by Dave Baxter, Investors Chronicle, February 14, 2025:
Having bought assets that look much harder to sell, or even to accurately value, than listed equities, alternative investment trusts appear relatively safe from a Saba-style activist campaign. But stubbornly wide share price discounts to net asset value (NAV) mean they could still disappear via other routes.
That much is clear from the arrival of a cash offer for infrastructure stalwart BBGI Global Infrastructure (BBGI), something one team of analysts described as a “bolt from the blue”..
Plenty of other infrastructure trusts look cheap in the same respect, with the Association of Investment Companies’s Infrastructure sector on an average discount of 20.3 per cent on 7 February and its Renewable Energy Infrastructure sector on 32.7 per cent. Specialists are divided on the extent to which others could fall to such bids, but the BBGI offer nevertheless has big implications for the sector.
The bid for BBGI sends a message that even those trusts with a good level of scale could be vulnerable if they look cheap and attractive enough to a potential buyer..
James Carthew, head of investment company research at QuotedData, said: “[BBGI bidder] BCI has gone for the plain vanilla option on the table. Others have a slightly different risk profile, but this is reflected in their NAV calculations and there is no good reason why they should have traded on much wider discounts than BBGI did or why they should not also attract interest from similar buyers.”
He pointed to CORD as a possible target due to its wide discount, as well as sector stalwart HICL Infrastructure (HICL), but added: “The true bargain in the sector is probably Pantheon Infrastructure (PINT), which has demonstrated that it can grow its NAV as well as generating a decent income.
“However, if I had the funding, I’d buy one of the renewables companies. Those ratings and the yields on offer are just daft.”
Read more here