TIDMINPP
RNS Number : 2654P
International Public Partnership Ld
16 November 2016
International Public Partnerships Limited
Portfolio Update
For the period 1 July 2016 to 15 November 2016
16 November 2016
International Public Partnerships Limited ('INPP', 'the
Company'), a listed investment company which invests in global
public infrastructure projects, today issues the following update
for the period 1 July 2016 to 15 November 2016.
Highlights
-- The Company's portfolio of 126 public infrastructure
investments are performing fully in line with expectations;
-- The Company reported an increase in Net Asset Value ('NAV')
per share to 138.2 pence at its 2016 Interim Results for the six
months to 30 June 2016 (Dec 2015: 130.2p);
-- Inflation linkage in the portfolio remains strong such that a
1.00% increase in inflation leads to a 0.71% increase in return(1)
;
-- A first half year 2016 dividend of 3.325 pence per share was
declared on 1 September 2016 and was paid on 3 November 2016;
-- A minimum target dividend for the 2016 and 2017 financial
years has been set at 6.65 pence and 6.82 pence per share
respectively and these amounts are in line with the average
increase of c.2.5%(2) or greater each year;
-- Additional GBP133.0 million of investments were made during
the period, including GBP33.9 million in relation to the Company's
commitment to the Thames Tideway Tunnel;
-- The Company has 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 commitment to the Thames Tideway Tunnel project;
-- The Company has delivered a Total Shareholder Return
(comprising share price growth and aggregate dividends) since IPO
in November 2006 to 10 November 2016 153.96% or 9.76% on an
annualised basis(3) .
Rupert Dorey, Chairman of International Public Partnerships
Limited, commented: "We have been encouraged by the continued
strong performance of the Company's portfolio, as the demand for
private investment in public infrastructure across the UK and the
overseas developed markets where we have interests remains
high.
As a result, we remain confident in the pipeline of suitable
infrastructure and utility projects currently under review and will
continue to use our primary origination capability to uphold the
long-dated, low-risk and inflation-linked characteristics that make
up the Company's investment case."
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 11.3% of assets still in physical
construction. The weighted average investment life of the portfolio
is currently 30 years with a weighted average (non-recourse) debt
tenor of 28 years.
As at 10 November 2016, the portfolio comprised economic
interests in 126 projects with a composition as detailed below:
Geographic Investment Sector Investment
breakdown Fair Value breakdown Fair Value
% %
---------------- ------------ -------------------- ------------
United Kingdom 71.0% Energy Transmission 26.3%
---------------- ------------ -------------------- ------------
Belgium 11.0% Education 25.0%
---------------- ------------ -------------------- ------------
Australia 6.5% Transport 18.9%
---------------- ------------ -------------------- ------------
United States 4.1% Waste Water 8.2%
---------------- ------------ -------------------- ------------
Germany 3.3% Health 6.4%
---------------- ------------ -------------------- ------------
Canada 2.7% Courts 5.2%
---------------- ------------ -------------------- ------------
Ireland 1.3% Military Housing 4.2%
---------------- ------------ -------------------- ------------
Italy 0.1% Police Authority 3.1%
---------------- ------------ -------------------- ------------
Custodial 0.7%
---------------- ------------ -------------------- ------------
Government
Offices/Other 2.0%
---------------- ------------ -------------------- ------------
Investment Investment Investment Investment
life Fair Value stake Fair Value
% % %
------------- ------------ ----------- ------------
<20 years 47.8% 100% 60.4%
------------- ------------ ----------- ------------
20-30 years 35.5% <50% 30.3%
------------- ------------ ----------- ------------
>30 years 16.7% 50% - 100% 9.3%
------------- ------------ ----------- ------------
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.
Gearing and cash position
The Company has utilised GBP138.4 million of the credit
available under its revolving credit facility, (taking into account
its future investment obligations into new projects including its
investment commitments to the Thames Tideway Tunnel project and a
drawn cash balance of GBP13.5 million). The Company has previously
fully deployed the capital it raised in July 2016.
Taking into account the significant pipeline of investments the
Company is also exploring increasing the size of its corporate debt
facility, details of which will be released once the facility has
been successfully renegotiated.
Investments
During the period since 30 June 2016, c.GBP133.0 million was
invested across 13 projects.
Additional investments in UK schools
The Company invested GBP72.3 million to acquire investment
interests in a total of ten UK schools. The investment opportunity
was secured through pre-emption rights that INPP gained as part of
its ownership of Building Schools for the Future Investments LLP
("BSFI"). INPP acquired BSFI from the Department of Education and
Partnerships UK in August 2011.
Owing to its established position in UK education
infrastructure, the Company already held 10% interests in seven of
the Balfour Beatty investments in question and as a result of the
transaction, the Company increased its stake to between 80.0% and
99.9% in each scheme. At the same time, the Company acquired new
interests in a further three BSF schemes previously under Balfour
Beatty's ownership.
In addition, the Company invested GBP2.2 million to acquire
45.0% of the subordinated debt and equity of HTP Grange Limited, a
BSF project located in Halton, Cheshire.
Additional investment in US Military Housing
The Company invested US$32.0 million (GBP24.6 million) into a
further investment in the US military housing sector. The
investment is in the form of interest-bearing subordinated debt and
is secured on the same underlying military housing assets as those
purchased by the Company in October 2015 but rank higher in
priority to them.
The interests are underpinned by security over seven operational
PPP military housing projects. These projects encompass a total of
19 operational military bases in the US, with approximately 21,800
individual housing units. The debt has a 36-year tenor and matures
in 2052.
Tideway project update
In the period since 30 June 2016 the Company has invested
GBP33.9 million into the Tideway project and has an additional
c.GBP100 million to be committed by early 2018 (currently supported
by a letter of credit) of which c.GBP20 million is expected to be
committed during the remainder of 2016.
During the period, Tideway made good progress against the
project's indicative timetable, including the development of a new
pier at Blackfriars Bridge which will allow hard construction works
to begin at the site of the former Millennium Pier.
Top Ten Investments
The Top Ten Investments of the Company in terms of investment
made as at 10 November 2016 were:
Rank Asset Investment
Fair Value
%
------ ------------------------------ -------------
1 Lincs Offshore Transmission 12.1%
------ ------------------------------ -------------
2 Diabolo Rail Link 11.1%
------ ------------------------------ -------------
3 Ormonde Offshore Transmission 8.9%
------ ------------------------------ -------------
4 Thames Tideway Tunnel 8.2%
------ ------------------------------ -------------
5 Angel Trains 4.5%
------ ------------------------------ -------------
6 Royal Children's Hospital 3.0%
------ ------------------------------ -------------
7 BeNEX Rail 2.6%
------ ------------------------------ -------------
8 US Military Housing 2.5%
------ ------------------------------ -------------
9 Northampton Schools 2.2%
------ ------------------------------ -------------
Hereford & Worcester
10 Courts 2.1%
------ ------------------------------ -------------
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 project 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 updated to reflect both
project-specific and macroeconomic factors.
Since 30 June 2016 (NAV: 138.2 pence per share), government bond
rates in all of the jurisdictions in which the Company invests have
decreased. The decrease in these rates could, other things being
equal, be expected to have a positive effect on the Company's
NAV.
Over the same period, the GBP forward curve has weakened against
the four currencies to which the Company has exposure. The weakened
foreign exchange position of GBP could be expected, other things
being equal, to have a positive effect on the Company's NAV.
Based on these two macroeconomic updates alone, the NAV could be
expected to have increased since 30 June 2016.
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 30 June 2016 the Company
has seen continued 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 full year results.
Distributions
On 1 September 2016, the 2016 first half year distribution of
3.325 pence per share was declared for shareholders on the register
as at 23 September 2016. This distribution was for the period 1
January 2016 to 30 June 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 was made on 3 November 2016.
The Board of Directors have previously announced minimum targets
for the 2016 and 2017 distributions of 6.65 pence per share and
6.82 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
Overall, 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 the commitment
to 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 particular focus on large scale opportunities in the UK regulated asset sector;
-- Continued activities in the area of UK offshore transmission;
-- US P3 and similar opportunities, particularly through the relationship with Amber/Hunt;
-- Other UK and European primary investment opportunities (for
instance in the healthcare and judicial 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. In aggregate, the weighted return of the portfolio would be
expected to increase by 0.71% per annum in response to a 1.00% per
annum inflation increase across the whole portfolio over the
currently assumed inflation rates.
2. 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.
3. Source: Bloomberg, share price appreciation plus income.
End
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 126 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 Advisor
to INPP and consists around 90 dedicated staff who manage, advise
on and originate projects 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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