Gcp Infrastructure Inves... Share Discussion Threads

[speedsgh] 13/12/2023 08:36

~ NAV at 30/9/23: 109.79p (30/9/22: 112.80p)
~ Dividend target for 2024 held at 7.00p
~ Plan to realise 15% of portfolio to materially reduce RCF and make a capital return to shareholders of at least £50m by end of 2024.

Annual report and financial statements -

Andrew Didham, Chairman of GCP Infra, commented:

The wider financial market in which the Company operates has continued to face significant challenges. Against a backdrop of increased inflation, higher interest rates and high energy prices, the Company has continued to deliver stable and predictable income for shareholders through its focus on debt investments in infrastructure assets vital to the efficient operation of modern society.

The Company generated total profit and comprehensive income for the year of £30.9 million (30 September 2022: £140.3 million) and paid a dividend of 7.0 pence per ordinary share (30 September 2022: 7.0 pence). For the forthcoming financial year, the Company has set a dividend target1 of 7.0 pence per share. At the year end, the Company's share price was 67.70 pence, representing a 38.3% discount2 to NAV (30 September 2022: 97.80 pence, representing a 13.3% discount2 to NAV). The Board believes the discount at which the Company's shares have traded to the stated NAV is not reflective of the strength in the Company's underlying investment portfolio, with the effective yield considerably higher than the discount rate on investments determined by the independent Valuation Agent. Underlying portfolio performance also remains strong, with loans continuing to be serviced.

The Board and the Investment Adviser are committed to the Company's intentions to re-allocate capital towards reducing gearing, buying back shares while they remain an attractive investment opportunity and disposing of assets to rebalance the portfolio and generate funds. Subject to market conditions and the ability to agree acceptable terms, the Board has adopted a capital allocation policy of realising c.15% (£150 million) of the portfolio to rebalance sectors and reduce equity exposures, and to apply the funds towards a material reduction in the RCF and facilitate the return of capital to shareholders of at least £50 million before the end of the calendar year 2024, whilst maintaining the dividend target1. The Board believes that this capital allocation policy will underline the Company's position as a leading investor in infrastructure debt, with a strong focus on sustainable investments.

[someuwin] 15/11/2023 07:11

15 November 2023

GCP Infra is pleased to announce the publication of its investor report, which is available at www.gcpinfra.com .

At 30 September 2023:

-- The net asset value was, as previously announced, 109.79 pence per ordinary share;
-- The Company was exposed to a diversified and partially inflation protected portfolio of 51 investments with an unaudited valuation of GBP1.0 billion; and

-- The portfolio had a weight-adjusted average annualised yield of 7.9%, principal outstanding of GBP1.0 billion and an average life of ten years.

In the quarter to 30 September 2023, the Company completed a refinancing of two existing loan notes secured against two waste-wood biomass projects, valued at c. GBP85 million as at 31 March 2023 and committed to a new GBP50 million loan note as part of a syndicated facility supporting the same, and one additional, biomass project. This refinancing generated GBP50 million of net cash proceeds that were used to repay the Company's revolving credit facility. Prepayment fees and valuation impacts totalling c. GBP10 million led to a c. 1.2 pence per ordinary share uplift to the Company's net asset value. At 30 September 2023, the Company had GBP104 million (30 June 2023: GBP154 million) outstanding under its revolving credit arrangements.

Share buyback programme

The Company remains committed to pursuing buyback opportunities in line with the strategy that has been set out previously, and to benefit from the investment opportunity that the Company's shares offer at the current price. At 30 September 2023, the Company had bought back 13,565,019 shares.

Company broker

On 10 October 2023, the Company announced the appointment of RBC Capital Markets ("RBC") as the Company's joint corporate broker, to work alongside Stifel Nicolaus Europe Limited. RBC's appointment was the result of a process that was run by the Company to identify and appoint a party to further support the delivery of the Company's strategy.

[badtime] 14/11/2023 17:11

Nice tick up today

[panshanger1] 09/11/2023 15:31

Ex dividend today

[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