3i Infrastructure has published a quarterly update covering the final quarter of 2022. It says that overall the portfolio performed well, exceeding the expectations set in September 2022, and continues to deliver strong performance. The board believes that the company is on track to deliver its dividend target of 11.15p for the financial year ended in 2023 (FY23), up 6.7% from FY22. This dividend is expected to be fully covered by net income.
During the period, strategically important contracts were signed by TCR, Ionisos, GCX, Tampnet and ESVAGT. Infinis and Valorem also made good progress in growing their respective renewable development pipelines.
Following the completion of the acquisition of DWS’s stake in TCR in October, 3i Infrastructure completed the syndication of a 28% stake for proceeds of about £190m in November. TCR also signed a term loan to repay its revolving credit facility and secured a new capex facility to fund growth projects.
Another portfolio company Joulz has also raised additional fixed rate debt to repay its revolving credit facility.
Total income and non-income cash of £55m was received in the period, ahead of expectations. This compares with total income and non-income cash of £26m for the same period last year.
Portfolio update
Infinis’s plans to develop solar energy generation and battery storage are progressing well. The company’s combined development pipeline is now 1.5GW. Similarly, Valorem closed 74MW of wind projects in France and Greece during the period and benefits from a healthy 5.7GW pipeline of mainly wind and solar projects in Europe.
The levy/price cap on electricity generators imposed by UK and European governments are expected to have a limited negative impact, which, when considered together with movements in power prices, will not result in a significant impact on the September 2022 valuation of the trust’s three renewable generation companies – Infinis, Valorem and Attero.
The trust is getting ready to sell Attero. Attero is a high quality asset in the energy transition sector and it is expecting significant interest from potential purchasers. Any sale proceeds are expected to contribute towards partially repaying drawings on the revolving credit facility (RCF).
TCR now represents 14% of the portfolio. It had a number of significant contract wins in the period and it continues to experience increasing demand for its full service rental model. TCR also completed the bolt-on acquisition of Adaptalift, an Australian headquartered ground service equipment lessor.
Ionisos has signed an agreement to acquire E-beam sterilisation facilities for about €25m, from Studer Cables AG, a manufacturer of cable solutions and systems located in Daniken, Switzerland. In a capacity constrained market, the acquisition will increase Ionisos’s ability to address and meet strong underlying demand growth for sterilisation, whilst diversifying its technology mix and expanding the geographic footprint from which it will service its medical and pharma client base. About €5m of funding for this will come from 3i Infrastructure, with the balance coming from Ionisos’s own resources.
ESVAGT’s offshore wind joint venture in the United States, CREST, signed its first contract in January 2023. Under the terms of the 15-year agreement with Siemens Gamesa, it will deliver and operate a new vessel to service the large Coastal Virginia Offshore wind park. This win represents an incremental step up in earnings and a key milestone in converting ESVAGT’s promising wind farm Service Operation Vessel (SOV) pipeline in the US market. The pipeline for further new SOVs in the North Sea and the United States is strong. Market conditions and contractual terms within ESVAGT’s Emergency Rescue and Response Vessel segment also remain robust, underpinned by an increasing emphasis on security of energy supplies in the North Sea.
Tampnet continues to benefit from demand growth in its end markets, which is translating to strong growth in its underlying EBITDA. During the period, Tampnet signed important contracts in both the North Sea and Gulf of Mexico, and announced that it has become a reseller of Starlink bandwidth as a complementary offering to its core fibre, cellular and private network products.
GCX secured a significant Managed Services contract and is experiencing increasing demand for bandwidth capacity across its network. GCX and Tampnet have announced a strategically important partnership which supports the increasing network connectivity demands of the data centre market in the Nordics.
In line with expectations, the trust invested a further €18m into DNS:NET in support of its continued fibre roll-out in the Berlin area. 3i Infrastructure is working with the company to optimise its business model and strengthen the management team in order to deliver its investment plan.
Balance sheet
At 31 December 2022, the cash balance was £75m, with drawings of £555m under the £900m RCF. This cash balance was subsequently reduced by the payment of the interim dividend of £50m in January 2023
3IN : Q4 2022 update from 3i Infrastructure