Gcp Infrastructure Inves... Share Discussion Threads

[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?

[donald pond] 29/9/2023 08:21

GCP is IMO lower risk debt with higher duration. It's the duration that's the problem but with the yield at over 10%, you are getting rewarded.

[wshak] 27/9/2023 15:56

GABI has significantly outperformed GCP since the merger was announced, and again when it was called off.

This is probably as a result of GABI likely going into wind-down.

Anyone have a view on the respective quality of their NAVs?

[badtime] 27/9/2023 15:03

70 seemed to offer done support ..drifted past that yesterday and lower today ..next floor?

[hindsight] 22/9/2023 11:45

They are doing some buybacks 675k yesterday
Added few myself

[williamcooper104] 18/9/2023 12:33

Yep; as said I think it would be better to carry on with new management but absent that then it's a wind down Cary on with current doesn't work Though they did make me giggle when they tried to turn their co-living bad loan into a separate equity reit - lose money for shareholders and increase AUM for management

[wshak] 18/9/2023 12:00

WC & hpcg,

I own both GABI and RECI in size, having only recently purchased GABI at 57.5p.

Both of you are correct in how I view GABI.

I was prepared to take GCP shares as a merger but am happy to see it called off, as I can see a much better return by winding it down and returning capital to shareholders.

I have a positive view of long term interest rates compared to where they are, so basically see GABI as a pref with upside.

I can't say I am enthused by the assets or the skill of management. I'll be voting for it to wind down when given the opportunity.

[williamcooper104] 18/9/2023 11:41

Both GABI and GCP should continue but under new management There's been plenty of failing US BDCs which have thrived with a change of manager (eg FSK and OSCL - I hold the later) It's really bad for UK markets to see yet more assets/investment options go A change of manager of course doesn't preclude selling/winding down some assets to fund buy backs/return of capital

[williamcooper104] 18/9/2023 11:37

Have owned in greater or lesser amounts HICL since their IPO and have occasionally held GCP - the lower yielding HICL is way ahead on total return GCP is IMO an equity/pref debt fund masquerading as a debt fund Hence they started out with PFI sub debt and they are now so sensitive to power prices which isn't what a debt position should really be GABI are a good compare and contrast with RECI, in favour of RECI

[hpcg] 18/9/2023 10:45

A good chunk of the discount is completely correct. At current interest rates the principal investment is worth less than the headline number because of discounting. There is no mechanism under the control of management to unwind it, at least not here with the long duration assets. The only way is to sell a tranche of debt at a lower discount. That falls down because wy would anyone do that when they can buy at the current discount in the market? The only other way is to use buybacks, which they are doing, not fool proof as all the buybacks at prices above today's share price are testament.

[mwj1959] 18/9/2023 10:32

One thing that we can guarantee is that the major holders won't stand for the discount remaining at current levels, so now that Plans A and B have come to nothing the board is going to have to come up with a credible Plan C relatively soon and not one that necessarily is beneficial to Gravis.

[hpcg] 18/9/2023 10:20

GABI up on the introduction of a continuation vote I would say. A wind up is attractive for a short duration book. The discounts in neither make sense in absolute terms, in my opinion it is more the lack of obvious buyers. The distribution isn't sufficient for FI type investors, by which I mean funds, who are happy with conventional assets. Some funds are probably still sellers. Equity funds have never been investors. So it leaves hedge funds and private investors seeking income. The latter, especially those with long horizons, are happy with interest rate risk, credit risk and like the premium over short or long term rates depending on the fund. There is the potential for discount reduction, but that needs to see bank rates come down. A wind up offers, at least for short term debts, the prospect of the discount being closed rapidly, and suddenly value funds, conventional and hedge can see a path to excess returns.

[hugepants] 18/9/2023 10:12

It looks like GABI shareholders prefer the continuation vote route (announced for May next year) than the merger.

[mwj1959] 18/9/2023 10:07

And a major challenge for Gravis as the two trusts combined constitute around 50% of their AUM. As an LT, but modest, owner of GCP (so divs have more than compensated me for the share price decline) I'm tempted to buy more at these levels on the belief that the discount is unsustainable at current levels, downside risk to the NAV is relatively limited and that the dividend is secure. But clearly there are risks here on all fronts.

[chucko1] 18/9/2023 09:03

Spread between the two (GCP and GABI) is now 7p tighter than it was pre-announcement. So, I have sold ALL my GABI purely on that basis! The only thing that has changed is that some diehards want to keep GABI's show on the road, and I presume because they hold them from rather higher a price.

These failed combinations tend to raise uncomfortable questions for Boards further along the line.