Gcp Infrastructure Inves... Share Discussion Threads

[williamcooper104] 03/11/2023 03:26

Really sorry Why do I need to speak to Gravis when GABI have told us that they have lent money to borrowers connected to their managers/previous managers If you don't see why that's a problem and why no respectable credit fund will ever do that they sorry but really....... And rather than me it's up to Gravis to explainIt's a cheap market so nobody needs to buy gravis and I just see them doing stuff that no debt fund/lender would do (ok HBOS pre 2008 did - but that's my point)

[williamcooper104] 03/11/2023 03:22

Nope My issue is if I am running a debt fund I should never ever lend money to myself That's literally what GIBI did It's a mega red flag

[panshanger1] 02/11/2023 18:50

Anyway a good day today !!Well done anyone who picked up a few around the 60 mark maybe that was the bottom ?

[ghhghh] 02/11/2023 18:18

WC

You clearly don’t know the detail. Talk to the company re disclosure and connection between the two boards. And you do know who the major Gravis shareholder is?

Very strange that you won’t talk to GCP. Why waste our time with innuendo when GCP can hopefully allay your concerns?

Please don’t bother replying until you have discussed this with GCP.

As Chucko says, one can never rule out something dodgy so I wait with interest…..

[tag57] 02/11/2023 17:42

WC104, do you see GCP Infra any different to say JLEN? Both have financed the purchase or construction of renewable assets etc via loans. Each generating asset has a subsidiary set up to manage it, owned by the group company via various group holding companies. Each subsidiary has at least one Fund Manager as a Director of the subsidiary etc.
Is your issue more to do with how they present the investment fund as a finance vehicle rather than an owner of renewable assets as JLEN does?
Thanks
Tag

[williamcooper104] 02/11/2023 16:56

So Gravis lent money to another vehicle founded by Gravis's managers That those individuals are no longer involved in the manager doesn't make it any less wrong Nor does putting a board of directors into sign off the loan It just should not happen - period - totally unacceptable conflict of interest

[williamcooper104] 02/11/2023 16:54

Usually project debt on renewables gets paid out by ROCs/PPP contracted income, with equity taking the power price risk or at worst debt having some amortisation at the back end form non contracted income but with a huge tail between end of expected loan and the end of the project such that worst case the loan gets extended a bit

[donald pond] 02/11/2023 16:12

FWIW i've known Gravis for ages and I trust them. They launched a fund, about a decade ago, to invest in middle eastern infrastructure. They raised all the money and were ready to go but then they realised that they "other side" expected payments which were unreasonable. Rather than do this, they wound up the fund, returned the subscription monies in full to investors, and swallowed the costs themselves. Which were into seven figures.
Everyone involved in it has always, to my knowledge, tried to do the right thing. And Phil Kent is exceptionally diligent.

[chucko1] 02/11/2023 15:24

All of these points that raise "concern" are valid. And then I look at other aspects of the companies (both GABI and GCP) to see if there is anything else that points in the same direction. In particular this involves, wherever possible, going on calls/webinars such as the one GABI had this morning and see how they reacted to questions similar to this. Looking into their eyes helps.

You see, although one thing or another might indeed be a red flag, against other green flags and underlying risk/reward, I would never rule anything out. But there must be something corroborating otherwise you could find reason to avoid just about anything.

Complex SPV structures could be used for the avoidance of transparency, if you want to see it that way or else, there may be perfectly valid tax reasons or credit reasons for same. What do their general patterns of behaviour point towards? If you wish to invest, find out.

More tangibly, at least on GABI in particular one can follow the cash. Listening(watching) to the call this morning and comparing their thought processes with that of other asset managers of near or actual wind-down concerns, paying regard to the method and meaning of portfolio valuation, left me with no concerns of note. Recall that Phil Kent is currently involved in both GCP and GABI - they introduced the new GABI fund manager (rather grey, I must say, but that is no bad thing for something that may be about to enter run-off).

Price action of many of these things today has once again strongly indicated that a large portion of market participants would be better off serving coffee.

[ghhghh] 02/11/2023 14:39

WC

Historically GABI has lent to Student Accommodation projects developed by Scape, a business which was founded by the same team that founded Gravis. The partners involved in that business are no longer involved in the Gravis business but retain some equity interest. In light of the perceived conflict, decisions relevant to those assets are made by the Board of Directors in Jersey and not Gravis.

I’m told that there are no investments made by GCP to the same borrower.

Again, rather than speculating, please first clarify your concerns with GCP.

[donald pond] 02/11/2023 14:38

William, I didn't say that they couldn't pay unless power prices are high. I said that if prices are high the loan will be valued more highly.

You have to remember most of these loans are for a long period of time: some up to 40 years. They were all entered into based on long term power price predictions from people like Afry, with a margin built in. Now, all of those predictions are materially higher than they were in the 2015-2020 period. So the loans are much more secure. Also, at one time IIRC around 20% of the loans were for assets that were in construction. Now that is less than 1%. So again, the loans are in a better position.

As far as related company transactions are concerned, I don't believe there are any at GCP. GCP lends money to an SPV company, to which Gravis provide the directors, which issues a loan note, which is listed on TISX. That gives a tax treatment, can't remember the details. That SPV then lends it on to the project company. It is all arm's length.

[williamcooper104] 02/11/2023 14:16

On point 1 - anyone following the HOME debacle will see that as a huge red flag

[williamcooper104] 02/11/2023 14:15

A borrower who has a loan that can't be serviced unless power prices are high doesn't have a loan but cheap equity

[williamcooper104] 02/11/2023 14:12

It's not something smelly There's dead rotting fish GABI lent money to a borrower connected to the manager - that's 5% of their NAV - it's not a small position Question is how deep is the rot; that I don't know But forgive me for being somewhat paranoid about small/start up managers post the recent debacles at CSH, HOME and DGI9 (that's more incompetence than dodgy though)

[ghhghh] 02/11/2023 14:09

Erstwhile

Rather than posting your analysis here, why not run through this all this with GCP? I'm sure they will be keen to reassure you if they can.

So please, speak to GCP, we'd all be interested in your conclusions

[ghhghh] 02/11/2023 13:17

WC

Instead of throwing mud, why don't you check the 2022 AR, page 124. This details that investments are made through SPV's for historical withholding tax purposes. They are back to back. Auditors are KPMG.

You are also erstwhile? It's just you both seem to have an agenda here. Why not contact the company rather than pumping out all these 'something smelly' allegations?

[donald pond] 02/11/2023 12:19

All of the GCP investments are at arms length.
The sensitivity to inflation comes about because of inflation linkage in the loan documentation.
The sensitivity to power prices has 2 sources. Firstly, it affects the ability of the borrower to service the loan, and this affects the discount rate the valuers apply. If the loan note bears 9% interest, and the asset is yielding 15%, then the loan will be worth more than if the asset is only yielding 10%.
But some of the projects are refinanced at some point, or go through an enforcement procedure, or are structured so that GCP has a form of profit participation.

[williamcooper104] 02/11/2023 12:05

At inception the loans were mostly equity but as it was PFI sub debt it was still a high quality credit asset

[williamcooper104] 02/11/2023 12:03

Doing that would of course mean that Gravis could now say that there's no loans to entities connected to the manager

[williamcooper104] 02/11/2023 12:02

Is it a case of Gravis/related entities funds develop an asset They sell it to an orphan SPV/charity Orphan funds itself by way of a loan from GCP which strips out the economics (possible there's still a profit participating note for any excess cashflows owned by someone else or GCP) So basically GCP then used as a conduit for the manager/related parties to fund their own developments Not saying this is the case by the way - but gravis have of course lent to themselves in GABI

[ghhghh] 02/11/2023 11:07

Have spoken to GCP

1. All GCP loans are to independent third parties. See page 124 of 2022 AR

2. Gravis has zero beneficial interest in any entities where GCP has invested.

3. Re equity buffers, see 'Average Capital Structure by sector' exhibit in 2022 AR.

[speedsgh] 02/11/2023 08:24

Dividend Declaration -

GCP Infra is pleased to announce a dividend of 1.75 pence per ordinary share, for the period from 1 July 2023 to 30 September 2023. The dividend will be paid on 5 December 2023 to holders of ordinary shares recorded on the register as at the close of business on 10 November 2023.

The Board, in its discretion, has determined that the offer of a scrip dividend will remain suspended for the period from 1 July 2023 to 30 September 2023. The suspension is as a result of the discount between the likely scrip dividend reference price of the shares and the current net asset value per share of the Company. The Board will keep the payment of future scrip dividends under review.

Expected timetable:

Shares quoted ex-dividend - 9 November 2023
Record date for dividend - 10 November 2023
Dividend payment date - 5 December 2023