Gcp Infrastructure Inves... Share Discussion Threads

[panshanger1] 23/10/2023 08:44

Finals and investment report December last year Probably going to see a dividend cut for next year ?

[speedsgh] 23/10/2023 07:46

Company update and net asset value(s) -

Net Asset Value

GCP Infra announces that at close of business on 30 September 2023, the unaudited net asset value per ordinary share of the Company was 109.79 pence (30 June 2023: 110.02 pence), a decrease of 0.23 pence per ordinary share. The net asset value takes into account cash, other assets, accrued liabilities and expenses and leverage of the Company attributable to the ordinary share class.

As announced on 15 May 2023, the Company completed a refinancing of two existing loan notes secured against two waste-wood biomass projects, valued at c. £85 million as at 31 March 2023 and committed to a new £50 million loan note as part of a syndicated facility supporting the same, and one additional, biomass project. Including prepayment fees and valuation impacts totalling c. £10 million, this refinancing generated £50 million of net cash proceeds that were used to repay the Company's revolving credit facility and led to a c. 1.2 pence per ordinary share uplift to the Company's net asset value, predominantly from prepayment fee income received. At 30 September 2023, the Company had £104 million (30 June 2023: £154 million) outstanding under its revolving credit arrangements.

A period of very low wind speeds and exceptionally dry weather in England and Scotland has decreased actual cash distributions to the Company from its renewables investment portfolio, negatively contributing c. 1.2 pence per ordinary share to the movement. Further reductions in electricity prices continue to decrease actual and forecast cash distributions to the Company from its renewables investment portfolio driven by decreases in short-term power prices as a result of lower European gas demand, an ample supply of LNG, unseasonably mild weather and significant reductions in UK carbon prices leading to a wider price disconnect between the UK emissions trading scheme and the equivalent EU scheme. This is partially offset by the positive performance of the Company's hedging arrangements, therefore overall net movements negatively contributed c. 0.5 pence per ordinary share.

Various other downward movements across the portfolio totalled c. 0.4 pence per ordinary share, offset by updates for actual inflation that contributed c. 0.7 pence per ordinary share. As advised by the Company's independent valuation agent, discount rates remained unchanged this quarter, following the c.40bps increase in the weighted average discount rate used by the Company to value its portfolio at 30 June 2023...

... Portfolio

Notwithstanding the lower electricity price forecasts, the portfolio continues to perform materially in line with the Company's expectations. The Company's mature, diverse and operational portfolio provides defensive access to income against a backdrop of market volatility and uncertainty. It is the view of the Company that the long-term and structural demand for infrastructure, and particularly infrastructure debt, offers investors an attractive exposure to an asset class whose performance is non-correlated to wider markets and benefits from long-term and partially inflation protected income. Further portfolio information is available at: www.graviscapital.com/funds/gcp-infra/literature, including a line-by-line breakdown of the investment portfolio and underlying assets that has been made available during the quarter and will be updated by the Company periodically.

[donald pond] 12/10/2023 09:00

The old guard sold a chunk of Gravis to a Japanese house Orit 3/4 years ago. It may be that as AUM drops with DIGS now gone and GABI to follow Orit can manage the CFO function. But as we've discussed in several places the business model for alternatives is based on raising funds at a premium and origination. Gravis did have a good operational team though.

[williamcooper104] 12/10/2023 08:46

There's been a lot of personal moves as Gravis Not a good sign

[speedsgh] 12/10/2023 08:33

Probably of little relevance but thought it worth mentioning. Picton Property Income (PCTN) have today announced the appointment of Saira Johnston as CFO effective 1/4/24. Saira's most recent appointment has been as CFO of Gravis Capital Management Ltd.



Saira is not listed amongst the senior team on the Gravis Capital website which may indicate that she has already left her role there, even though her LinkedIn profile still lists her as CFO at Gravis. The CEO & CIO are listed but no mention of a CFO which indicates the change may have been recent?

[mwj1959] 10/10/2023 10:44

Given share price performance perhaps not a surprise to see them beefing up their corporate broker support.

[donald pond] 06/10/2023 16:59

There is a subtext here which is that the Japanese house Orix bought a chunk of Gravis at the height of the market and have since seen DIGS bought out and all the other funds fall out of favourPhil Kent runs GCP and GABI and is very diligent. It's just a very out of favour sector but even so, a near 11% yield that looks sustainable to me is surely attractive

[hpcg] 06/10/2023 11:23

A new manager coming in and changing the mandate would be utterly disastrous for the NAV. For a start I have money here because it isn't a property debt fund. For the most part, and as seen against every single long duration debt class, including government bonds, there is literally nothing the manager could have done to prevent the market price adjustment. We should judge managers on bad debts, nimbleness in trading in and out of undervalued or overvalued assets, fees and to a degree communication. Interest rate risk is on our shoulders as investors.

[williamcooper104] 06/10/2023 02:55

Makes sense because they've taken equity risks in a supposed debt fund, screwed up their ROCs and our running a c0.7x cash covered dividend; and that's after cutting it a few years ago

[apollocreed1] 06/10/2023 02:41

hxxps://oilprice.com/Alternative-Energy/Renewable-Energy/Hawkish-Fed-Triggers-Renewable-Stock-Drop-Despite-Bidens-Backing.html

The renewable energy sector tends to be highly sensitive to interest rates because clean energy projects require developers to borrow lots of capital up front to build projects. To make matters even more complicated, the cost of electricity generated from renewable energy tends to be impacted much more by rising interest rates compared to electricity generated from fossil fuels.

Indeed, a 2020 analysis from the International Energy Agency found that a 5% rise in interest rates increases the levelized cost of electricity from wind and solar by a third but only marginally for natural gas plants

[apollocreed1] 06/10/2023 02:33

@williamcooper- Why does it make sense? The management have been fine here. The share price drop is irrational.

[williamcooper104] 05/10/2023 23:10

Changing the manager of both trusts does make a lot of sense

[cc2014] 05/10/2023 11:26

Schroders proposed taking over the investment mandate of GCP Asset Backed Income (GABI) from Gravis earlier this year, after the trust was hit by two sudden fund manager departures and a set of bad loans, Investment Week understands.
Sources with knowledge of the matter told Investment Week that Schroders' investment trusts sales team approached a number of shareholders at the beginning of 2023 to gather their views on potentially taking over the mandate.

The proposal included shifting the trust's investment strategy to focus on real estate debt, with the firm's $88bn private assets arm, Schroders Capital, pitched to run the mandate.

The firm also approached the board, the sources said.


Continues...


If I'm any judge of this changing the mandate to focus on property loans would have been too far a jump for shareholders.

[donald pond] 04/10/2023 09:45

Volume has been building though. Hopefully seller running out

[hindsight] 03/10/2023 13:28

One thing thats clear, if renewables are going to have to pay the debt rates that the GCP price indicates, it wont only be new offshore wind that isnt viable to do now

[cc2014] 03/10/2023 12:32

#760

I agree. I thought I'd been ever so clever waiting and waiting until my first purchase at 68.8p.

I've been scaling in and just taken some more at 65.8p.

[apollocreed1] 03/10/2023 11:52

I bought in yesterday. I think the portfolio as a whole is quite defensive, there is a decent amount of RPI linkage and so we have a 10% yield that has the potential to rise. The management team are pretty good but have suffered from the macro environment and being listed in the UK.

[badtime] 03/10/2023 10:51

Quite heavy T/o already this morning

[hindsight] 02/10/2023 18:08

Yes hpcg, if the 240m comes in it will transform things

[hindsight] 02/10/2023 18:02

Yes I have my name for a reason
Will add too as bonds mature, shifting to longer end of curve

[hpcg] 02/10/2023 16:25

Looking again at the most recent presentation there is a continuous stream of repayments that can be used to reduce the revolver or to be invested at interest rates dictated by current yields. Based on the most recent holdings RNS I think we are simply seeing an institution burning other peoples money in front of their faces by selling at any level whatsoever. Well I certainly won't be helping them on the bid right at this time, but I will continue to add here because it is now pricing in beyond extreme events.

[badtime] 02/10/2023 15:36

In hindsight you could have waited until today :)

[chucko1] 29/9/2023 10:51

Donald, I agree with you in that the RCF is not a "problem". On Gilts, they are yielding 5.75% below what this risky income stream offers. Around 1% too much, and that assumption implies a price nearer to 76 than 68.5.

[donald pond] 29/9/2023 10:31

Well, the last they said was when the debt discussions ended and at that point the RCF was a little over £100m. Let's ignore the NAV and the market cap and focus on the assets.

They are generally good assets: the default rate has historically been low and they are part backed by revenue flows guaranteed by the Uk government. The current amount owed or principle outstanding is £1bn, earning an average of 7.9%, with an average life of 10 years. They aren't doing more lending for obvious reasons.

So I can't see either servicing or repaying the debt as a major issue. The problem is simply that when you can get enough from gilts, income seekers don't look any further.

[spectoacc] 29/9/2023 08:33

Indeed, but what about the RCF, which the GABI deal was supposed to resolve?