International Public Partnerships has published results for the 12 months ended 31 December 2021. The NAV increased from 147.1p to 148.2p and dividends totalling 7.55p were declared. The company has set out dividend targets for 2022 of 7.74p (+5.2%) and 2023 7.94p (+2.6%).
The chairman says that: “Whilst overall the portfolio performed well in 2021, the pandemic continued to impact a small number of the company’s investments, whose performance has already started to improve and is expected to continue to do so during the course of 2022.
Diabolo Rail Link (‘Diabolo’) has experienced the greatest impact, as Brussels airport saw much reduced numbers of passengers using its services. However, independent forecasts predict a gradual recovery in passenger volumes during 2022 and thereafter. Discussions are ongoing with Infrabel, the Belgian rail network owner, over the implementation of contractual protections that have the potential to mitigate some of this impact, although no such mitigation is assumed within the company’s current valuation of its investment in Diabolo.
Tideway, the company building the 25km ‘super sewer’ under the River Thames in London, has continued to make good progress with construction 73% complete as at 31 December 2021 and with the primary tunnelling expected to be complete in the coming months. As reported previously, Tideway has been in discussions with Ofwat regarding additional measures to mitigate the impact on Tideway’s investors of both Covid-19 related cost overruns and the Financing Cost Adjustment Mechanism (‘FCAM’). Subsequent to a provisional agreement with Tideway, Ofwat launched a public consultation in December 2021 to gain views from interested parties on the proposed amendments. As the consultation was ongoing at the valuation date, the 31 December 2021 valuation of the company’s investment in Tideway included a prudent assessment of the outcome of the consultation and the necessary licence modification process. The consultation subsequently closed in January 2022 and the licence modifications came into effect in March 2022.
There has also been satisfactory resolution of the appeal by Cadent (our gas distribution investment) to the Competition and Markets Authority (‘CMA’) against regulator Ofgem’s final determination in respect of the five-year regulatory period beginning April 2021. The CMA published its final determination in October 2021 and the findings were modestly positive for the company’s valuation of Cadent.”
£257m was invested during the year. This included:
- A new police headquarters in Offenbach, Germany, investing £8.1m for a 45% shareholding;
- Purchase of Beatrice and Rampion Offshore Transmissions projects (‘OFTOs’), the eighth and ninth OFTO investments in INPP’s portfolio;.
- An additional 5% investment in Angel Trains, the largest rolling stock company in the UK. Angel Trains serves the UK passenger rail sector with a diversified fleet of more than 4,000 vehicles, the majority of which are electric multiple units. Angel Trains is now the third largest investment;
- The first investments in Denmark – four Public-Private Partnership (‘PPP’) projects, including two schools, a specialist land registry court archive building and a hospital car parking facility; and
- A commitment to invest £9.2m in the Flinders University Health and Medical Research Building in South Australia.
INPP : International Public Partnerships says effects of COVID are receding