REG - 3i Infrastructure - Pre-close update

3i InfrastructureAnnouncement

30/09/2022 07:01

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RNS Number : 2469B  3i Infrastructure PLC  30 September 2022

 

30 September 2022

 

3i Infrastructure plc - Pre-close update

 

 

 

Portfolio generating strong momentum, expected to exceed target returns

 

3i Infrastructure plc ('3iN' or the 'Company') is an investment company whose
purpose is to invest responsibly in infrastructure, delivering long-term
sustainable returns to shareholders and having a positive impact on our
portfolio companies and their stakeholders. This statement relates to the
period from 1 April 2022 to 29 September 2022 (the 'Period').

 

Highlights

 

·    Portfolio performing strongly: Our portfolio has continued to perform
robustly and ahead of expectations set at March 2022. 3iN's portfolio
demonstrates a positive correlation between inflation, power prices and total
portfolio value. In addition, our strategy of identifying resilient companies,
positioned to benefit from structural mega-trends, provides the foundation for
sustainable value growth and positive real returns across the portfolio. We
expect to report growth in net asset value ahead of the Company's target
return for the Period.

 

·    No near-term portfolio refinancing exposure: Following the recent
refinancing of Tampnet, there are no material refinancing requirements in the
portfolio until 2026. Over 85% of our long- term debt facilities are either
hedged or fixed rate.

 

·    Extension of 3iN's credit facilities: The Company has extended its
existing Revolving Credit Facility ('RCF') of £900 million to November 2025.

 

·    FY23 dividend target: The Company is on track to deliver the FY23
dividend target of 11.15 pence per share, up 6.7% from FY22, which we expect
to be fully covered.

 

·    Income exceeded expectations in the Period: Income of £73 million
and non-income cash of £25 million were received in the Period, both slightly
ahead of expectations. This compares with income of £56 million and no
non-income cash received in the same period last year.

 

 

 

Scott Moseley and Bernardo Sottomayor, Managing Partners and Co-Heads of
European Infrastructure, 3i Investments plc, Investment Manager of the
Company, commented: "This is a high quality and differentiated portfolio, with
proven resilience, that is structurally positioned to continue to deliver
value growth in real terms. The market for infrastructure investments remains
competitive, with significant fund-raising activity amongst our private
markets' competitors and strong demand for quality infrastructure assets."

 

 

Portfolio update

 

The portfolio is delivering strong performance from its differentiated
exposure to mega-trends including energy transition, digitalisation and
connectivity. Additionally, power prices and inflation have provided a strong
tailwind in the Period.

 

Infinis, Attero and Valorem are making good progress in expanding their
renewable energy development platforms. Infinis' plans to develop solar energy
generation and battery storage are progressing well, as is the conversion of
the pipeline of renewable energy projects at Valorem.

 

TCR has continued to perform ahead of our expectations and has now returned to
its pre-COVID EBITDA. As the air travel industry recovers from the pandemic,
TCR is seeing an uptick in interest for its full service rental model. The
acquisition of DWS's 48% stake will enable 3iN to take full advantage of
future growth opportunities in airports around the world.

 

ESVAGT has outperformed our expectations in the Period. The emphasis on
security of energy supply in Europe is providing positive momentum in both the
Emergency Response and Rescue Vessel segment and offshore wind.

 

Tampnet performed strongly in the Period, benefitting from accelerating
digitalisation offshore, the renewed focus on energy security and industrial
innovation in its core North Sea and Gulf of Mexico basins and inflation
linkage of its revenues.

 

As is generally the case across the German fibre-to-the-home market, DNS:NET
is experiencing some delays in the roll-out of its network in Berlin. In our
view, this is a timing issue and we remain confident in achieving the roll-out
targets.

 

On 2 September 2022, 3iN completed its $377 million investment to acquire a
100% stake in Global Cloud Xchange ('GCX'), a leading global data
communications service provider and owner of the world's largest private
subsea fibre optic network.

 

The remainder of the portfolio performed well during the Period. As usual, an
important element of the determination of the Company's results for the
half-year to 30 September 2022 will be the valuation exercise carried out on
the investment portfolio at that date. Given the significant risk premium
included in our long-term discount rates and the continued appetite for high
quality infrastructure businesses, we do not anticipate that rising risk-free
rates will impact our discount rates in the Period.

 

Balance sheet

 

At 29 September 2022, the Company's cash balance was £15 million, with
drawings of £310 million under the RCF. The cash balance and drawings are
after the completion of GCX and include proceeds from the syndication of 16.9%
of the Company's stake in ESVAGT of £91 million, the sale of the European
projects portfolio of £106 million and the proceeds of £101 million from
the vendor loan note due from the sale of WIG in 2019, all of which completed
in the Period. The acquisition of DWS's stake in TCR for c.£334 million is
due to complete in October 2022.

 

On 6 July 2022, the Company restructured and extended its existing RCF to
£900 million maturing in November 2024, comprising a base facility of £600
million and commitments under an accordion facility of £300 million. The
previous commitments under the one-year credit facility of £400 million to
January 2023 have been cancelled. In September 2022, the £900 million RCF has
been extended to November 2025. This provides increased flexibility over how
and when to repay drawings under the facility, as well as longer-term
liquidity to make further investments.

 

 

Ends

 

For information, please contact:

 

 Thomas Fodor           Shareholder enquiries  +44 20 7975 3469
 Kathryn van der Kroft  Media enquiries        +44 20 7975 3021

 

 

About 3i Infrastructure plc

3i Infrastructure plc is a Jersey-incorporated, closed-ended investment
company, an approved UK Investment Trust, listed on the London Stock Exchange
and regulated by the Jersey Financial Services Commission. The Company's
purpose is to invest responsibly in infrastructure, delivering long-term
sustainable returns to shareholders and having a positive impact on our
portfolio companies and stakeholders.

 

3i Investments plc, a wholly-owned subsidiary of 3i Group plc, is authorised
and regulated in the UK by the Financial Conduct Authority and is the
investment manager of 3i Infrastructure plc.

 

This press release is not for distribution (directly or indirectly) in or to
the United States, Canada, Australia or Japan and is not an offer of
securities for sale in or into the United States, Canada, Australia or
Japan.  Securities may not be offered or sold in the United States absent
registration under the U.S.  Securities Act of 1933, as amended (the
'Securities Act'), or an exemption from registration under the Securities
Act.  Any public offering to be made in the United States will be made by
means of a prospectus that may be obtained from the issuer or selling security
holder and will contain detailed information about 3i Group plc, 3i
Infrastructure plc, 3i India Infrastructure Fund and management, as
applicable, as well as financial statements.  No public offering in the
United States is currently contemplated.

 

This statement aims to give an indication of material events and transactions
that have taken place in the period from 1 April 2022 to 29 September 2022 and
their impact on the financial position of 3i Infrastructure plc.  These
indications reflect the Board's current view.  They are subject to a number
of risks and uncertainties and could change.  Factors which could cause or
contribute to such differences include, but are not limited to, general
economic and market conditions and specific factors affecting the financial
prospects or performance of individual investments within the portfolio of 3i
Infrastructure plc.

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