GCP Infrastructure Investments is a Jersey-incorporated, closed-endedwhose shares are traded on the of the London Stock Exchange. It aims to provide its shareholders with regular, sustained, long-term distributions and to preserve capital over the long term by generating exposure primarily to UK infrastructure debt and related and/or similar assets which provide regular and predictable long-term cashflows.
Since its launch in 2010, it has provided its investors with a high and stable stream of quarterly distributions (these have totalled 7.6p per year, for the last seven years). The fund’s income is derived from loaning money at fixed rates to entities which derive their revenue, or a substantial portion of it, from UK public-sector backed cashflows, such as subsidies. Wherever it can, it tries to secure an element of inflation-protection.
In practice, GCP has exposure to renewable energy projects (where revenue is part subsidy and part linked to sales of power), private finance initiative (PFI) and public-private partnership (PPP)-type assets (whose revenue is predominantly based on the availability of the asset, that is the owner gets paid if the asset is available for use and maintained to agreed standards, rather than say based on the level of demand or usage) and specialist supported housing (where local authorities are renting specially-adapted, residential accommodation for tenants with special needs).
We have written a number of notes which explain the workings of the fund and the sectors that it invests in
Stable income, uncertain times was our initiation note, published in January 2020. It is the most comprehensive and includes detailed descriptions of the markets that GCP operates in.
Rebased dividend, published in June 2020, looked at the reasons why the board had reluctantly decided that it needed to reduce the dividend from 7.6p to 7.0p.
Compelling yield, published in January 2021, updated on the fund’s experience of COVID and looked back at a decade since launch
Penalised for being conservative?, published in July 2021, looked into whether GCP’s conservative valuation assumptions were holding back its rating relative to peers
The future is brighter and greener, published in January 2022, looked at how GCP might take advantage from the push for decarbonisation
Improving outlook and room to grow, published in July 2022, looked at the drivers of GCP’s good recent performance
Green is good published in February 2023, celebrates the company’s strong NAV growth
Merger to unlock compelling value? published in September 2023 was written after the potential three-way merger of GCP Infrastructure, GCP Asset Backed Income and RM Infrastructure Income was announced
You can access the manager’s website here
You can view our interviews with the company’s Fund Managers below:
22nd July 2022: Philip Kent – Weekly Show