3i Infrastructure Share Discussion Threads

[stevie blunder] 07/11/2019 08:53

This is interesting for some depending on your tax status:

(I have mine in an ISA so wont make a difference to me.)

Designation of dividends as interest distributions



As an approved investment trust, the Company is permitted to designate dividends wholly or partly as interest distributions for UK tax purposes. Dividends designated as interest in this way are taxed as interest income in the hands of shareholders and are treated as tax deductible interest payments made by the Company. The Company expects to make such dividend designations in periods in which it is able to use the resultant tax deduction to reduce the UK corporation tax it would otherwise pay on the interest income it earns from its investments. The Board is designating 3.4 pence of the 4.6 pence interim dividend payable in respect of the period as an interest distribution.

[jonwig] 07/11/2019 07:50

Consistent H1 performance again:

The Company generated a total return of 5.8% on opening NAV for the first half of the year, ahead of its target return of 8% to 10% per annum to be achieved over the medium term. The NAV per share increased to 243.6 pence. The portfolio is performing in line with expectations, both financially and operationally, with our Investment Manager driving value growth over the period through active asset management of the portfolio. We are very pleased to have completed the acquisition of Ionisos, further improving the diversification of the portfolio.

The Company delivered a Total Shareholder Return ('TSR') of 8.9% in the period (FTSE 250: 6.3%). Since IPO, the Company's annualised TSR was 13.6%, comparing favourably with the broader market (FTSE 250: 7.6% annualised over the same period). The Company has achieved this outperformance with a low correlation to the broader equity market.



NAV premium is 'only' 18% now!

[jonwig] 11/10/2019 06:09

Result of placing;

3iN plc is pleased to announce the completion of the equity placing announced on 3 October 2019.

A total of 81,000,000 new ordinary shares of no par value each were issued at a price of 275 pence per Share, raising gross proceeds of approximately GBP222.8 million. The Shares being issued represent approximately 9.9 per cent. of 3iN plc's issued ordinary share capital prior to the Placing. The issue was substantially oversubscribed and the issue price represents a discount of approximately 7.6 per cent. to 3iN plc's share price immediately prior to the announcement of the Placing and a premium of 19.4 per cent. to the latest disclosed net asset value as at 31 March 2019 of 230.4p per ordinary share after adjusting for the dividend paid since.

[jonwig] 03/10/2019 08:42

hirani - it's non-preemptive, so no. But you could ring up one of the two bookrunners and find out the terms.

You'd be asked how many shares you would buy and what price. It would be well outside my league!

[hirani2] 03/10/2019 08:06

Can ordinary investors apply for the placing shares.

[chc15] 03/10/2019 07:51

Yes mkts taken a turn, however I always buy during times like this, daily via index funds, always recovers in a month or so..I have enough in 3IN, so will hold.

[jonwig] 03/10/2019 07:46

Market looks nasty, and lots of profits to be taken here.

[chc15] 03/10/2019 07:31

Looks like 280ish, 285 probably, not great, but buying opp here for us?

[jonwig] 03/10/2019 06:16

Placing of up to 81m shares:



Non-preemptive, naturally! Interesting to see what the price comes out at: over 290p would be encouraging, 280-ish a sign that market jitters had taken over.

[chc15] 30/9/2019 15:06

Yes all seems well, had another tip in the mail on Sunday too.

[jonwig] 30/9/2019 06:10

Pre-close update. Everything in line, meeting targets:

[chc15] 13/9/2019 15:23

why u so that that..could do I suppose.

[jimmy143] 12/9/2019 06:22

we could go to 350p.

[jonwig] 26/7/2019 06:12

Acquisition of Ionisos:



Looks an excellent company. Hard to know whether price is fair.

[jonwig] 09/7/2019 05:32

Unwelcome, but probably to be expected:

Jefferies has downgraded 3i Infrastructure (3IN) as a tick up in its premium has left it in a ‘precarious’ place.

Analyst Matthew Hose has downgraded his recommendation from ‘hold’ to ‘underperform’ with a target price of 302p on the stock, which is trading at a 30% premium to net asset value (NAV).

‘A 30% premium to NAV leads us to downgrade our recommendation on the fund to “underperform”,’ he said.

‘This is somewhat reluctantly given the quality of 3i Infrastructure’s proposition but the extent of the rating has left it precariously positioned in light of any potential portfolio activity.’

He added that he was ‘loathe to make pure valuation calls… particularly when the underlying fund is of high quality, as it is here’ but the shares have re-rated and there ‘are obvious risks to the fund’s near-term share price returns’.

The shares fell 1.7% to 297p yesterday.

[chc15] 04/7/2019 14:42

Yes over 3 now, forgot about the agm today, was due to go, next time!

[jonwig] 04/7/2019 06:12

Q1 performance update. Entirely in-line with expectations:

[hutch421] 10/6/2019 06:16

Many thanks Jon - been a holder for 10 years and considering adding a few.

[jonwig] 10/6/2019 05:27

If you register you can read two free online articles per week. This is one of mine, then:

One of the lessons to have emerged from the travails of Neil Woodford’s investment firm is that there are good and bad ways to put together an investment vehicle that takes stakes in unlisted illiquid assets. 3i Infrastructure is a perfect example of one of the good ways.

Founded in 2007 by the FTSE 100 private equity investor 3i, it is an investment trust whose brief is to generate capital growth and income for investors over the long term by investing in infrastructure assets, which can range from waste treatment and processing facilities to renewable power developers.

The trust is a constituent of the FTSE 250 and 3i both manages the investments and has a 33.35 per cent stake that it is showing no signs whatsoever of wanting to offload.

The reason it is the right way to invest in hard-to-trade holdings is that 3i will not become a forced seller of any of its assets if investors turn bearish and sell. This is the underlying problem at Mr Woodford’s equity income fund.

Based on its prevailing performance, particularly over the past two years, shareholders in this 3i investment trust have had little reason to head for the exit; the opposite in fact. As an example, over the year to the end of March, 3i Infrastructure improved the net value of its assets by 15.4 per cent, way ahead of its target of between 8 per cent and 10 per cent. It generated a total shareholder return of 33 per cent, against a 1 per cent increase in the wider FTSE 250.

The shares have gained 43.6 per cent over the past 24 months and trade at a premium to its net asset value of a very high 19.5 per cent.

Several years ago 3i rethought its investment strategy, moving away from stable cashflow generators such as utilities to businesses that, while still cash generative, can be developed operationally, including expanding through acquisitions.

While it still buys and sells assets — offloading its stake in the Thameslink rail rolling stock leasing company Cross London Trains for £333 million in February — it has effectively now created its core portfolio of what it sees as long-term growth businesses.

It looks good from here. Take the two biggest holdings. Infinis is the UK market leader in generating electricity from landfill gas and coalmine methane. At the forefront of green energy, it plays into the government’s drive for renewables projects and has expansion through M&A built into its strategy.

The Wireless Infrastructure Group builds and operates the towers and other equipment that connect networks and communities. It is at the centre of the introduction of 5G connections and, as well as expanding by acquisition, is involved in other projects such as developing networks for driverless car trials.

Also among the core nine holdings are ESVAGT, a business based in Denmark that provides emergency response vessels and services for wind farms, and Attero, a company based in the Netherlands that operates waste treatment and processing facilities.

This investment trust positively oozes quality. The problem for prospective investors is that this is no secret and the premium rating for the shares, which have risen by nearly 44 per cent in the past two years, is undoubtedly offputting.

The asset sales that have helped to deliver its outperformance over the past two years are likely to feature less in the coming years, but there is every reason to expect the core portfolio to deliver solid returns.

As well as appreciating, the shares, off 1½p, or 0.5 per cent, at 280½p yesterday, carry a respectable yield of nearly 3.2 per cent. If you own them, don’t let them go easily.
ADVICE Hold long term

[hutch421] 09/6/2019 21:04

Where please?

[chc15] 07/6/2019 16:25

Good write up in the Times today..

[jonwig] 09/5/2019 06:18

Annual results:



Strong stuff!

The Company generated a total return of £258 million in the year ended 31 March 2019, or 15.4% on opening NAV, again exceeding the target of 8% to 10% per annum to be achieved over the medium term. The NAV per share increased to 234.7 pence. We delivered a Total Shareholder Return ('TSR') of 33.4% in the year (FTSE 250: 1.0%). Since IPO, the Company's annualised TSR was 13.4%, comparing favourably with the broader market (FTSE 250: 7.4% annualised over the same period). The Company has achieved this performance with relatively low share price volatility. The Company's share price performance relative to the FTSE 250 has been particularly strong over the last five years.

NAV premium has narrowed to 18%.
2019-20 dividend target up 6.4% to 9.2p (8.65p).

[jonwig] 02/5/2019 10:40

Thanks Q8Don. here's the key bit, taken from a Stifel analyst:

... such a high rate of asset sales can’t be maintained, said Iain Scouller, of Stifel, the stockbroker.

“The fund’s strategy is buy and hold, and it normally expects to keep its assets for five or six years,” he told Questor. “However, if it gets a good offer, it will sell. Its timing has been good, but it’s not going to be selling infrastructure year after year.”

It currently has only about 10 assets, most of them relatively new, and is buying more. “These businesses take time to bed in, so we cannot expect quick sales,” Scouller added.

Another signal that the shares may have got ahead of themselves is the yield. Although the dividend was increased significantly in the most recent financial year, the yield is just 3.1pc, which is on the low side for an infrastructure trust.

The sector is seen largely as a source of income, and many of 3i Infrastructure’;s rivals yield far more: HICL’s figure is 5pc, for example, while GCP Infrastructure Investments yields 5.9pc.

Questor, therefore, fears that the premium could easily fall. In the absence of a sufficiently strong rise in the NAV, a falling premium means a falling share price, which in turn means bringing the yield more in line with that of the peer group.

“I think the premium is unsustainable – you have to question it,” Scouller said.

A falling premium is, of course, no reflection on the portfolio itself, which is managed by an arm of the long-established and larger 3i investment trust.

“Although there have been some changes in personnel, it is overall a stable management structure,” Scouller said. “It’s now led by Phil White, who has an experienced team who’re good at getting the deals done.”

The managers are certainly well paid: on top of the base 1.5pc annual charge, there is a performance fee of 20pc of any gains of more than 8pc a year, which Scouller said was anomalous in the infrastructure sector.

[q8don] 02/5/2019 10:02

Questor in Telegraph said sell to bank profits and buy back later. Well, okay if you can time the market well enough to pay the cgt, cover the spread... and still make a profit! I'm holding long term... they have refreshed their portfolio and these businesses will produce future gains in NAV.

[chc15] 02/5/2019 09:51

What happened?