GCP Infrastructure has released an investor report for the three month period to March 31. The company’s NAV fell 2% due predominately to a change in the March 2024 OBR inflation forecast. Power price forecasts also had a negative impact.
Post period end, on 26 April 2024, the company also noted that it has disposed of its interest in loan notes secured against Blackcraig Wind Farm. The disposal occurred at a 6.4% premium to valuation at 31 March 2024, and generated net cash proceeds of c.£31m. The net cash proceeds will be used to repay its revolving credit facility. Following such repayment, the GCP’s net debt position is expected to be c.£45m. Further, the disposal has reduced its exposure to merchant electricity prices and equity-like interests.
This follows on from the adoption of the company’s capital allocation policy which was part of its 2023 annual report, reconfirming its intentions to prioritise a material reduction in leverage, as well as reducing equity-like exposures and exposures in certain sectors, and facilitating the return of capital to shareholders. The board set a conditional target of releasing £150m (c. 15% of the portfolio) from disposals or refinancings, to materially reduce leverage and return at least £50 million to shareholders before the end of the calendar year 2024.
The disposal detailed above represents a positive first step in facilitating the company’s execution on its capital allocation policy, materially reducing leverage while decreasing equity-like exposure across the portfolio. The board and the Investment Adviser continue to focus on additional opportunities for refinancings or disposals within the portfolio, in order to achieve the targets set out in the capital allocation policy.
GCP : GCP Infrastructure delivers first step in capital allocation policy