BBGI Global Infrastructure has published results for the year ended 31 December 2022. Over that period the fund generated an NAV return of 9.1%.
[Bizarrely, in what is otherwise a lengthy and detailed report, the statement makes no mention of BBGI’s share price, which we can tell you fell from 175.6p to 156.6p over the year and has fallen further since to 144.0p. Factoring in the dividend (see below), shareholders were left with a return of -6.6% for 2022.]
The dividend for the year was 7.48p and that was covered 1.47x. The board has revised its dividend targets for the years 2023 and 2024, increasing the growth rate from 2% to 6% (7.93p in 2023 and 8.40p in 2024).
The weighted average discount rate used to value BBGI’s forecasted cash flows – to calculate the NAV – increased from 6.6% to 6.9%, reflecting an equity risk premium of about 3.1%. [It is the possibility of higher discount rates – as interest rates climb – that has been weighing on the share prices of funds in the infrastructure and renewable energy sector, we think.]
Some other highlights:
- Strong operational performance from a globally diversified portfolio of 56 high-quality, 100 per cent availability-style infrastructure assets.
- Contracted inflation linkage of 0.5% for every 1% increase in inflation – this added £76m to the NAV.
- Cash receipts ahead of expectations, with no material lockups or defaults.
- Consistently high level of asset availability rate of 99.9 per cent maintained.
- Net debt position on an investment basis of £26.3m, with £57.5m drawn under the revolving credit facility (RCF). The RCF, which historically has been used to finance new investments ahead of equity raises, has the possibility, under its accordion tranche, to be increased by a further £70m, and matures in May 2026.
- Published a net zero plan for BBGI and for its portfolio companies.
- Two new availability-style investments totalling £64m.
- Attractive pipeline of availability-style investments in Europe, North America, and Australia, maximising the benefits of strategic investment partnerships with leading contractors.
- BBGI is a socially beneficial investment under SFDR’s Article 8.
BBGI hit by discount widening