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INPP International Public Partnerships Ld

0.00 (0.0%)
Last Updated: 13:33:48
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
International Public Partnerships Ld LSE:INPP London Ordinary Share GB00B188SR50 ORD 0.01P
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.0% 132.00 1,377,447 13:33:48
Bid Price Offer Price High Price Low Price Open Price
131.80 132.20 132.40 131.40 131.40
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Unit Inv Tr, Closed-end Mgmt 370.13M 326.9M 0.1916 6.89 2.25B
Last Trade Time Trade Type Trade Size Trade Price Currency
13:34:24 O 6,093 131.90 GBX

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Date Time Title Posts
06/12/202307:23International Public PaI is a solid yield play built on global infrastructure192

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Posted at 08/12/2023 08:20 by International Public Par... Daily Update
International Public Partnerships Ld is listed in the Unit Inv Tr, Closed-end Mgmt sector of the London Stock Exchange with ticker INPP. The last closing price for International Public Par... was 132p.
International Public Par... currently has 1,706,103,581 shares in issue. The market capitalisation of International Public Par... is £2,252,056,727.
International Public Par... has a price to earnings ratio (PE ratio) of 6.89.
This morning INPP shares opened at 131.40p
Posted at 06/12/2023 07:14 by nerja
As noted in the highlights section, the Board is acutely focussed on the way it allocates capital in the current environment. Through the Airband divestment and the use of surplus free cash flow, the Company has already reduced the cash drawings on its CDF from GBP107 million at 30 June 2023 to GBP80 million.
As part of the Company's Interim Results announcement, the Board announced its intention to realise additional value from the existing portfolio in order to further reduce the cash drawn balance on the CDF. The Company is pleased to confirm that it is making good progress on another divestment and expects to realise sufficient proceeds to pay down the full GBP80 million cash drawn balance on the CDF within the next eight weeks.
Once the Company is in a position where it has repaid the cash drawn balance of its CDF and has cash available, the Board intends to consider what further measures, such as a share buyback, it may take to address the discount to NAV at which the Company's shares are currently trading.
Fundamentally, the Company does not need to make additional investments to deliver current projected returns. Moreover, the projected cash receipts from the Company's portfolio are such that even if no further investments are made, the Company would be able to continue to meet its existing progressive dividend policy for at least the next 20 years(3) .
The Company is aware that current market conditions are not optimal for raising new equity financing and therefore any further investment opportunities, including long-standing opportunities that form the Company's near-term pipeline, would need to be funded by recycling capital from the existing portfolio and ultimately improve the overall portfolio composition and key metrics. Moreover, the economics of such opportunities would need to be considered against alternative capital allocation options whilst taking into account the longer-term strategic rationale.
Posted at 11/11/2023 17:21 by williamcooper104
Agreed I used to have a large HICL holding and vastly reduced it to increase INPP (same rough value but better growth) and BBGI (higher value but still some growth and it's v safe)
Posted at 11/11/2023 17:19 by mrscruff
Worth having both but out of the two it has to be INPP over HICL because INPP has a greater growth profile. Combining INPP with a bit of UKW increases diversification. We may have passed peek rates so perhaps now is a good time to go big on the sector for the recovery even if rates stay on hold.
Posted at 16/7/2023 00:17 by unastubbs
HICL vs IPP: Which infrastructure trust should you buy?
International Public Partnerships and HICL Infrastructure are both relatively low-risk, but there are differences to factor in
Investor's Chronicle July 14, 2023

A popular asset class until last year, infrastructure has fallen out of favour quite spectacularly as interest rates rise and investors worry about the impact on net asset values (NAV). While it might be some time before a rally arrives, funds in this sector still have much to recommend them for the long term, including high yields, good levels of inflation linkage and government-backed revenues.

Sector giants International Public Partnerships (INPP) and HICL Infrastructure (HICL) have hardly ever been this cheap, but choosing between them isn't a simple task. As the chart below shows, over the past five years their performances have been similar, although HICL Infrastructure did better at times during 2022.

The two trusts have many features in common, so you need to look below the surface to gauge which of them might be more suitable for your investment approach.

Two evolving portfolios
Both trusts invest in core infrastructure, which HICL defines as “essential infrastructure assets that deliver resilient cash flows from a protected market position” and “sit at the lower end of the risk spectrum”. And both have exposure to private public partnerships (PPP), through which revenues come from the public sector so are less exposed to economic fluctuations.

But like most infrastructure trusts, over the past few years, both portfolios have evolved, reducing their exposure to PPP and ‘social’ infrastructure assets, for example in the health and education sectors, in favour of more economically sensitive projects, such as those in the utilities sector.

Despite their names, HICL is more exposed to PPPs than International Public Partnerships, which has significant investments in regulated assets instead. Regulated assets’ revenues are pre-determined for a given period via sporadic regulatory settlements.

IPP’s key assets in this area are Cadent, the UK’s largest gas distribution network, and Tideway, which is in charge of building and maintaining the new 25km London ‘super-sewer’ under the Thames. The trust recently published an update to reassure investors that the financial difficulties experienced by Thames Water are not impacting Tideway, which is a separate company and has arrangements in place to protect its revenues in such circumstances.

The past few years HICL has shifted towards a higher exposure to demand-based assets, particularly in the transport sector. For example, traffic levels have an impact on the revenues of the trust’s second-largest investment, the A63 motorway in France.

HICL's shift away from PPP, health and education is because no new PPP projects are being commissioned in the UK and the price of secondary transactions is rising, detracting from returns. Earlier this year, Stifel analysts argued that moving towards economic assets offers benefits including higher potential for returns and longer portfolio lives. But it also slightly changes the trusts’ risk profiles, leaving them more exposed to economic conditions and regulatory changes. “Given the weaker economic outlook, this is a bit of a concern,” they noted.

As well as having fewer PPP projects, International Public Partnerships has greater exposure to construction projects – 14 per cent of its portfolio compared with 3 per cent of HICL's. Both trusts are UK-focused, although HICL is slightly more internationally diversified with a 64 per cent exposure to the UK against International Public Partnerships’ 76 per cent.

Mick Gilligan, head of managed portfolio services at Killik, adds: “[Many infrastructure investors will] prefer assets that have low levels of economic sensitivity and execution risk, and high levels of inflation linkage. In effect, closer to an inflation-linked bond than to an equity. On this basis, HICL is more attractive than International Public Partnerships.”

Discount rates under pressure
While the composition of its portfolio means International Public Partnerships is arguably slightly riskier than HICL, there are other considerations including the discount rate they use – International Public Partnerships’ is 7.5 per cent, on average, while HICL’s is 7.2 per cent.

Because of the long lives of their assets, both trusts are heavily impacted by an increase in their discount rates. According to their last financial statements, a percentage point increase in discount rate was expected to result in 11.6 and 8.9 per cent NAV decreases for HICL and IPP, respectively.

This helps to explain why these trusts react so negatively to higher interest rates, with their share prices showing high levels of correlation with gilt yields (‘Why it's hard to find funds that benefit from higher rates’, IC, 23 June 2023). Higher rates put pressure on the risk premium offered by these funds, and International Public Partnerships has a bit of extra breathing room. In its latest portfolio update at the end of May, the trust acknowledged the increase in government bond yields since the publication of its December 2022 NAV, although it added that “historically discount rates have not moved in lockstep with government bond yields”.

Both HICL and IPP might yet have to increase their discount rates further this year, after increasing them by 60 basis points (bps) and 54bps, respectively, over the course of last year.

But this might not be as bad as the discounts in the sector would imply. At the end of June, Stifel analysts estimated that the market was pricing in discount rates of 8.8 per cent for HICL and 9.5 per cent for International Public Partnerships, which they deemed “relatively high".

The negative effect of discount rates is partly compensated for by inflation-linked revenues. HICL boasts an inflation correlation of 0.8, meaning that every percentage point increase in inflation is expected to result in a 0.8 per cent increase in its cash flow. International Public Partnerships has an inflation correlation of 0.7.

To gauge which of the two trusts looks more attractive at any given time, Gilligan uses a model that adjusts the discount rate to take into account factors such as any leverage or cash at the holding company level, fees and the premium or discount. The model calculates the “steady state return” or the rate of return that investors should receive based on the current share price. As at 4 July, this was 7.9 per cent for HICL and 8.4 per cent for International Public Partnerships.

“We like the relatively low-risk nature of both trusts and hold both in portfolios,” says Gilligan. “We tend to have a higher weighting in whichever [one] is showing a higher steady state return, which is currently International Public Partnerships.”

'Disappointing' dividend growth

HICL had a slightly wider discount and higher yield than International Public Partnerships. As of 7 July, but despite its high levels of inflation-linkage, the trust doesn't plan to increase its dividend target in respect of its financial years to March 2024 and 2025, meaning that the real value of its shareholders' investment income will decrease significantly. After years of steady dividend growth, HICL has held its dividend at 8.25p a share since its financial year to March 2020.

The trust’s board says that this is to future-proof the portfolio as the trust gradually moves to assets other than PPP that offer better growth prospects but tend to provide lower yields at first. The trust’s biggest asset, Affinity Water, which accounts for about 7 per cent of its portfolio, is not currently paying dividends to shareholders and is unlikely to do so until 2025. But HICL hopes to resume dividend growth in future.

International Public Partnerships targets annual dividend growth of 2.5 per cent, which is more promising, although still well below the current inflation rate.

Jefferies analysts say that the dividend plans of both funds are disappointing. By estimating future dividend cover based on cash flow projections, they believe that whether HICL will be able to resume dividend growth “is largely contingent on inflation outperformance”;, while International Public Partnerships “could consider a higher run-rate of dividend growth".

Yet both trusts could be good additions to a portfolio and their current discounts to NAV look like a solid opportunity to get them on the cheap. They provide a degree of inflation protection and a solid level of income at low risk. Which one you choose partly depends on your investment preferences – HICL looks a bit more like a bond proxy while International Public Partnerships has slightly more potential for growth.
Posted at 07/6/2023 02:07 by unastubbs
Time to anoint the seven infrastructure funds up to the tasking of offering growth as well as income at a time when government debt yields over 4%.
The number 4.5% doesn’t really have much significance for most people but I have a sneaking suspicion it matters greatly for all those investors who watch the UK gilts market closely, and by default investors in infrastructure funds.

Legend among investors is that when 10-year government security yields start to move above 4% important stuff starts to break (by which we mean banks, markets, liquidity transmission systems), although after the Truss debacle I suspect more attention in the UK is focused on the 4.5% level seen during that aborted administration last autumn.

Sadly for the current Conservative administration, over the last few weeks that number has loomed into view again as gilt yields rise – the 10-year rate is currently at 4.1% but has moved past 4.3% on some days. There are no prizes for guessing why that gilt yield has risen – core inflation is still running high and many market observers now think that a peak interest rate of 6% is possible if not likely.

Over in investment trust land the steady ascent of two- and 10-year gilt rates has had a direct impact on the broad infrastructure sector. UK interest rates started their steep ascent in the tail end of 2021 and ever since then infrastructure fund pricing has fallen back steadily, with the sector overall – according to Numis Securities figures – now trading at a collective 10% discount.

And that’s just an average number with very well-established core infrastructure funds such as HICL (HICL ) and International Public Partnerships (INPP ) now trading above that level while I counted at least six infrastructure funds trading at a discount of more than 15%.

The derating of the infrastructure sector is much more than just a story of rising interest rates and bond yields, but I’ve given up counting the number of investment trust buyers who’ve asked me, ‘why bother buying a risky infrastructure fund that trades at a whopping discount and yields not much more than 5% when I can buy a rock-solid, 10-year bond yielding over 4%?’

Any sensible explanation would of course have to include idiosyncratic fund issues as well as plunging power prices in recent months, but rising interest rates and increased bond yields do produce a feedback loop. Discount rates are marked up, putting net asset values under pressure, while the cost of borrowing also increases (although most funds have hedged out interest rate risk). All this while the pool of interested ‘bond proxy’ fund buyers slowly dries up as they seek safety in gilts.

And, sadly for infrastructure fund managers, there’s no real likelihood of matters improving imminently. Precisely because the Bank of England was so far behind the interest rate increase curve, we now face the likelihood of another two or more increases. While I don’t think that 6% interest rates are a likely peak, I do think we’re looking at probably 5.5% in the next six months. Somehow all that inflation needs to be squeezed out of the system and as the BoE was so late to the party it now has even more work to do.

Not surprisingly, given this dismal rate environment, pricing for the infrastructure sector generally has continued to slip – overall, according to Numis numbers again, the broad infrastructure sector has declined by 3% in the last month and 2.6% in the last three months. If we were to extrapolate those declines to the remainder of the year, I wouldn’t be surprised to see another 5% softening across the board.

But I do want to propose a slightly more benign scenario which could benefit a select group of high-achieving infrastructure funds. One macro tailwind is that as we approach peak UK interest rates, we might start to see some investors thinking ahead to declining rates in 2024. Because the BoE was late in raising rates, it might well overreact now on the way up which, perversely, makes the likelihood of a sharp reversal of interest rates in 2024 more possible.

The Treasury nagging away about escalating interest rate costs might also prompt some group rethink next year. It’s also possible, even likely, that inflation rates will start to fall quite sharply, giving the BoE even more breathing space.

The cumulative effect is likely to be a more benign risk-pricing environment which might begin to put some wind behind the sails of the infrastructure sector ie, if rates were to come down sharply then the current composite 5.7% net yield across the sector might start to look attractive again.

But I would also add one other dimension. Even if rates are to come down, I doubt they’ll come down by a huge amount. We’re likely, though not definitely, to be in a higher-rates-for-longer scenario which might last for a few years. That makes a reliance on just a regular dividend yield – especially one that is not much above 5.5% without much capital growth - distinctly unattractive in a more inflationary world.

I’d suggest investors’ attention will – if it hasn’t already – turn to infrastructure funds ability to generate above average net asset value returns. Thus, the name of the game is to make real those boasts – widely echoed across the sector – that the fund manager can produce total target returns in the 7.5% to 9% range (with some outliers at the 10% level).

Time to find and anoint the over achievers! Now, I realise that the past is not necessarily a guide to the future, but a good place to look is those funds that have generated well above average growth in net asset value (NAV) in the past five years.

Using Numis data I’ve sorted through one-, three- and five-year NAV returns to see which funds have consistently outpaced their peers in what has been a volatile economic environment. I’ve struck the baseline for my exercise at a total return of 8.25% per annum which over three years equates to cumulative investment returns of 27% and over 48% for five years.

I’ve then screened for how often the funds have appeared in the top quartile of NAV returns – the results are in the table below.

Magnificent seven

One-year net asset value (NAV) returns Three-year NAV returns Investment company Discount Yield
23.70% 85.20% Gresham House Energy Storage (GRID ) -0.80% 4.60%
16.20% 63% Greencoat UK Wind (UKW ) -10.20% 5.90%
13% 55.30% JLEN Environmental (JLEN ) -5.90% 6.50%
12.30% 55.20% Foresight Solar (FSFL ) -14.30% 7.10%
16.20% 51.20% Bluefield Solar (BSIF ) -6% 6.40%
14.70% 47.90% 3i Infrastructure (3IN) -4% 3.70%
12.40% 48.10% Gore Street Energy Storage (GSF ) -9% 6.90%
16.20% 58% Average of seven -7.20% 5.80%
12.20% 40% Average of infrastructure sector -10.50% 5.70%
Source: Numis Securities 2/6/23

Overall, there are about seven funds that have hit the mark although there’s also some also-rans who nearly got in, such as Renewables Infrastructure Group (TRIG ) and Greencoat Renewables (GRP ).

Obviously, this group of seven funds has a heavy flavour of renewables businesses that have benefited from surging power prices. There’s also a strong flavour of new technologies in the shape of battery energy storage –ie, Gresham House Energy Storage (GRID ) and Gore Street (GSF ).

As a non-executive director at GRID, I’ll refrain from saying much about the NAV performance but the numbers do speak for themselves.

One last observation: NAV returns from the core PPP/PFI funds have been lacklustre by comparison, and their yields are not exactly appetising, all of which might help explain why their discounts have widened so much.

My point in emphasising NAV growth potential is more than just about a strategy that avoids an over reliance on dividends – it’s also about making sure that you are actually growing the pool of cash-generating and, hopefully, inflation-proofed infrastructure assets that can pay ever more generous dividends in the future.

In the new world of higher for longer, with inflation rates more consistently in the 3 to 7% range, I’d suggest that the name of the game for infrastructure funds is to be less like bond proxies and more like quality stocks, with steadily accretive NAV growth based on a solid balance sheet, feeding through to a well-backed dividend yield that can grow over time.
Posted at 07/6/2023 01:01 by apollocreed1
The arguments in this article might explain why INPP isn't so desirable in an environment where 10 year treasuries are yielding 4.25%. It's NAV growth has been rather pedestrian.

Posted at 30/3/2023 06:47 by rik shaw
Final Results
NAV per share increase of 7.3% to 159.1p, 2022 cash dividend cover of 1.3x

Dividend declaration
Posted at 15/9/2022 08:42 by jong
XD today. 3.87p per share payable on Friday 18th November.
Posted at 08/9/2022 06:35 by rik shaw
Interim results.

NAV per share increased 6.1% to 157.3 pence
overall inflation-linkage maintained at 0.7%

Dividend declaration
Posted at 27/6/2022 13:17 by riverman77
Has to be a risk that Labour gets back into power in a couple of years. Then all the talk about these contracts getting ripped up could start again (as happened in 2019 when a Corbyn government looked an outside possibility). For that reason alone I have avoided this share - perhaps being too cautious.
International Public Par... share price data is direct from the London Stock Exchange

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