GCP Infrastructure Investments (GCP) has released the following update:
“GCP seeks to provide investors with exposure to a diversified portfolio of UK infrastructure projects, which are by their nature long-term investments.
The directors and the company’s manager, Gravis, believe such investments are well placed to weather the uncertainty driven by Covid-19 over the long term. Substantially all of the company’s investments are availability-based infrastructure assets and therefore are not currently expected to be materially impacted by the reduced demand for goods and services that is occurring as a result of restrictions on the movement of people.
Any potential impact is likely to be limited to:
(i) short-term reductions in asset performance which may result from the reduced availability of personnel responsible for operating, managing or maintaining assets, or spare parts; and
(ii) the impact of any short-term reductions to electricity prices. The manager does not currently consider these to be material risks to the company’s ability to continue to meet its key long-term objective of providing shareholders with regular, sustained, long-term dividends and the preservation of capital over the long term.
At the date of this announcement the company’s investments continue to perform in-line with the manager’s expectations.
A further announcement will be made in due course, if appropriate.”
[Ahead of this announcement, GCP’s share price had fallen from 134p on 24 January 2020 to a low of 76.7p on 19 March. In the context of the defensive nature of GCP’s portfolio, that looked bizarre. We wrote a note recently that explains GCP’s investment approach. The three strands that make up the portfolio – PFI-type projects, renewable energy and specialist supported housing – all come with government support in one form or another. GCP’s revenues are fairly predictable with the only significant variable element being power prices. The market has taken GCP’s reassurance well and the shares are trading close to 90p at the time of writing, a gain of 17% on the day.]
GCP: Covid-19 update from GCP Infrastructure Investments