Strong start for Cordiant Digital Infrastructure – Cordiant Digital Infrastructure (CORD) has published its first set of results since IPO, which cover the period from 4 January to 30 September 2021. The trust had a strong start, successfully raising gross proceeds of £595m from IPO in February 2021 and its follow-on equity issuance and over the period under review, total shareholder return was 9.5%.
While not forming part of its investment policy, CORD intends to pay dividends twice a year, with dividends typically declared in respect of the six-month periods ending 31 March and 30 September and paid in July and December, respectively. As announced in May 2021, CORD is targeting an initial dividend of 3 pence per ordinary share and C Share in respect of the first full financial year, compared with the 1 penny per ordinary share target described in its prospectus. It will pay a first interim dividend in December 2021 of 1.5 pence per ordinary share and 1.5 pence per C Share, totalling £8.92m. CORD aims to pay a second interim dividend in July 2022 of 1.5 pence per share in respect of the period from 1 October 2021 to 31 March 2022.
Review from the manager
We are delighted to have raised £595 million for the Company through its IPO and follow-on equity issuance. In addition, we are in the process of negotiating fund-level credit facilities with a group of banks, which will enable us to draw on additional capital to pursue the Company’s investment objective.
80% of the IPO proceeds were deployed in České Radiokomunikace (CRA), and the remaining funds provide the firepower to complete investment opportunities currently in advanced stages of negotiation. In addition, the Company has a strong pipeline of additional target investments.
We are enthusiastic about the opportunities to deploy investor capital in this critical and growing sector. Statistics from McKinsey Global Institute (2020) suggest that – in terms of annual capital expenditures – Digital Infrastructure is the third largest infrastructure segment in the world.
We believe that the Company is unique in the ways in which it aims to generate additional return for investors.
The Digital Infrastructure sector has been a beneficiary of changes in work patterns associated with the COVID-19 pandemic. We do not expect Digital Infrastructure usage patterns to change significantly as global economies begin to recover from this worldwide health emergency: video calls conducted from an office building use just as much bandwidth and data centre capacity as those conducted from a home. In our view, growth rates in the use of digital services should remain above those of the economy in general.
The uncertainty around the form and extent of the economic recovery, and the potential for resurgences in infection rates, are areas of concern. Stubbornly high rates of inflation associated with shortages and struggling supply chains are also a concern, not least as they create issues around maintenance and capital expenditures. However, as noted earlier, these tend to be more than offset by contractual inflation escalators in contracts.
The abundance of capital in global markets has created certain instances of pricing indiscipline and high levels of competition for assets. The Company is committed to remaining a disciplined buyer of assets, leveraging the Investment Manager’s ability to deploy a large and experienced team in a ‘buy, build & grow’ strategy to make it a preferred counterparty. The Investment Manager will also focus on rigour in negotiations, judging that this will benefit investors over the medium to long term.
We are enthusiastic about the Company’s near-, medium- and long-term pipeline.
Our confidence in our ability to deliver sustainable returns to investors over the long term is high. We aim to do so through our balanced, prudent buy, build & grow strategy, leveraging the strengths of our team.
CORD : Strong start for Cordiant Digital Infrastructure