardation market structure observed for most products and
recent market volatility may maintain some short-term pressure on
pricing of contract renewals.
Ionisos's performance exceeded expectations in the Period driven
by increasing end customer demand across all market segments and a
favourable product mix.
Ionisos's Estonian business has in the past sourced Cobalt-60
from a Russian-owned company, JSC. Whilst JSC is not currently
subject to sanctions, Ionisos will not source new Cobalt-60 from
JSC for the foreseeable future and is in the process of making
alternative supplier arrangements.
SRL, the traffic management equipment business acquired in
December 2021, is performing in line with our investment case. As
planned at acquisition, the Company completed a debt raise in
February 2022 and the bridge loan provided at acquisition by 3i
Infrastructure has been repaid.
ESVAGT has started the period of our 100% ownership well, with
good progress made in the pipeline for new service operation
vessels. ESVAGT's emergency rescue and response vessel segment is
also experiencing positive momentum due to the oil price rebound
and increasingly attractive supply / demand dynamics.
Infinis performed strongly in the Period supported by higher
energy prices, benefitting its power response business in
particular. Infinis has continued the development of its solar
power generation business and now has a consented pipeline of 117MW
with a further 93MW currently in planning.
Infinis's electricity offtake arrangements include contracts
with Gazprom's UK subsidiary, a large supplier in the UK
non-domestic energy market. Whilst these contracts are not
currently affected by sanctions, Infinis is actively replacing
contracts where permitted and others will run off over time. We do
not expect Infinis to be adversely affected by any extension of
sanctions or an insolvency process for Gazprom's UK subsidiary.
Despite lower than anticipated revenue from electricity
generation due to low wind conditions in Q4 2021, Valorem's
performance has been in line with expectations. In February 2022,
Valorem closed the 313MW Viiatti wind project in Finland, of which
148MW is owned by Valorem, enhancing its pan-European profile.
TCR outperformed our expectations in the Period. The recovery in
air traffic continued, although negatively affected by travel
restrictions and regulations imposed to combat the Omicron variant
of Covid-19, and the business maintained strong cost
discipline.
The performance of Joulz's infrastructure services and metering
businesses was in line with expectations and we saw continued
healthy growth in the order book. In December 2021 the Company
injected EUR5.5 million of additional equity into Joulz to
part-fund upcoming projects including the purchase of a further
c.EUR2.7 million of transformers from Stedin.
Tampnet performed well ahead of expectations in the Period and
significantly higher than prior year. Tampnet's core connectivity
business in the North Sea performed well as customers continued to
upgrade their bandwidth requirements. The Gulf of Mexico region
also performed well in 2021 although it is still experiencing
delays in installations, particularly in the deep water, as
Covid-19 and severe weather conditions during the winter continued
to affect customer operations.
On 29 March 2022, the Company signed an agreement to sell all of
its holdings in the European projects portfolio, comprising four
Dutch and two French PPP projects across transport and social
infrastructure, to 3i EOPF. Completion is expected by June 2022 and
proceeds are estimated at c.GBP100 million. The proceeds from the
transaction will be used to pay down the Revolving Credit Facility
('RCF') and provide the Company with further liquidity. The
projects portfolio performed well in the Period.
There was completion of a further small divestment from the
India Fund at an uplift to carrying value.
Portfolio returns
The portfolio is delivering income in line with expectations.
Total income and non-income cash was GBP86 million in the Period,
comprising income of GBP85 million and non-income cash of GBP1
million. This compares with GBP69 million of income and non-income
cash received in the same period last year.
As usual, an important element of the determination of the
Company's results for the
full-year to 31 March 2022 will be the valuation exercise
carried out on the investment portfolio at that date.
Balance sheet
At 30 March 2022, the Company's cash balance was GBP14 million,
with drawings of GBP232 million under the RCF.
In December 2021, 3i Infrastructure received lender approval to
increase the RCF by GBP200 million to GBP600 million. In January
2022, the Company obtained an additional one-year credit facility
of GBP400 million from existing lenders. Aggregate credit
facilities therefore total GBP1 billion today.
The outstanding balance on the vendor loan note due from the
sale of WIG in 2019 was rolled forward. The Company received GBP12
million of accrued interest in December 2021, leaving GBP98 million
of deferred proceeds due in December 2023 and callable on 6 weeks'
notice.
Ends
For information, please contact:
Thomas Fodor Shareholder enquiries +44 20 7975 3469
Kathryn van der
Kroft Media enquiries +44 20 7975 3021
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About 3i Infrastructure plc
3i Infrastructure plc is a Jersey-incorporated, closed-ended
investment company, an approved UK Investment Trust, listed on the
London Stock Exchange and regulated by the Jersey Financial
Services Commission. The Company's purpose is to invest responsibly
in infrastructure, delivering long-term sustainable returns to
shareholders and having a positive impact on our portfolio
companies and stakeholders.
3i Investments plc, a wholly-owned subsidiary of 3i Group plc,
is authorised and regulated in the UK by the Financial Conduct
Authority and is the investment manager of 3i Infrastructure
plc.
This press release is not for distribution (directly or
indirectly) in or to the United States, Canada, Australia or Japan
and is not an offer of securities for sale in or into the United
States, Canada, Australia or Japan. Securities may not be offered
or sold in the United States absent registration under the U.S.
Securities Act of 1933, as amended (the 'Securities Act'), or an
exemption from registration under the Securities Act. Any public
offering to be made in the United States will be made by means of a
prospectus that may be obtained from the issuer or selling security
holder and will contain detailed information about 3i Group plc, 3i
Infrastructure plc, 3i India Infrastructure Fund and management, as
applicable, as well as financial statements. No public offering in
the United States is currently contemplated.
This statement aims to give an indication of material events and
transactions that have taken place in the period from 1 October
2021 to 30 March 2022 and their impact on the financial position of
3i Infrastructure plc. These indications reflect the Board's
current view. They are subject to a number of risks and
uncertainties and could change. Factors which could cause or
contribute to such differences include, but are not limited to,
general economic and market conditions and specific factors
affecting the financial prospects or performance of individual
investments within the portfolio of 3i Infrastructure plc.
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END
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