3i Infrastructure let down by falling premium – in what was otherwise a good year, a reduction in the premium to asset value that the shares trade at left shareholders nursing a loss.
3i Infrastructure reports an 11.4% return on NAV for the year ended 31 March 2020. It hit its 9.2p dividend target and increased the target dividend for the current financial year to 9.8p. However, a fall in its premium left shareholders with a return of -7.3%.
On the pandemic, the chairman had this to say “The Covid-19 pandemic is affecting most businesses across the world and its ultimate impact on the company and its portfolio will only be fully understood over time. However, we believe that our strong liquidity position, our defensive portfolio of businesses providing essential services, our exposure to long-term sustainable trends through this diverse group of businesses and our focus on risk mitigation will offer a significant degree of protection to shareholders.”
3i Infrastructure sold WIG for about £387m during the year, realising a 27% IRR from this investment, and sold the UK operational projects portfolio for approximately £194m, realising a 15% IRR. It also made its first investment in healthcare infrastructure, Ionisos, for £186m and completed the acquisition of Joulz for £190m.
The company also raised an additional £223m from investors last October, issuing 81m shares at 275p.
Today the shares are about 253p, a 5.9% premium to asset value. That is in line with most other infrastructure funds. However, 3i Infrastructure had been on one of the highest ratings in the sector and its shares are the worst performing over the last three months. The trust’s previous higher rating reflected its long term track record, which remains well ahead of competing funds. It achieved this by being willing to take on a bit more risk and maybe that is why investors are nervous now.
3IN : 3i Infrastructure let down by falling premium