REG - International PPL - Portfolio Update

International Public PartnershipsAnnouncement

23/06/2025 07:00

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RNS Number : 8635N  International Public Partnerships  23 June 2025

INTERNATIONAL PUBLIC PARTNERSHIPS LIMITED

PORTFOLIO UPDATE

FOR THE PERIOD 1 JANUARY TO 23 JUNE 2025

Continued commitment to enhancing shareholder value, reaffirming the objective
to enhance capital returns by taking a disciplined approach to capital
allocation and active portfolio optimisation

23 June 2025

International Public Partnerships Limited, the listed infrastructure
investment company ('INPP', or the 'Company'), has today issued a portfolio
update for the period 1 January 2025 to 23 June 2025.

Mike Gerrard, Chair of International Public Partnerships, commented: "We
remain focused on delivering long-term shareholder value by maintaining a
disciplined approach to capital allocation. This includes advancing our share
buyback programme, targeted realisations that support our published
valuations, and reinvesting where we see strong strategic alignment and where
the long-term characteristics of a new investment substantially outperform the
shorter-term benefits available through share buybacks. These initiatives
reflect the Board's confidence in the Company's fundamentals and the quality
of the portfolio - qualities that we believe are not reflected in the current
market-wide discount to NAV."

 

HIGHLIGHTS

During the period, the Company announced its Net Asset Value ('NAV') as at 31
December 2024 and published its 2024 Annual Report and 2024 Sustainability
Report.

·      The Company's portfolio of over 140 projects and businesses
performed well, both operationally and financially, during the period. The
portfolio continues to deliver essential services to stakeholders, maintaining
availability levels that remain at or above target levels.

·      The Company continues to progress capital allocation initiatives
with ongoing share buybacks, continued progress on divestment initiatives, and
selective reinvestment. The Board reaffirms its commitment to substantially
enhancing shareholder returns through an expanded capital return programme of
up to £200 million by 31 March 2026.

·      On Friday 20 June, the Company signed an agreement to raise £49
million in proceeds from its UK education infrastructure portfolio. The
transaction is scheduled to complete in early July and will be accretive to
the implied valuation 1  (#_ftn1) as at the transaction date. During the
period, the Company also agreed to sell its minority equity interests in seven
UK education PPPs to an existing co-shareholder for total proceeds of c.£8
million which is in line with the most recent valuations. The sale is expected
to complete in Q3 2025.

·      The Company's Corporate Debt Facility ('CDF') was successfully
renewed with the same margins as the expiring facility. As previously, the
£250 million CDF includes an additional £100 million accordion facility,
supporting the Company's ongoing financial flexibility.

·      The Company reconfirms its 2025 and 2026 dividend targets 2 
(#_ftn2) of 8.58 pence per share and 8.79 pence per share respectively in line
with its progressive dividend policy. Future dividends are expected to be paid
on a quarterly basis 3  (#_ftn3) .

·      During the period, the Company announced its intention to revise
the Investment Adviser fee structure. From 1 July 2025, the base fee payable
in respect of each quarter will be based on the equal weighting of: the
average of the closing daily market capitalisation of the Company during that
quarter; and the most recently published NAV. This fee change is expected to
reduce the ongoing management fee by c.10% per year as at time of the
announcement on 27 March 2025 and enhance alignment with shareholders.

 

CAPITAL ALLOCATION

During the period, the Board and the Investment Adviser have remained actively
focused on executing the capital allocation strategy and optimising the
existing portfolio, recycling capital and implementing other measures to
enhance shareholder returns.

Realisations

·      On Friday 20 June 2025, the Company signed an agreement to raise
£49 million in proceeds from its remaining senior debt position in its
Priority School Building Aggregator Programme and 13 of its Building School
for the Future Investments (BSFI) investments - largely minority stake
investments. The transaction is scheduled to complete in early July and will
be accretive to the implied valuation 4  (#_ftn4) as at the transaction date.
INPP continues to retain equity interest in the investments following the
transaction.

·      Prior to this transaction, in March 2025, the Company agreed to
sell its minority equity interests in seven of the UK education assets from
the BSFI portfolio for total proceeds of c.£8 million, in line with the most
recent valuations. This has reached contractual completion, and financial
completion is expected in Q3 2025.

·      To date, INPP has realised c.£317 million of proceeds in the
last 30 months in the energy transmission, social and digital infrastructure
sectors, equivalent to c.12% of the portfolio based on the latest valuations
as at 31 December 2024. All of the divestments made have been in line with the
most recently published valuations, validating INPP's internal valuation
methodology.

·      INPP continues to progress additional capital recycling
initiatives to optimise portfolio value and fund new opportunities. The
Company will provide further updates in due course.

Share buybacks

·      The Board has reaffirmed its commitment to returning more to
shareholders, expanding the existing buyback programme from up to £60 million
to up to £200 million by 31 March 2026.

·      The share buyback programme remains active. As at 20 June 2025,
£76.7 million worth of shares have been repurchased. Since 31 December,
£33.6 million of buybacks have added an estimated 0.4 pence per share to the
31 December NAV.

Investment activity

·      Whilst the Board currently prioritises the return of capital to
shareholders given the market trading environment, it also carefully considers
opportunities to reinvest divestment proceeds into investment opportunities.

·      Since the beginning of the year, the Company has made follow-on
investments totalling £5.9 million, of which £5.3 million related - as
previously communicated - to three long-standing commitments: the Flinders
University Health and Medical Research Building (Education), Gold Coast Light
Rail - Stage 3 (Transport) and toob (Digital Infrastructure). A further
c.£7.0 million of commitments to these assets is expected to be funded over
the next 15 months.

·      The remaining £0.6 million related to the acquisition, in Q2
2025, of the final 10% stake in the two Southwark Building Schools for the
Future initiative schemes (Education) for £0.6 million, bringing INPP's
ownership in both schemes to 100%.

 

FINANCIAL PERFORMANCE

Overview

·      On 27 March 2025, the Company published its 2024 full-year
results. The Company's NAV per share as at 31 December 2024 was 144.7p.

·      As at 20 June 2025, the implied projected net return on an
investment in the Company's shares is 10.1% 5  (#_ftn5) , with a current
dividend yield of 7.2% 6  (#_ftn6) , which the Board continues to believe
represents an attractive proposition to shareholders and a 4.8% premium to
that offered by a 30-year UK government bond 7  (#_ftn7) , while also offering
the potential for growth through both net asset value accretion and
indexation-linked income over time.

·      The Board forecast the continuation of the Company's track record
of growing dividends each year since the IPO in 2006 with target 2025 and 2026
dividends of 8.58 pence per share and 8.79 pence per share respectively. These
dividends are expected to be fully covered by net operating cash flows and the
annual increases are in line with the Company's long-term projected annual
dividend growth rate of c.2.5%(8).

·      The Company reconfirms that the projected cash receipts from the
Company's portfolio, which consists of more than 140 investments, are such
that even if no further investments are made, the Company currently expects to
be able to continue to meet its existing progressive dividend policy for at
least the next 20 years 8  (#_ftn8) .

·      As announced in September 2024, the dividend of 4.19 pence per
share paid on 9 June 2025 was the last six-monthly dividend. The Company will
commence quarterly dividends payments for the 2025 dividends. The first
interim dividend is expected to be paid in September 2025. This will provide
investors with a more regular income stream and demonstrates the Company's
commitment to ensuring predictable and consistent returns for shareholders.

·      The Company successfully renewed its Corporate Debt Facility
during the period, with the same margins as the previous facility. The renewed
facility comprises £250 million of committed capital and includes an
accordion feature of up to £100 million. The lender consortium was
reconfigured, with ING replacing SMBC.

Macroeconomic update

·      The Company's NAV per share remains sensitive to a range of
external macroeconomic factors, including inflation, interest rates and
foreign exchange movements. Taken together, and assuming all other factors
remain constant, the Company anticipates the NAV per share to remain broadly
in line with the position as at 31 December 2024.

·      Inflation across the Company's key geographies remains broadly in
line with expectations as at 31 December 2024. However, reflecting a growing
view that long-term inflation may stabilise at a higher level, a number of
market participants have started to revise their long-term assumptions upward.
This has been factored into the Company's forward looking assumptions. Given
the portfolio's inflation linkage, such a revision would be expected to have a
positive impact on NAV;

·    Government bond yields in the Company's key investment markets have
risen modestly since 31 December 2024  9  (#_ftn9) . While this may imply a
downward pressure on valuations, the discount rates to be applied in the 30
June 2025 valuation will also reflect other relevant factors, including the
strong operational performance of the Company's investments and current market
evidence for infrastructure asset pricing; and

·      The Company has observed a strengthening of Sterling against all
the currencies it is exposed to, with the exception of the Euro. Other things
being equal, this would have a minor negative impact on the Company's NAV per
share.

 

PORTFOLIO UPDATES

Key updates during the period

·      Cadent (Gas distribution, top 10 investments, 16.1% of fair value
as at 31 December 2024): Cadent expects to receive Ofgem's draft determination
in Q2, 2025 in response to its final business plan in respect of the next
five-year price control period starting in April 2026. The results of Ofgem's
determination will cover the revenues that UK gas network companies will be
able to earn from 2026. Ofgem announced previously that it does not anticipate
significant regulatory changes from the existing framework, that the framework
must be adaptable to a range of potential future energy pathways, and that
maintaining a safe and resilient gas network remains paramount. The Company
does not expect any material impact on the valuation of its investment in
Cadent as a result of Ofgem's draft determination.

·      Tideway (Waste water, top 10 investments, 15.0% of fair value as
at 31 December 2024): In February 2025, Tideway was pleased to confirm that
its final 21(st) site was connected and the full 25km tunnel is now able to
prevent sewage discharge from flowing into the River Thames. Since September
2024, Tideway has prevented over 7 million cubic metres of sewage 10 
(#_ftn10) from entering the river. Tideway is now in its system commissioning
phase, which ensures the reliability of the tunnel through ongoing testing and
storm simulations. Handover, the point at which Thames Water has certified
that system commissioning is complete, remains planned for the second half of
the year. While Thames Water's financial position continues to be uncertain,
regulatory protections limit any direct impact on Tideway. Broader water
sector reviews are ongoing but are not expected to affect the asset. Tideway
was also very pleased to welcome His Majesty the King to the Tideway
Blackfriars Bridge site, the largest of the new public spaces, to meet some of
the team and celebrate the project.

·      Beatrice OFTO (Energy transmission): The Beatrice offshore
transmission operator, Transmission Capital Partners ('TCP'), is continuing
investigations into a recent cable fault that occurred in Q2 2025 and planning
for repair works is ongoing. The transmission system is currently operating at
reduced capacity, and the Company is working towards returning to full
operation later in the year. Evidence gathered to date indicates that the
cable fault was beyond the reasonable control of Beatrice OFTO and therefore
the asset is expected to be protected against any revenue reductions by the
protections available in its transmission licence. The costs of the repair
are expected to be covered by insurances and any financial impact is not
expected to be material to the portfolio.

 

CORPORATE GOVERNANCE

Board of Directors

·      John Le Poidevin and Giles Frost have retired as Directors of the
Company at the 2025 AGM. Giles Adu was appointed in 2024 to support effective
Board succession.

·      Meriel Lenfestey has assumed the role of Senior Independent
Director with effect from the 2025 AGM.

·      The Board reconfirms that the Company is fully compliant with the
FCA Listing Rules on diversity and following the retirement of Giles Frost,
the Board is entirely constituted of independent directors

Investment Adviser fee changes

·      As previously announced, the revised fee structure for the
Investment Adviser will take effect from 1 July 2025. The base fee payable in
respect of each quarter will be based on the equal weighting of: the average
of the closing daily market capitalisation of the Company during that quarter;
and the most recently published NAV.

·      The base fee payable under the new arrangements will be capped
such that the base fee payable will be no higher than under the existing
arrangements.

·      Based on the share price discount to the NAV at the time the fee
change was announced on 27 March 2025, the fee change is expected to reduce
the ongoing management fee by approximately 10% per year, providing additional
value for shareholders, and further increasing the alignment of interests
between the Company and the Investment Adviser.

 

OUTLOOK

The Company's portfolio continues to perform strongly and is well-positioned
to continue delivering predictable, inflation-linked returns. The Board
remains confident in the strength of the portfolio, the sustainability of the
dividend policy, and the potential for long-term growth. Efforts to narrow the
share price discount to NAV will remain a key priority. The Company is
committed to maintaining a disciplined approach to capital allocation,
balancing selective investments with capital returns to shareholders.

The outlook for infrastructure remains positive, as governments in INPP's core
markets continue to prioritise investment in critical infrastructure.

Notably, the UK Government's 10 year infrastructure strategy(( 11  (#_ftn11)
)) (the "10 Year Strategy") which was published on 19 June 2025, emphasises
the UK's infrastructure needs. The Company is particularly encouraged by the
recognition that, "…a significant increase in private investment is needed
to complement and maximise the value of the extensive public investment
underway".  The Company has worked successfully in partnership with
governments for close to two decades and believes it is well positioned to
support the UK's significant infrastructure investment pipeline, more details
of which are expected to be provided by the UK Government in the near future.

Both the 10 Year Strategy and the 2025 Spending Review reaffirm the UK
Government's long-term policy support for investing in infrastructure to
enable resilient growth, drive the transition to a secure, low-carbon energy
system, and ensure social infrastructure is capable of supporting essential
public services.

The Company believes responsible infrastructure investment that supports the
needs of global communities while accelerating the environmental transition is
a significant investment megatrend. INPP has constructed its portfolio in
alignment with this view. The Board believes INPP, as a listed evergreen
closed-ended fund, is the safest and best structure for supporting regional
governments and investors, responding to new and emerging opportunities, and
providing shareholders with access to this vital sector.

 

ENDS.

For further information:

Erica
Sibree
+44 (0) 7557 676 499

Amber Fund Management
Limited

Hugh Jonathan
                    +44 (0)20 7260 1263

Numis Securities

Mitch Barltrop / Jenny Boyd
          +44 (0) 7807 296 032 / (0) 7971 005 577

FTI Consulting

Notes to Editors:

While it is no longer a requirement under the Disclosure Guidance and
Transparency Rules for the Company to issue Interim Management Statements, the
Board believes it is in the interest of shareholders for the Company to
provide quarterly updates in addition to its half year reports.

About INPP:

INPP is a listed infrastructure investment company that invests in global
public infrastructure projects and businesses, which meet societal and
environmental needs, both now, and into the future.

INPP is a responsible, long-term investor in over 140 infrastructure projects
and businesses. The portfolio consists of utility and transmission, transport,
education, health, justice and digital infrastructure projects and businesses,
in the UK, Europe, Australia, New Zealand and North America. INPP seeks to
provide its shareholders with both a long-term yield and capital growth.

Amber Infrastructure Group ('Amber') is the Investment Adviser to INPP and in
this capacity is responsible for investment origination, asset management and
fund management of the Company.

Amber is part of Boyd Watterson Global Asset Management Group LLC, a global
diversified infrastructure, real estate and fixed income business with over
$36.3 billion in assets under management and over 300 employees with offices
in eight US cities and presence in twelve countries.

 1  The Company's valuation methodology is detailed in the Company's Annual
Report and financial statements for the year ended 31 December 2024, published
on 27 March 2025.

 2  Future profit projection and dividends cannot be guaranteed. Projections
are based on current estimates and may vary in the future.

 3  The H2 2024 dividend of 4.19p, paid on 9 June 2025, was the final dividend
to be paid on a six-monthly basis. Following this, dividends will be paid
quarterly, commencing with the first of four interim dividends for the
financial year 2025, expected to be paid in September 2025.

 4  The Company's valuation methodology is detailed in the Company's Annual
Report and financial statements for the year ended 31 December 2024, published
on 27 March 2025.

 5  As at 20 June 2025. This is calculated based on INPP's weighted average
discount rate, less the Ongoing Charges Ratio, adjusted to reflect the share
price discount to the rolled-forward NAV from 31 December 2024, using
published sensitivities.

 6  Dividend projected to be paid over the 12 months from 20 June 2025 divided
by the Company's share price as at 20 June 2025.

 7  As at 20 June 2025. 30-year bond used owing to the UK weighting of the
portfolio and the weighted average investment tenor of c.38 years.

 8  This is reflective of the 2025 and 2026 dividend targets, and 2.5% annual
dividend growth thereafter.

 9  Based on government bond yields as on 16 June 2025.

 10  Please see the Tideway tracker to see the live volume of sewage being
prevented from entering the River Thames: https://www.tideway.london

 11 
https://www.gov.uk/government/publications/uk-infrastructure-a-10-year-strategy

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