Investment trust insider on infrastructure – James Carthew: Why investors see PINT half full in infrastructure beats me
We are fully into the results season for investment companies with 31 December year ends. Amongst these are the infrastructure funds BBGI Global Infrastructure (BBGI) and International Public Partnerships (INPP). I scoured both their statements last Thursday for any disclosure of the impact of share price falls that have afflicted both companies, but in vain. Maybe they are just not used to thinking about it. Over 2022, the loss to shareholders for INPP was 6.1% and for BBGI 6.6%.
BBGI shares trade close to net asset value (NAV), but, this is a big comedown from the heady premiums of 20% more above NAV a year ago. The share price rose on the back of the results, possibly encouraged by news of a 6% targeted uplift in the dividend this year and next.
By contrast, INPP is targeting dividend increases of just 2.5% over the next couple of years, which looks to me like a real-terms cut in income after inflation and feels a bit unambitious. That’s because INPP claims to have greater inflation-linkage within the contracts in its portfolio, saying it should deliver a 0.7% uplift in revenues for every 1% increase in inflation. The equivalent figure for BBGI is 0.5%. INPP’s board may just be being conservative so that they can surprise on the upside but, for the moment, that will not do much for its 11% share price discount.
However, there are bigger bargains in the infrastructure sector today that might reward closer inspection. GCP Infrastructure (GCP) shares trade nearly 24% below NAV and offer a yield of 8.1%, while Pantheon Infrastructure (PINT) stands on a 20.5% discount with a prospective yield of 5.1%.
PINT has featured… read more here