James Carthew: 3i Infra is thriving, but its shareholders have trust issues
The £3.2bn trust has been sealing lucrative sales, but the memory of its written off stake in DNS:NET is holding the share price back.
3i Infrastructure (3IN) announced the sale of TCR for €1.14bn last week – a 22% premium to its carrying value. The transaction added about 19.4p or 4.8% to the NAV, but the share price reaction was more muted.
Perhaps investors were already expecting a decent uplift, maybe it was just a reflection of the wider turmoil in markets associated with the Iran war, or could it be that 3IN needs to rebuild trust following the unexpected write off of its German fibre business DNS:NET.
TCR has been a remarkable success story. The business provides ground support equipment used in almost 240 airports in over 20 countries. 3IN paid €200m for a 48% stake in 2016. Then, in June 2022, 3IN bought out its partner DWS, paying about £334m (roughly €390m) to take its ownership to 96%.
In the intervening period, TCR had been through a difficult patch as airlines grounded planes in response to COVID travel restrictions, but the company got through that and continued to expand. TCR’s contracts were availability-based, rather than based on some other metric such as the number of planes serviced. That meant that customers kept paying even when they were not using the equipment.
3IN says that… read more here