Portfolio Update - 1 July 2020 to 19 November 2020

Source: RNS
RNS Number : 9397F
International Public Partnerships
20 November 2020



20 November 2020

International Public Partnerships Limited ('INPP', the 'Company'), the FTSE 250 listed investment company which invests in global public infrastructure projects and businesses, has today issued the following portfolio update for the period 1 July 2020 to 19 November 2020.


·    The Company reaffirms that its investment portfolio has continued to perform well, with no material changes to its operational or financial performance since it announced its Interim Results on 10 September 2020

·    During the period, the Company made further investments of c.£9.2 million across the education and digital infrastructure sectors

·    The Company's portfolio of 130 investments in public and social infrastructure projects and businesses continue to deliver essential services to all its stakeholders, maintaining high levels of asset availability

·    The Company continues to maintain confidence in the portfolio's resilience and notes that Covid-19 has resulted in a limited impact on the portfolio and the Company to date

·    Nevertheless, the Company continues to monitor certain specific risk areas, particularly relating to Tideway and the Diabolo Rail Link ('Diabolo'), as highlighted at the time of its Interim Results

·    The Company has delivered a Total Shareholder Return1 since IPO in November 2006 to 19 November 2020 of 231.7% or 8.9% on an annualised basis

·    A first half-year 2020 dividend of 3.68 pence per share was declared on 10 September 2020 and was paid on 13 November 2020


Overall, the Company's portfolio of assets continues to perform well, both for shareholders and wider stakeholders. We continue to closely monitor the performance of all of our investments specifically in relation to the implications of Covid-19.

·    The portfolio currently has 8.9%2 of assets still in physical construction. The weighted average investment life of the portfolio is currently 34 years3 with a weighted average (non-recourse) debt tenor of 31 years3.

·    As at 30 June 2020, the portfolio comprised economic interests in 130 projects and businesses with a composition as detailed below. This has largely remained unchanged to 19 November 20202:

Sector Breakdown

Investment Fair Value %

Energy Transmission






Gas Distribution


Waste Water






Military Housing





Portfolio review

During the period, the Company has continued to work with the management team at Cadent, an essential UK gas distribution business serving 50% of UK gas customers (16.6% of Investments at Fair Value2). Together with its co-investors, the Company has been engaging with the industry regulator, Ofgem, as it seeks a fair regulatory settlement in respect of Cadent's allowable returns and incentives over the next five years. Cadent, the Company and other market participants will continue to work for a better outcome for both Cadent's customers and investors in the final determination that Ofgem is expected to be publish in December 2020.


In addition, as previously indicated, there continues to be specific areas of uncertainty as a consequence of Covid-19 relating principally to Tideway, being the Company's largest asset under construction, and Diabolo, where the revenues are linked to passenger numbers.

·    Tideway (8.9% of Investment at Fair Value2) - Tideway is building the 25km 'super sewer' under the River Thames to create a healthier environment for London. Further to the update provided on 10 September 2020, construction activities have continued across the Tideway construction sites with processes and procedures in place to protect the health of workers and the wider community. Progress continues to be made with 19km of tunnel now constructed and the last of the 21 bridges over the River Thames has now been passed. At the end of September 2020, construction works were 60% complete compared to 57% as at 30 June 2020. As previously reflected in the Company's Interim Results, Tideway published a progress update in August 2020 reflecting the impact of Covid-19, which included an estimated £233 million negative effect on cost, increasing the total project cost from £3.9 billion to £4.1 billion, and a nine-month impact on schedule, taking completion to the first half of 2025. There are a number of contractual and regulatory safeguards available to Tideway to help minimise the possible financial impacts of these measures. These include provisions to share additional costs between contractors, Tideway investors (including the Company) and end-customers, up to a threshold, beyond which they are borne by the UK Government. Tideway remains in discussions with Ofwat on a package of measures that would mitigate the financial impact of Covid-19 on the Company. Progress is being made in these discussions and an agreement is expected to be reached in the coming months.


·    Diabolo (8.2% of Investment at Fair Value2) - Diabolo integrates Brussels airport with Belgium's national rail network. Whilst Diabolo does not operate train services and part of its revenues are paid on an availability basis, the majority of its revenues are linked to passenger use of either the rail link itself or the wider Belgian rail network. As a result of Covid-19, passenger numbers have been significantly lower over the course of 2020 compared to previous years, and the reinstatement of a national lockdown in Belgium at the end of October 2020 will have further impacted passenger numbers. Discussions are ongoing with project lenders and the Belgian state railway in order to agree resolutions to short-term liquidity and related debt covenant issues consequent to the reduction in passenger numbers. We will provide further information in due course. In the longer-term, the project benefits from a contractual mechanism which permits an adjustment to the passenger fee should passenger numbers and returns fall below a certain threshold. This mechanism operated successfully earlier in the life of the contract albeit under different circumstances. The operational performance of the asset remains excellent.


On 10 September 2020, the Company announced its results for the six months to 30 June 2020 reporting:

·    A 0.9% decrease in Net Asset Value ('NAV') per share to 149.2 pence (31 Dec 2019: 150.6 pence)

·    The portfolio maintains a high level of inflation-linkage such that a 1.00% increase in inflation leads to a 0.78% increase in return4

·    On 10 September 2020, the 2020 first half-year distribution of 3.68 pence per share was declared. This distribution was made in respect of the period 1 January 2020 to 30 June 2020 and represents a c.2.5% increase on the distribution paid in the previous corresponding period

·    The Scrip Dividend Alternative Circular applicable to that dividend was available to investors and the associated scrip allotment or dividend payment was paid on 13 November 2020

·    A target dividend for the 2020 and 2021 financial years has been set at 7.36 and 7.55 pence per share, respectively, in line with the current target annual increase of c.2.5%5. Whilst we currently have good forward-visibility of the cash flows projected to be generated by the Company's investments, we continue to monitor the portfolio for the impact of Covid-19 related risks including those noted above

The Company also notes that it has a £400 million corporate debt facility (available until July 2021) and as at 19 November 2020, c.£29 million of the facility was drawn, leaving c.£371 million undrawn to support nearer term investment commitments of c.£100 million.


·    The Company's investment portfolio valuation is determined semi-annually by the Directors after advice from the Investment Adviser and is reviewed by the Company's auditors, EY. This semi-annual valuation is published within the Company's Interim and annual accounts, the last of which was published with the Company's Interim Results ended 30 June 2020 on 10 September 2020

·    The Company also provides quarterly NAV guidance predominantly based on movements over the period in the government bond yields of countries where the Company holds investments and changes to relevant foreign exchange rates

·    This quarterly guidance does not include any changes (positive or negative) in NAV arising from matters specific to individual investments (e.g. changes in asset specific risks, changes to cash flow projections and assumptions, indexation adjustments due to changes in inflation, etc.) although attention is drawn to commentary provided above on the performance of individual assets in the current environment

·    Since the Company published its 30 June 2020 NAV of 149.2 pence per share, government bond yields have decreased in all jurisdictions in which INPP is invested. Other things being equal, the decrease in government bond yields could be expected to have a positive impact on the Company's NAV

·    Since 30 June 2020, Sterling strengthened against all currencies that the Company is exposed to, being the Australian Dollar, Canadian Dollar, the Euro and the US Dollar. The net impact of these foreign exchange rate movements could also be expected, other things being equal, to have a small negative impact on the Company's NAV.


During the period since 1 July 2020 the Company made new investments of c.£9.2 million.

·    As previously reported, in August 2020, the Company acquired stakes in six PFI project companies that own 14 UK schools. These schools provide education facilities to over 17,000 pupils across Bradford and Lewisham. The Company invested a further £3.6 million and as a result increased its existing stake by 4% in each of the six underlying project companies. Upon completion, the Company will hold a 54% investment in three of the Lewisham BSF schemes and 45% in the fourth; as well as increasing its share in the two Bradford schemes to 15.5% and 19% in the phase 1 and 2 schemes, respectively

·    During the period, as part of the Company's £45 million commitment to the National Digital Infrastructure Fund ('NDIF'), the Company made further commitments across two of the NDIF's existing portfolio companies, toob and Airband. In addition, and as reported in the Interim Results, NDIF partially realised an initial investment in Community Fibre which reflected a positive return on the Company's original investment and will support the further growth of Community Fibre in delivering fibre connectivity across London

·    In October 2020, the Company acquired an additional interest in Blackburn and Darwen BSF project. The Company invested a further £1.1 million to acquire stakes in two project companies which owns three schools. As a result, the Company now has 100% ownership.



·    Our portfolio of investments provides essential infrastructure to over 13 million people, households and businesses daily across the countries in which we invest   

·    As Covid-19 continues to affect many aspects of society and government policy, we continue to assess and monitor its impact on the Company's portfolio

·    Since the outbreak of the pandemic, earlier in the year, there has been an increased focus on ensuring resilience against future threats and the recognition that infrastructure plays a pivotal role in delivering this globally

·    The appetite for long-term responsible investment into public and social infrastructure remains high. There continues to be a positive outlook for private sector investment into public infrastructure across the geographies that the Company invests in particularly in supporting the post-Covid-19 recovery

·    International momentum for action on climate change continues to grow, with China and Japan joining the UK, EU, Sweden and New Zealand in setting net zero carbon targets. The Company continues to monitor the opportunities that will emerge from climate action

·    The pipeline for the types of assets the Company invests in is positive and the Company remains confident in the ability to continue to source and develop high-quality, well-performing opportunities, across the Company's target geographies, that deliver long-term, predictable cash flows with strong inflation-linkage that meet the Company's risk-return profile

·    In addition, the Company continues to monitor developments as Brexit preparations progress and as previously expressed, we do not believe that we are unusually exposed or that there will necessarily be a significant impact on the Company's existing investments. However, this cannot be guaranteed, and we continue to monitor developments closely, as the new relationship between the UK and the EU continues to evolve


Notes to Editors:

While it is no longer a requirement under the Disclosure 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.

1.   Source: Bloomberg. Share price appreciation plus dividends assumed to be reinvested.

2.   This is based on the fair valuation of the Company's investments as at 30 June 2020 calculated utilising a discounted cash flow methodology as stated in the valuation section.

3.   This includes non-concession entities which have potentially a perpetual life but are assumed to have finite lives.

4.   In aggregate, the weighted average return of the portfolio would be expected to increase by 0.78% per annum in response to a 1.00% per annum inflation increase over the currently assumed inflation rates across the whole portfolio. Based on analysis as at 30 June 2020.

5.   Dividend targets are targets and not profit forecasts and there can be no guarantee they will be achieved. Projections are based on the current individual asset financial models and may vary in the future.



For further information:

Erica Sibree/Amy Joslin                                                 +44 (0)20 7939 0558/0587

Amber Fund Management Limited                                                         


Hugh Jonathan                                                               +44 (0)20 7260 1263

Numis Securities             


Ed Berry/Mitch Barltrop                                                  +44 (0) 20 3727 1046/1039
FTI Consulting


About International Public Partnerships (INPP):

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

INPP is a responsible, long-term investor in 130 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 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 consists of 130 staff who are responsible for the management of, advice on and origination of infrastructure investments.

Visit the INPP website at www.internationalpublicpartnerships.com for more information.

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