Gcp Infrastructure Inves... Share Discussion Threads

[cc2014] 06/9/2023 07:41

I am unsurprised the Board of RMII have not gone for this. The managed wind down appears to give a better result for their shareholders and to me it was never a natural fit anyway.

I think GABI should be going down the same route but this is very hard to see given the Board of GABI have recommended it. It's not going to happen unless the GABI shareholders revolt.

The overall proposal makes no sense to me as a GABI shareholder. GABI's debts mature much sooner than GCP's and the idea seems to be to use GABI's debts to pay down the RCF's of both. I am unclear why this would be attractive to me. Instead just use the maturing GABI debts to pay down GABI's RCF and then use the surplus to buy back shares or return some capital to GABI's shareholders. I suspect soon enough the discount on GABI would close.

[hpcg] 06/9/2023 07:18

GABI and GCP are straightforward to merge; the discounts are similar, no one needs to lose a job but there are some small cost savings. Not the case for RMII.

[donald pond] 06/9/2023 06:55

I wonder if that might put some pressure on GABI to go down the same route? The long date on GCP assets make it harder here but we may be starting the process of winding up alternative funds. The model doesn't work when origination dries up and who will be borrowing at the 10/12% rates needed to be more attractive than buybacks? I expect the next general election to have both parties talking of the need to harness private sector investment into infrastructure. Why invest in new infra when you can buy the stuff that's up and running at a 35% discount to NAV and a near 10% yield?

[rik shaw] 06/9/2023 06:07

Discussions with RMII terminated:

[cc2014] 04/9/2023 15:16

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 14:59

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 14:09

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 12:45

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 13:29

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

[hindsight] 23/8/2023 17:23

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 12:11

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 06:54

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 06:09

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 14:35

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

[hugepants] 22/8/2023 14:30

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

[hpcg] 22/8/2023 12:59

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 12:40

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 07:39

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 07:28

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 07:20

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 21:00

Seems to be falling way more than other infra funds ?

[spangle93] 21/8/2023 08:06

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 07:23

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

[hindsight] 18/8/2023 12:52

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