Gcp Infrastructure Inves... Share Discussion Threads

[cc2014] 04/9/2023 16:16

Ah thanks. I was a bit puzzled when I read your post as your figures don't match the June factsheet. But I see there is a post June transaction which dropped the debt to the figures you are using.

Interesting. I don't hold but I do hold GABI where they do need to get the debt down.

[stemis] 04/9/2023 15:59

Net asset value (per 23.8.23 RNS) was 110.02/share x 874,931,308 shares = £962.6m.

Debt (same RNS) = £104.0m.

Gearing 104/962.6 = 10.8%

I take your point re cost of debt but a loss of 1.2% on £100m = £1.2m/yr or 0.14/share. Knocking it down by £50m is 0.07p/share. Hardly a strategic priority I'd have though...

Anyway

[cc2014] 04/9/2023 15:09

If the cost of the debt has to be re-done at say SONIA +3.5% = 8% that's more than the underlying yield which is 7.9%. If you add in the ongoing fees of 1.1% the underlying yield is 6.8% which means a loss on marginal geared stuff if you use an average.

I also get the gearing to be higher. For sure they are in a better place than some of the others in terms of the gearing.

[stemis] 04/9/2023 13:45

I don't really understand why GCP is making such a play about reducing gearing when it's actually already pretty low ~10%

[the deacon] 01/9/2023 14:29

Intervtwith QuotedDatahttps://youtu.be/x7-3YBr-bvM?si=doA9e22NKWaRc0eI

[hindsight] 23/8/2023 18:23

For me the question is what is the real discount
If the loan book under ZIRP was created at 7.9% then if add on gilt 10 year +2.5% shift get to 10.4%
If take 110p then with the 10.4% get 87.4p
The reduced RCF news encouraged me to add today

[mwj1959] 23/8/2023 13:11

I'm not sure that there will necessarily be many Discretionary / Income fund sellers at such a wide discount (even if there are concerns that there is further downside to the NAV), now material yield pickup and capital appreciation potential. From a MT perspective it is too late to be selling in my opinion, although I recognise that in the ST there could well be further to go. If I was an institutional investor in this I would be working closely with the board to come up with an outturn that narrows the discount. So, I presume (perhaps incorrectly)that the proposed deals announced involved some sort of consultation with largest shareholders (who would have been made insiders) beforehand.

[donald pond] 23/8/2023 07:54

Highlighting the debt reduction is helpful. A 10% yield for a loan book that has very low default rates and some inflation protection seems too high but it's about supply and demand and I suspect many of the income funds that used to rely on GCP to hit their 5% target are moving into lower yielding, but notionally safer gilts

[jonwig] 23/8/2023 07:09

Quarterly update:



They point out again that the FAV scheme will apply to the GCP-GABI merger (as it should) but the RMII deal is separate and outside that scheme.

The buyback has reached 0.7% of the share capital. Not much of a bazooka there.

[brucie5] 22/8/2023 15:35

Some seems to have got their 69p. Each time you think it can't get any lower...

[hugepants] 22/8/2023 15:30

Well the proposed GABI deal has gone down well. No guarantees it will ultimately complete though?

[hpcg] 22/8/2023 13:59

That merger is still at the discussion stage from what I can tell from the rns, with no details on the deal structure.

The Board is also pleased to announce that it is in separate discussions with the board of RM Infrastructure Income plc ("RMII") with the intention of agreeing a potential combination of the enlarged GCP Infra with RMII (the "RMII Scheme"). It is expected that this combination will be effected by way of a scheme of reconstruction of RMII and the associated transfer of a material proportion of its assets to GCP Infra in exchange for the issue of new shares in GCP Infra. The Company will provide a further update as and when appropriate.

[stemis] 22/8/2023 13:40

Surely they are going to struggle to carry out a merger with RMII at comparative NAV since the discount to NAV is only 25% compared to ~38% for GCP and GABI? Short of any immediate rerating on the combined entity, RMII shareholders would see a ~15% loss in value of their shares.

[donald pond] 22/8/2023 08:39

Divi should be fine though I think merger should be done on the basis of market cap rather than any fair value calculation. The idea seems to be to use GABIs short dated loans to repay the merged entity's longer term debt. But the cash flows look sufficient to cover the dividend

[spectoacc] 22/8/2023 08:28

Does the divi survive the merger(s)?

The buy back hasn't been too successful so far - hopefully more so down here. SEIT another with an ongoing buy back starting from much higher.

[donald pond] 22/8/2023 08:20

Just one of those opportunities the market throws up. 10% yield on long term assets with reliable income flows and very low default rates. Would anybody be surprised if the share price was 90p in 12/18 months for a 40% gain

[timmy40] 21/8/2023 22:00

Seems to be falling way more than other infra funds ?

[spangle93] 21/8/2023 09:06

Thanks jonwig

Wish the market saw it that way. I've topped up on compelling bargains twice recently and the share price still keeps falling. :-(

[jonwig] 21/8/2023 08:23

QD (sponsored), "Merger to unlock compelling value" -

[hindsight] 18/8/2023 13:52

Brought in today, may not be bottom looking at bid/offer sizes but one home for some of BOI proceeds

[hpcg] 18/8/2023 12:37

Stockstockham - r.e. "No one else sees interest rates as at their peak", you'd be surprised. The investment world seems to have some huge schisms at the moment on inflation, short term rates, long term rates, and recession. There are still deflationists out there. Most of the noise is with respect to US of course, and the UK ranks well down the list of what anyone cares about, but it is the same here.

My personal opinion is that spreads on debt like instruments over 10 year gilts are sufficient and will return more than the former even if there are some write-offs. I don't foresee rates going especially low but even if they were to stick this high for an extended period this would still be the case.

[spectoacc] 18/8/2023 09:28

2008-2020 - because they couldn't reduce below the zero bound, hence QE

"..So [why] do we need to reduce activity?". Because, inflation. It's the fundamental point.

Recent inflation began as cost-push. You can only counter cost-push by stamping down very hard on demand. The BoE didn't do that, and now it's demand-pull (or wage-push, if you like).

It's early 90's redux, and we can only hope the outcome is a much less serious downturn. I think it will be, because the rate rises we've had are just taking longer to take effect. But I'd argue the risk is to the downside (ie, rates more likely to be 7% than 4%).

[donald pond] 18/8/2023 09:22

Interest rates lower inflation by reducing economic activity.But why then was the economy so sluggish from 2008-2020? And why, when growth is below 1%, so we need to reduce activity? I think people have no idea of the relationship between inflation, economic activity, growth and wages. I suspect UK inflation has very little to do with UK interest rates.

[hindsight] 18/8/2023 09:12

One point is the drivers of the housing market are FTBs and BTLs and they virtually all take out mortgages. Sales to them have dropped 50% and I'm surprised its only that fall having the data from one about the doubling of quotes. Fortunately never signed


Interesting comment in the IC last week - same stat as before but expressed differently - that only around a quarter of households have a mortgage, and only around a half of them (ie c.12.5% of UK households overall) have seen any effect from the rate rises so far, due to fixes.