REG - RM Infrastructure RM SecDirect - RMDC - Net Asset Value(s)

RM Infrastructure IncomeAnnouncement

18/04/2023 07:00

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RNS Number : 4808W  RM Infrastructure Income PLC  18 April 2023

 RM Infrastructure Income Plc

 ("RMII" or the "Company")

 LEI: 213800RBRIYICC2QC958

 Net Asset Value

 NAV Performance

The Company's NAV % Total Return for the month of March was 0.26%, which
 brings the NAV % Total Return for the quarter to 1.33%.

 The NAV % Total Return over the last twelve months was 4.43% and inception to
 date 39.05%.

 The Ordinary Share NAV as at 31(st) March 2023 was 92.10 pence per share. This
 monthly NAV return of -1.385 pence per share arose primarily from the
 ex-dividend effect of the 1.625 pence per share ordinary dividend for the
 period Q4 2022, declared and paid in March 2023. Otherwise, there was positive
 interest income, net of expenses, of 0.52 pence per share and a decrease in
 portfolio valuations of 0.28 pence per share.

Summary for March 2023 (pence per share)
 Net interest income             +0.520p
 Change in portfolio valuations  -0.280p
 Payment of Dividend (Q4 2022)   -1.625p
 Net NAV Movement                -1.385p

 

 Market Update

 A volatile quarter for markets as a banking crisis caused a pullback to an
 otherwise strong start to the year. Global equity markets generally finished
 the quarter higher, and in the rates market, UK government bond yields
 remained broadly unchanged in the 5-year part of the curve although short
 dated UK interest rate expectations continued to rise as 1 year UK government
 bond yields rose 30bp to circa 3.9%.

 Credit spreads saw a material reduction in the risk premium with the Markit
 ITRX European Crossover Index opening at 475bps in January and closing at
 425bp at the end of the quarter. Spreads briefly touched 400bps before
 widening during March when there were some regional bank failures within the
 US and further questions were being asked on the stability of the banking
 system.

 RMII has significantly outperformed benchmark loan and bond indices in 1Q2023
 as outlined in the below table:

                    Total Return
                     1yr      3yr     5yr
 RM Infrastructure Income NAV           4.43%    30.73%  32.63%
 RM Infrastructure Income Share Price   -8.10%   35.39%  11.89%
 S&P European Leveraged Loan Index      -4.18%   12.63%  -6.02%
 Ishares Core Corp Bond UCITS ETF GBP   -10.95%  -7.81%  -4.18%

 Portfolio Update

The Investment Manager remains confident with regards to the low interest rate
 sensitivity of the portfolio. This is largely driven by the short average
 duration nature of the portfolio, which is currently 2.13 years. This in turn
 means that loans can be repaid relatively quickly and reinvested at higher
 yields. This has been evidenced during the last twelve months as a number of
 loans written over previous years were repaid and the capital redeployed into
 higher yielding loans. In conjunction with this, the Portfolio Manager has
 been seeking to increase security with a move up the capital structure by
 recycling this capital into senior secured loans and reducing mezzanine or
 junior lending exposure. The portfolio yield has thus increased over the
 quarter by 50bps from 9.15% to 9.65%.

 Increased investments

 ·      Environmental Infrastructure - Energy Efficiency, Ref 96: £135k

 ·      Social Infrastructure - Care Home, Ref 97a&b: c.£120k

 ·      Social Infrastructure - Health and Well-being, Ref 76: £100k

 ·      Social Infrastructure - Aged Care, Ref 88: c.£38k

 Repayments:

 ·      Environmental Infrastructure - Energy Efficiency, Ref 62: £20k

 ·      Environmental Infrastructure - Energy Efficiency, Ref 63: c.£47k

 ·      Non-Core - Asset Finance, Ref 61: c.£4,500k

 ·      Environmental Infrastructure - Renewable Heat Incentive, Ref
 9&52: c.£61k

 ·      Social Infrastructure - Child Care, Ref 95a&b: £40k

 ·      Social Infrastructure - Health and Well-being, Ref 94a: £35k

 Shareholder Consultation Update

 In Q2 2021, the Company consulted widely with Shareholders regarding a
 potential liquidity opportunity, to consider their liquidity needs and
 structure a set of proposals that were suitable and cost effective, with the
 result being that Shareholders were overwhelmingly supportive of the Company's
 performance, particularly during the pandemic and its recovery, as well as the
 updated investment focus and strategy. Based on this feedback and the lack of
 demand for a near-term liquidity opportunity, the Board determined that the
 next liquidity opportunity consultation would be put to Shareholders in 2024,
 as per the Company's prospectus, or, should the Company's shares trade at a
 discount over the six-month period from 1 October 2022 to 31 March 2023, the
 Board would bring the liquidity opportunity consultation forward by 12 months
 to prior to the 2023 AGM.

 The Company has generated a NAV total return of 9.24% during 2021 and 4.98%
 during 2022, outperforming many other fixed income comparables. However, the
 Company's shares, in common with many investment trusts, have traded at a
 discount over the last six months, and accordingly the Board confirms it is
 bringing forward the liquidity opportunity consultation and will consult with
 shareholders shortly.

 RMII has paid consistent dividends since IPO and as announced in March 2023,
 based on the current run rate, the Company is on track to generate a net
 interest income of more than 7 pence per share for FY2023, in excess of the
 annual dividend target of 6.5 pence(1).  Since the last consultation and in
 line with the Company's refreshed investment focus on social &
 environmental infrastructure, the Company has increased exposures to its core
 target sectors of [accommodation, healthcare, childcare & education, clean
 energy & renewables, waste management and energy efficiency & carbon
 reduction] with 58% of the portfolios committed capital invested within social
 & environmental infrastructure.

 Peel Hunt and Singer Capital Markets, joint financial advisers and brokers to
 the Company, will contact Shareholders in due course. Any Shareholders not
 contacted by Peel Hunt or Singer Capital Markets wishing to participate in the
 shareholder consultation are invited to contact Peel Hunt or Singer Capital
 Markets.

 Any retail Shareholder who wishes to participate in the consultation should
 contact their own broker / independent financial adviser for advice or the
 Company Secretary via email (ciara.mckillop@apexfs.group). Neither the Company
 nor its advisers can provide any advice to Shareholders on this matter. If you
 are in any doubt about the contents of this announcement you are recommended
 to seek your own financial advice from an independent financial adviser who is
 authorised under the Financial Services and Markets Act 2000 (as amended) if
 you are in the United Kingdom, or from another appropriately authorised
 independent financial adviser if you are in a territory outside the United
 Kingdom.

 A further announcement will be made following the Board's review of the
 shareholder consultation.

 The Company also announces that the Monthly Report for the period to 31 March
 2023 is now available to be viewed on the Company website:

 https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

 END

 For further information, please contact:
 RM Capital Markets Limited - Investment Manager
 James Robson
 Thomas Le Grix De La Salle
 Tel: 0131 603 7060

 FundRock Management Company (Guernsey) Limited - AIFM
 Chris Hickling
 Dave Taylor
 Tel: 01481 737600

 Apex Listed Companies Services (UK) Limited - Administrator and Company
 Secretary
 Brian Smith
 Ciara McKillop
 Tel: 020 3327 9720

 Singer Capital Markers Advisory LLP - Financial Adviser and Broker
 James Maxwell
 Asha Chotai
 Tel: 020 7496 3000

 Peel Hunt LLP - Financial Adviser and Broker
 Luke Simpson
 Liz Yong
 Tel: 020 7418 8900

 About RM Infrastructure Income

 RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended
 investment trust established to invest in a portfolio of secured debt
 instruments.

 The Company aims to generate attractive and regular dividends through loans
 sourced or originated by the Investment Manager with a degree of inflation
 protection through index-linked returns where appropriate. Loans in which the
 Company invests are predominantly secured against assets such as real estate
 or plant and machinery and/or income streams such as account receivables.

 For more information, please see
 https://rm-funds.co.uk/rm-infrastructure-income/

 

Market Update

A volatile quarter for markets as a banking crisis caused a pullback to an
otherwise strong start to the year. Global equity markets generally finished
the quarter higher, and in the rates market, UK government bond yields
remained broadly unchanged in the 5-year part of the curve although short
dated UK interest rate expectations continued to rise as 1 year UK government
bond yields rose 30bp to circa 3.9%.

Credit spreads saw a material reduction in the risk premium with the Markit
ITRX European Crossover Index opening at 475bps in January and closing at
425bp at the end of the quarter. Spreads briefly touched 400bps before
widening during March when there were some regional bank failures within the
US and further questions were being asked on the stability of the banking
system.

RMII has significantly outperformed benchmark loan and bond indices in 1Q2023
as outlined in the below table:

 

                                        Total Return
                                        1yr      3yr     5yr
 RM Infrastructure Income NAV           4.43%    30.73%  32.63%
 RM Infrastructure Income Share Price   -8.10%   35.39%  11.89%
 S&P European Leveraged Loan Index      -4.18%   12.63%  -6.02%
 Ishares Core Corp Bond UCITS ETF GBP   -10.95%  -7.81%  -4.18%

 
Portfolio Update

The Investment Manager remains confident with regards to the low interest rate
sensitivity of the portfolio. This is largely driven by the short average
duration nature of the portfolio, which is currently 2.13 years. This in turn
means that loans can be repaid relatively quickly and reinvested at higher
yields. This has been evidenced during the last twelve months as a number of
loans written over previous years were repaid and the capital redeployed into
higher yielding loans. In conjunction with this, the Portfolio Manager has
been seeking to increase security with a move up the capital structure by
recycling this capital into senior secured loans and reducing mezzanine or
junior lending exposure. The portfolio yield has thus increased over the
quarter by 50bps from 9.15% to 9.65%.

Increased investments

·      Environmental Infrastructure - Energy Efficiency, Ref 96: £135k

·      Social Infrastructure - Care Home, Ref 97a&b: c.£120k

·      Social Infrastructure - Health and Well-being, Ref 76: £100k

·      Social Infrastructure - Aged Care, Ref 88: c.£38k

 

Repayments:

·      Environmental Infrastructure - Energy Efficiency, Ref 62: £20k

·      Environmental Infrastructure - Energy Efficiency, Ref 63: c.£47k

·      Non-Core - Asset Finance, Ref 61: c.£4,500k

·      Environmental Infrastructure - Renewable Heat Incentive, Ref
9&52: c.£61k

·      Social Infrastructure - Child Care, Ref 95a&b: £40k

·      Social Infrastructure - Health and Well-being, Ref 94a: £35k

 

Shareholder Consultation Update

In Q2 2021, the Company consulted widely with Shareholders regarding a
potential liquidity opportunity, to consider their liquidity needs and
structure a set of proposals that were suitable and cost effective, with the
result being that Shareholders were overwhelmingly supportive of the Company's
performance, particularly during the pandemic and its recovery, as well as the
updated investment focus and strategy. Based on this feedback and the lack of
demand for a near-term liquidity opportunity, the Board determined that the
next liquidity opportunity consultation would be put to Shareholders in 2024,
as per the Company's prospectus, or, should the Company's shares trade at a
discount over the six-month period from 1 October 2022 to 31 March 2023, the
Board would bring the liquidity opportunity consultation forward by 12 months
to prior to the 2023 AGM.

 

The Company has generated a NAV total return of 9.24% during 2021 and 4.98%
during 2022, outperforming many other fixed income comparables. However, the
Company's shares, in common with many investment trusts, have traded at a
discount over the last six months, and accordingly the Board confirms it is
bringing forward the liquidity opportunity consultation and will consult with
shareholders shortly.

 

RMII has paid consistent dividends since IPO and as announced in March 2023,
based on the current run rate, the Company is on track to generate a net
interest income of more than 7 pence per share for FY2023, in excess of the
annual dividend target of 6.5 pence(1).  Since the last consultation and in
line with the Company's refreshed investment focus on social &
environmental infrastructure, the Company has increased exposures to its core
target sectors of [accommodation, healthcare, childcare & education, clean
energy & renewables, waste management and energy efficiency & carbon
reduction] with 58% of the portfolios committed capital invested within social
& environmental infrastructure.

 

Peel Hunt and Singer Capital Markets, joint financial advisers and brokers to
the Company, will contact Shareholders in due course. Any Shareholders not
contacted by Peel Hunt or Singer Capital Markets wishing to participate in the
shareholder consultation are invited to contact Peel Hunt or Singer Capital
Markets.

 

Any retail Shareholder who wishes to participate in the consultation should
contact their own broker / independent financial adviser for advice or the
Company Secretary via email (ciara.mckillop@apexfs.group). Neither the Company
nor its advisers can provide any advice to Shareholders on this matter. If you
are in any doubt about the contents of this announcement you are recommended
to seek your own financial advice from an independent financial adviser who is
authorised under the Financial Services and Markets Act 2000 (as amended) if
you are in the United Kingdom, or from another appropriately authorised
independent financial adviser if you are in a territory outside the United
Kingdom.

 

A further announcement will be made following the Board's review of the
shareholder consultation.

 

The Company also announces that the Monthly Report for the period to 31 March
2023 is now available to be viewed on the Company website:

 

https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

 

 

END

 

 

 

 

For further information, please contact:

RM Capital Markets Limited - Investment Manager

James Robson

Thomas Le Grix De La Salle

Tel: 0131 603 7060

FundRock Management Company (Guernsey) Limited - AIFM

Chris Hickling

Dave Taylor

Tel: 01481 737600

Apex Listed Companies Services (UK) Limited - Administrator and Company
Secretary

Brian Smith

Ciara McKillop

Tel: 020 3327 9720

Singer Capital Markers Advisory LLP - Financial Adviser and Broker

James Maxwell

Asha Chotai

Tel: 020 7496 3000

Peel Hunt LLP - Financial Adviser and Broker

Luke Simpson

Liz Yong

Tel: 020 7418 8900

 

 

 

 

 

 

 

About RM Infrastructure Income

 

RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended
investment trust established to invest in a portfolio of secured debt
instruments.

The Company aims to generate attractive and regular dividends through loans
sourced or originated by the Investment Manager with a degree of inflation
protection through index-linked returns where appropriate. Loans in which the
Company invests are predominantly secured against assets such as real estate
or plant and machinery and/or income streams such as account receivables.

For more information, please see

https://rm-funds.co.uk/rm-infrastructure-income/

 

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