RM Infrastructure Income to wind down

After extensive consultation with its advisers and shareholders, the board of RM Infrastructure Income (RMII) has decided to put forward proposals for a managed wind-down of the company. This follows a separate announcement also released today from GCP Infrastructure that noted RMII and GCP had been unable to agree on structure and terms for a potential merger.

QD Comment : Given the fund’s relatively solid execution over its seven-year life, it will be a shame to see RMII disappear from the sector. However, the fund was sub-scale and, with significant discounts having emerged across the entire infrastructure sector, there was little prospect of being able to raise additional equity anytime soon. For shareholders who would like to remain invested in the space, it would have been nice to see the offer of a rollover into another vehicle – we think the potential merger with GCP Infrastructure and GABI looked promising as it would have created a good-sized fund with a pretty diverse portfolio of assets. Although, RMII shareholders do have the option of buying shares in the newly enlarged GCP at a discount. With little in the way of alternatives, we expect shareholders will approve the managed wind-down that the board is proposing, and it will be interesting to see how close to NAV investors are able to exit the trust.

The RMII announcement is published in full below:

RM Infrastructure Income plc announces that after extensive consultation with its advisers and shareholders evaluating the future strategy of the Company, and having received various approaches from third parties, the board of directors (the “Board”) has decided to put forward proposals for a managed wind-down of the Company (the “Managed Wind-Down”). The Board unanimously recommend that shareholders vote in favour of the Managed Wind-Down, which they believe is in the best interest of shareholders, for the reasons set out below.

As previously announced, the Company has continued to deliver upon its investment objective of providing attractive NAV total returns, outperforming many other fixed income comparables, and generating a high and growing net interest income in excess of the annual dividend target of 6.5 pence per share*, despite a number of periods of volatility over its near seven-year life.

Shareholders consulted have been overwhelmingly supportive of the Company’s management and performance, as well as its investment focus and strategy, but other factors, including the Company’s small scale, prevailing discount to net asset value at which the shares have been trading and liquidity of the shares, has restricted the Company’s ability to grow.

The Board has also assessed a number of proposals regarding a potential combination of RMII’s assets with another suitable investment company or fund, and undertook further consultation with shareholders, as an alternative to a managed wind-down, in what has turned out to be a much more complex process than initially envisaged.  Differing views were received by shareholders on the merits of a potential combination against the alternative. The Board has therefore considered what is deliverable and in shareholders’ best interests as a whole in reaching its decision to put forward proposals for a managed wind-down.

The Board considers that approval of the Managed Wind-Down will not result in an immediate liquidation of the Company, rather an orderly realisation of the Company’s underlying assets, with capital returned to shareholders as the Company’s underlying loans are repaid to it, and its equity and warrant assets are realised in each case in a manner that seeks to maximise shareholder value. The Company will retain the ability to extend loan maturities or provide further funding to existing borrowers where the Board considers that doing so will maximise the returns to shareholders in the timeframe in which the Company will otherwise be dealing with the Managed Wind-Down. The Company’s listing will be maintained during the realisation period. The Board also intends to maintain its current target level of dividend until the commencement of the orderly realisation. Accordingly, the Board intends to publish a shareholder circular by the end of October 2023 (the “Circular”) to convene a general meeting (the “General Meeting”) at which it will seek approval from shareholders for the Managed Wind-down and any related matters required to facilitate an orderly realisation.

Shareholders should also note that prior to publication of the Circular, RM Capital Markets Limited (the “Investment Manager”) will explore the possibility of offering an opportunity for shareholders who wish to maintain their exposure to the strategy to roll-over their interests in RMII into an alternative fund structure to be managed by the Investment Manager and the Board remains open to any approaches from third parties who have not yet put forward a proposal. Further details will be set out within the Circular, as appropriate.  However, it should be noted at this stage that there can be no certainty that any such rollover opportunity will be offered nor any third party approach received.

RMII : RM Infrastructure Income to wind down