Solid portfolio management continues as 3i Infrastructure pays special dividend

The FTSE 250 company announced two divestments during the period, generating proceeds of £1.12bn through the £725m sale of its stake in Elenia and the £395m sale of its stake in Anglian Water Group.

A total of £425m was returned to shareholders in cash as a special dividend on Thursday, representing all of the value uplift during the year on Elenia and Anglian Water.

Four investments were announced during the period, including the £186m further investment to acquire a majority position in Wireless Infrastructure Group, £125m to fund Infinis's acquisition of Alkane Energy, £21m in ESVAGT to provide funding for growth in the offshore wind service business, and £12m in Infinis to fund organic growth.

The board said the portfolio overall continued to perform in line with expectations, with the investment adviser remaining focused on actively managing the portfolio to maximise value.

Total income and non-income cash was £64m in the period, with an additional £12m expected by 31 March.

The company said it remained on track to deliver its full year dividend target of 7.85p per share,, which would be fully covered.

3i Infrastructure’s cash balance was £273m as at 28 March, after funding the special dividend, with the undrawn balance of its revolving credit facility standing at £249m.

“The company has had a very busy second half of the year,” said chairman Richard Laing.

“The investment adviser has delivered outstanding value to shareholders through two well-managed sale processes and engaged portfolio management.

“We remain on track to deliver a full year dividend of 7.85p per share, in addition to the special dividend of 41.4p per share.”

Looking at the company’s portfolio, the board said it continued to perform in line with expectations overall.

All of the 115 trains in the Cross London Train fleet had now been manufactured, and more than 100 of those had now completed the testing and acceptance process.

The performance of the trains was ahead of plan, and remained on a positive trajectory, 3i said.

The company said it would consider the impact of that when setting the discount rate for the valuation of its investment at the end of the financial year.

Within Oystercatcher, and consistent with the company’s experience towards the end of the first half of the year, 3i said it continued to see some softening of demand for storage of certain product types.

Portfolio income, including dividends, interest receivable and any fees received from portfolio assets, totalled £43m in the period, with non-income cash of approximately £21m also received, both of which supported the company's dividend.

Further portfolio income of approximately £10m and non-income cash of £2m was expected by 31 March.

The board said that as usual, an important element of the determination of the company's results for the year to 31 March would be the valuation exercise carried out on the investment portfolio as at that date.

3i Infrastructure expected to announce its results for the year to 31 March on 11 May.

Phil White, managing partner and head of infrastructure at the investment adviser, 3i Investments, said he was “very pleased” with the transactions announced in the last six months.

“We have made selective new investments in good businesses, through bilateral transactions and follow-on investments in existing portfolio companies.”