Results for the half year to 30 September 2020
11 November 2020
Important information
The sole purpose of this information-only presentation ("Presentation") is to provide information on a non-reliance basis about 3i Infrastructure plc and its subsidiaries (together "3iN") and their holdings in 3iN's investment portfolio. This Presentation should not be taken as an offer of any kind or a recommendation to buy, sell or hold the shares of 3i Infrastructure plc or any other securities. Nothing in this Presentation constitutes or is intended to constitute an offer, invitation or a commitment of any kind or a solicitation by 3iN or its investment manager 3i Investments plc ("3i") to provide services or to enter into any transaction, nor does it evidence an intention on the part of 3iN, 3i or their respective affiliates (together the "Companies") to make such an offer. The Presentation does not and is not intended to give rise to legally binding relations and shall not create any legally binding obligations (whether contractual, non-contractual or otherwise) on the part of the Companies or any other person.
Nothing in this Presentation constitutes or is intended to constitute financial or other advice and you should not act upon any information contained in the Presentation without first consulting a financial or other professional adviser.
No representation, warranty or undertaking is given by the Companies or by any other person in respect of the fairness, adequacy, accuracy or completeness of statements, information or opinions expressed in the Presentation and neither 3iN, 3i nor any other person takes responsibility for the consequences of reliance upon any such statement, information or opinion in, or any omissions from, the Presentation. The information contained in this Presentation has not been audited or verified. The Presentation may contain statements about the future, including certain statements about the future outlook for 3iN. Any projections or forecasts in this Presentation have been prepared by 3iN and 3i based on various assumptions concerning anticipated results (which assumptions may or may not prove to be correct) and are illustrative only. These are not guarantees of future performance and will not be updated. The actual results may be materially and adversely affected by economic or other circumstances and the analysis is based on certain assumptions with respect to significant factors that may prove not to be as assumed. Nothing contained herein shall constitute any representation or warranty as to future performance of 3iN securities, any financial instrument, credit, currency, rate or other market or economic measure and past performance is not necessarily indicative of future results.
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3i Infrastructure plc, its management and its financial statements. 3iN is not currently making any public offering in the United States and no such prospectus has been issued. No public offering of any such securities in the United States is currently contemplated.
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As a result, by your continued attendance at today's presentation you represent that you act as investment manager for one or more accounts that are 'qualified purchasers', 'accredited investors' and 'qualified institutional buyers'. Moreover, you, on your own behalf and on behalf of your affiliates, agree that so long as 3iN is not registered under the 1940 Act, any securities of 3iN that are purchased will be purchased only for the accounts of 'qualified purchasers', 'accredited investors' and 'qualified institutional buyers'. You and your affiliates also agree that any securities of 3iN owned by any such accounts will be sold and/or transferred only in offshore secondary market transactions (e.g. through the London Stock Exchange) without the direct or indirect involvement of 3iN, its affiliates, agents or intermediaries.
This document has not been approved by a person authorised under the Financial Services & Markets Act 2000 ("FSMA") for the purposes of section 21 FSMA. This document has not been approved by the UK Financial Conduct Authority, the Jersey Financial Services Commission or other relevant regulatory body, nor by a person authorised under the Financial Services & Markets Act 2000. 3i Investments plc is acting only for 3i Infrastructure plc and is not acting for any other person (a "third party"). 3i Investments plc will not be responsible to any third party for providing the protections afforded to clients of 3i Investments plc and will not be advising any third party on investing in 3i Infrastructure plc.
This disclaimer notice (and any non-contractual obligations arising out of or in connection with it) is governed by English law.
2
Consistently strong performance against our objectives
Our strategy | Our objectives | |
To maintain a balanced portfolio of | To provide shareholders with: | |
infrastructure investments delivering an | • A total return of 8% to 10% per | |
attractive mix of income yield and capital | annum, to be achieved over the | |
appreciation for shareholders | medium term; and |
• A progressive annual dividend per share
3
Generating value in the current market
Return
Mid Market
Economic
Infrastructure
Large Core
Infrastructure
Operational
PPPs
Our investment focus
Asset intensive, resilient companies
Asset bases that are hard to replicate
Providing essential services
Established market positions
Good visibility of future cash flows
Acceptable element of demand or market risk
Risk | Opportunities for further growth |
4
Resilient to the challenges of Covid-19
3.8%
Total return on opening NAV
Resilient portfolio underpinning growth in net asset value
259.4p
NAV per share
Good level of income and non-income cash to support the dividend
Strong liquidity position to make new investments
On track to deliver the FY21 dividend target, 6.5% higher than FY20
£48m
Total income and non-income cash
£360m
Cash position
4.9p
Dividend per share for the half year
9.8p
Target dividend for FY21, up 6.5%
5
Strong return from a diversified portfolio
for the half year to 30 September 2020
Total portfolio return | 5.5% | |||||
Infinis | 2.5% | |||||
Tampnet | 6.3% | |||||
Joulz | 16.0% | |||||
Ionisos | 8.2% | |||||
TCR | (5.6)% | |||||
ESVAGT | ||||||
1.9% | ||||||
Oystercatcher | 4.5% | |||||
Valorem | 20.5% | |||||
Attero | (2.9)% | |||||
Projects | 10.6% | |||||
India Fund | 18.5% | |||||
6
A well-diversified, balanced portfolio
ProjectsIndia Fund | Infinis | ||||
Attero | 2% | ||||
4% | |||||
Valorem | 6% | 16% | |||
6% | |||||
Tampnet | |||||
Oystercatcher | 9% | 20 assets | 13% | ||
£1.8bn | |||||
9% | |||||
ESVAGT | 12% |
Joulz
11%
Utilities | Portfolio value by sector | |
Transportation / | 4% | |
logistics | 9% | |
Communications | ||
12% | ||
40% | ||
Healthcare | 13% | |
Natural Resources | 22% | |
/ energy | ||
Social | ||
infrastructure | ||
Netherlands | Portfolio value by country | |
2% | ||
France | ||
9% | ||
UK | 21% | |
9% | ||
Norway | ||
TCR
12%
Belgium | 11% |
19% | |
Ionisos
Luxembourg | 13% |
Denmark | |
16% |
India
7
Engaged asset management approach to positively influence our companies
1 | Strengthen portfolio company management teams |
2 | Invest and develop companies to support a sustainable future |
3 | Growing our platform businesses through acquisitions |
8
Infinis
Generator of electricity
£322m | ||||||||||
£281m | £132m | |||||||||
Cost | Closing value | Cash income and proceeds | ||||||||
Ownership | 100% | |||||||||
Date invested | December 2016 and April 2018 | |||||||||
Management team HQ Northampton, UK | ||||||||||
Country | UK | |||||||||
Currency | GBP | |||||||||
Sector | Utilities |
- Performed ahead of expectations in the period
- Mostly unaffected by the pandemic and continues to benefit from the inflation-linked UK Renewables Obligation Certificate regime until 2027
- Thanks to its near-term hedging strategy, low power prices have had limited impact, but revised medium to long-term forecasts weighed on valuation
- Small bolt-on acquisition for a solar development at Ling Hall and good progress on the broader solar initiative which could represent 400 megawatts of generating capacity, over the next few years
•
9
Tampnet
Offshore telecom network
£187m | ||||||||
£225m | ||||||||
Cost | Closing value | |||||||
Ownership | 50% | |||||||
Date invested | March 2019 | |||||||
Management team HQ | Stavanger, Norway | |||||||
Countries | Norway, UK, US | |||||||
Currency | NOK | |||||||
Sector | Communications | |||||||
- Agreed to acquire BP's fibre assets in the Gulf of Mexico, securing ownership of a key piece of subsea infrastructure and enabling Tampnet to replicate its successful North Sea business model
- The acquisition is expected to complete in 2021 and is value accretive
- Witnessed slower near-term growth and lower roaming revenues owing to lower oil prices and the pandemic
- Replaced CFO, appointing Ulf Bonnevier
10
Joulz
Essential energy infrastructure equipment and services
£190m | ||||||||||||||
£14m | ||||||||||||||
£219m | ||||||||||||||
Cost | Closing value | Cash income and proceeds | ||||||||||||
Ownership | 100% | |||||||||||||
Date invested | April 2019 | |||||||||||||
Management team HQ | Rotterdam, Netherlands | |||||||||||||
Countries | Netherlands | |||||||||||||
Currency | EUR | |||||||||||||
Sector | Utilities |
- Performed ahead of our investment case again for the year to date with limited impact from Covid-19
- Carve-outfrom Stedin and the integration of the new electric vehicle charging solutions business acquired in March are progressing well
- Completed a successful refinancing on better terms than envisaged in our previous valuation
- Continued to strengthen the management team with the appointment of Joulz's first CFO, Paul Smits, previously the CFO for the Port of Rotterdam
11
Ionisos
Cold sterilisation for the healthcare industry
£186m | |||||||||
£212m | |||||||||
Cost | Closing value | ||||||||
Ownership | 95% | ||||||||
Date invested | September 2019 | ||||||||
Management team HQ | Civrieux, France | ||||||||
Countries | France, Spain, Germany, Italy, Estonia | ||||||||
Currency | EUR | ||||||||
Sector | Healthcare | ||||||||
- Performed well during our first year of ownership
- Benefited from cold sterilisation being an essential service
- Pandemic resulted in reduced demand for surgical, cosmetic and veterinary products but offset by an increase in demand for medical PPE and packaging
- Started construction of a new E-beam facility in Bautzen, Germany
- Added a new CFO to the management team, Mohamed El Bounaamani
12
TCR
Ground support equipment in airports
£151m | ||||||||||||
£187m | £22m | |||||||||||
Cost | Closing value | Cash income and proceeds | ||||||||||
Ownership | 46% | |||||||||||
Date invested | July 2016 | |||||||||||
Management team HQ | Brussels, Belgium | |||||||||||
Countries | 10 European countries, Malaysia, | |||||||||||
Australia, New Zealand and US | ||||||||||||
Currency | EUR | |||||||||||
Sector | Transportation / Logistics | |||||||||||
- Performed broadly in line with our expectations during the first half of the year, as flights resumed slightly earlier than anticipated and operating costs were managed well
- Assuming a more prolonged and gradual recovery to previous air traffic levels by 2024 and consequential impacts on TCR's customers which reduced the valuation
- Increasing interest in TCR's business model from existing and potential new customers could accelerate growth in the medium term
13
ESVAGT
Wind farm maintenance support vessels and emergency response vessels
£147m | ||||||||
£166m | ||||||||
Cost | Closing value | |||||||
Ownership | 50% | |||||||
Date invested | September 2015 | |||||||
Management team HQ | Esbjerg, Denmark | |||||||
Countries | Denmark, Norway and UK | |||||||
Currency | DKK | |||||||
Sector | Natural Resources / Energy | |||||||
- Overall performance improved compared to the same period last year
- ERRV fleet seeing lower utilisation, as a result of lower oil prices
- Wind farm SOVs largely unaffected by Covid-19 or reduced oil prices
- Committed further £27m to support continued growth in the wind sector, with three new SOV vessels due to commence operations in the coming year
14
Oystercatcher
Oil product storage terminals
£139m | ||||||||||||
£161m | £125m | |||||||||||
Cost | Closing value | Cash income and proceeds | ||||||||||
Ownership | 45% | |||||||||||
Date invested | August 2007 and June 2015 | |||||||||||
Management team HQ Various | ||||||||||||
Countries | Netherlands, Belgium, Malta, Singapore | |||||||||||
Currency | EUR | |||||||||||
Sector | Transportation / Logistics | |||||||||||
- Good first half of the year, outperforming expectations and prior year
- Drop in oil prices caused a contango market structure which led to storage rate improvements and customers keen to renew earlier
- Negative impact of Covid-19 has been limited to lower throughput levels as a result of lower end- user demand and refineries continuing to operate below their normal output levels
15
Attero
Waste treatment and processing
£88m | ||||||||||||
£9m | ||||||||||||
£101m | ||||||||||||
Cost | Closing value | Cash income and proceeds | ||||||||||
Ownership | 25% | |||||||||||
Date invested | June 2018 | |||||||||||
Management team HQ | Apeldoorn, Netherlands | |||||||||||
Country | Netherlands | |||||||||||
Currency | EUR | |||||||||||
Sector | Utilities | |||||||||||
- Continued to perform well operationally
- Waste production in the Netherlands has largely recovered, however waste imports from the UK are still below pre-pandemic levels
- Plants were able to continue operating at full capacity during the period by drawing waste from
Attero's buffer - Significant reduction in power prices was partly mitigated by the company's hedging programme but the valuation reflects lower medium to long- term forecasts
16
Valorem
French renewable energy developer
£59m | |||||||||||
£105m | £8m | ||||||||||
Cost | Closing value | Cash income and proceeds | |||||||||
Ownership | 28.5% | ||||||||||
Date invested | September 2016 | ||||||||||
Management team HQ | Bègles, France | ||||||||||
Country | France | ||||||||||
Currency | EUR | ||||||||||
Sector | Utilities | ||||||||||
- Performed well in the first half of the year, benefiting from favourable wind conditions, good availability and a partial refinancing
- All assets continued to operate as normal during the lockdown period and a number of new projects became operational, while some construction projects suffered only limited delays
- Management team has been strengthened with the appointment of a new CFO, Tristan Maes
17
Projects portfolio
- Performed in line with expectations
- Availability-basedrevenues unaffected by the Covid-19 pandemic
- In October, agreed acquisitions of several co- shareholders' stakes for a total equity investment of c.€25m
£52m
£73m £14m
Cost | Closing value | Cash income and proceeds | ||
18
India Infrastructure Fund
- Significant progress made towards realising the remaining assets in the fund
- Agreement reached to sell stake in Krishnapatnam Port, for a price significantly above the latest valuation
£108m
£32m £25m
Cost | Closing value | Cash income and proceeds | ||
19
Outlook
3iN remains well positioned to deliver its objectives
Resilient portfolio with strong market positions
Strong liquidity to make new investments and invest in our portfolio
Continuing to deliver progressive dividend
20
Appendix
Share price continues to outperform
5 year share price and NAV performance | Total Shareholder Return | ||||||
3iN | FTSE 250 | 3iN NAV | |||||
Note: 1. FTSE 250 rebased to 3iN opening share price at 1 October 2015. | 22 |
2.Total shareholder return shown per annum. |
FY21 target dividend growth of 6.5%
Dividend growth since IPO
(pence per share)
Special dividends
Ordinary dividends
FY21 dividend target
41.4
4.2% p.a.1 | 17.0 | 10.2% | 6.4% | 6.5% | |||||||||||||||||||||||||||||||
5.00 | 5.30 | 5.50 | 5.72 | 5.94 | 6.49 | 6.70 | 7.00 | 7.25 | 7.55 | 7.85 | 8.65 | 9.20 | 9.80 | ||||||||||||||||||||||
FY08 | FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | FY21 |
1 Annualised growth rate in ordinary dividends to FY18.
23
Portfolio summary
30 September 2020 (£m)
Directors' | Foreign | Directors' | Allocated | Underlying | Portfolio total | ||||||
Investment in | Divestment in | Accrued income | Value | valuation 30 | foreign | ||||||
Portfolio assets | valuation 31 | exchange | portfolio income | return in the | |||||||
the year | the year | movement | movement | September | exchange | ||||||
March 2020 | translation | in the period | period1 | ||||||||
2020 | hedging | ||||||||||
Infinis | 285 | - | (2)2 | - | (2) | - | 281 | - | 9 | 7 | |
Tampnet | 205 | 23 | - | - | 14 | 4 | 225 | (7) | 2 | 13 | |
Joulz | 187 | - | - | 3 | 24 | 5 | 219 | (2) | 3 | 30 | |
Ionisos | 194 | - | - | 4 | 9 | 5 | 212 | (2) | 4 | 16 | |
TCR | 195 | - | 3,4 | - | 6 | (19) | 5 | 187 | (3) | 6 | (11) |
ESVAGT | 141 | 25 | - | - | (4) | 4 | 166 | (7) | 10 | 3 | |
Oystercatcher | 154 | - | - | - | 6 | 1 | 161 | - | - | 7 | |
Valorem | 88 | - | - | - | 15 | 2 | 105 | (1) | 2 | 18 | |
Attero | 103 | 13 | - | - | (5) | 2 | 101 | (1) | 1 | (3) | |
Economic infrastructure portfolio | 1,552 | 28 | (2) | 13 | 38 | 28 | 1,657 | (23) | 37 | 80 | |
Projects | 68 | - | - | - | 4 | 1 | 73 | (1) | 3 | 7 | |
India fund | 27 | - | - | - | 5 | - | 32 | - | - | 5 | |
Total portfolio | 1,647 | 28 | (2) | 13 | 47 | 29 | 1,762 | (24) | 40 | 92 | |
Adjustments related to | |||||||||||
unconsolidated subsidiaries5 | 5 | - | - | 3 | (3) | - | 5 | - | 3 | - | |
Reported in the Consolidated | |||||||||||
financial statements | 1,652 | 28 | (2) | 16 | 73 | - | 1,767 | (24) | 43 | 92 | |
- This comprises the aggregate of value movement, foreign exchange translation, allocated foreign exchange hedging and underlying portfolio income in the period.
- Shareholder loan repaid.
- Capitalised income.
- Follow on investment in ESVAGT of £15 million.
- Income statement adjustments explained in the September 2020 Half Year Report.
24
Income in line with expectations
(£m) | 0 | 5 | 10 | 15 | 20 | 25 | 30 | 35 | 40 |
Economic infrastructure - interest
European projects
UK projects
Economic infrastructure - dividends
Non-income cash
Non-portfolio interest
Sep-20Sep-19
25
Discount rate movement
The weighted average discount rate is 11.2%
Portfolio weighted average discount rate
9.9% | 10.0% |
11.3% | 11.2% | |
10.5% | 10.8% | |
Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Sep-20 |
26
Hedging programme mitigates volatility
(£m)
FX gain before | FX gain after |
hedging | hedging |
Hedged assets (€/SGD/DKK/NOK)
29
5
Note: SGD exposure is within Oystercatcher, a euro denominated investment. | 27 |
Sensitivities to total return
Inflation linkage | ||||||||||
Assets with revenues: | 12% | |||||||||
Directly linked to inflation | Sensitivity | +1% point | -1% point | |||||||
Change in inflation over | £21m | £(21)m | ||||||||
underlying assumption for | ||||||||||
Partly linked to inflation | next 2 years | |||||||||
88% | ||||||||||
Foreign exchange | 1%1% | |||||||||
7% | ||||||||||
GBP | ||||||||||
Sensitivity | +5% | -5% | ||||||||
EUR/SGD | ||||||||||
47% | ||||||||||
NOK | Change in foreign | £6m | £(6)m | |||||||
DKK | 44% | exchange rate1 | ||||||||
INR | ||||||||||
1.The sensitivity calculation assumes that the hedging programme movements are fully effective. Foreign exchange sensitivity calculation includes cash held at 30 September 2020. | 28 |
Introduction and Background
Experienced and well resourced team established in 2006
Jim Stoner | Thomas Fodor | James Dawes | ||
Senior Counsel | IR (D) | CFO | ||
Hazel | Richard | Jonathan | ||
Doberman | ||||
McElwain | Widdowson | |||
Financial | ||||
Legal Counsel | Manager | |||
Controller | ||||
Laura O'Brien | Sam Pickering | |||
Ed Pike | Senior | |||
(Deal | ||||
Legal Counsel | Finance | |||
Assistant) | ||||
Manager | ||||
Ben Adler
Finance
Manager
Chris Rowland
Strategy
(D)
Dhineka
Narain
(A)
Declan
Snowden
Finance
Manager
Shany Salem
(A)
Phil White
Managing Partner
Bernardo | Stephane | ||||||||||||||||||||||||||||||
Scott Moseley | Aaron Church | Anna Dellis | Grand- | John Cavill | Nigel Middleton | ||||||||||||||||||||||||||
Sottomayor | |||||||||||||||||||||||||||||||
Partner | Partner | Partner | guillaume | Partner | Partner | ||||||||||||||||||||||||||
Partner | |||||||||||||||||||||||||||||||
Partner | |||||||||||||||||||||||||||||||
Matt Barker | Tim Short | Stephane Duhr | Matthew | Antoine Matton | Celine | Oscar | |||||||||||||||||||||||||
Edwards | Maronne | Tylegard | |||||||||||||||||||||||||||||
Partner | Partner | (D) | (D) | ||||||||||||||||||||||||||||
(D) | (D) | (D) | |||||||||||||||||||||||||||||
Bryan Acutt | Fernando | Laura Kaps | Paolo | Yaad Virdee | Sebastian | ||||||||||||||||||||||||||
Castagnolo | Bergamelli | Schwengber | |||||||||||||||||||||||||||||
(AD) | (AD) | (AD) | |||||||||||||||||||||||||||||
(AD) | (AD) | (AD) | |||||||||||||||||||||||||||||
Neel Mistry | Adrien | Alexi | Rick | Thomas | |||||||||||||||||||||||||||
Delmotte | Kirilenko | Lethbridge | Monteiro | ||||||||||||||||||||||||||||
(SA) | |||||||||||||||||||||||||||||||
(SA) | (SA) | (SA) | (SA) | ||||||||||||||||||||||||||||
Bo Nie | Chouaib | Elia | Mads Moller | Giovanni | |||||||||||||||||||||||||||
Benlahoussine | Quartulli | Morgensen | Sparagana | ||||||||||||||||||||||||||||
(A) | |||||||||||||||||||||||||||||||
(A) | (A) | (A) | (A) | ||||||||||||||||||||||||||||
D | Director | ||||||||
Finance, | |||||||||
AD | Associate Director | European investment | |||||||
Ops, IR & | Legal | ||||||||
SA Senior Associate | team | ||||||||
Strategy | |||||||||
A | Associate | ||||||||
50-strong Infrastructure team in Europe, with c.30 Investment Professionals and dedicated legal, finance,
IR and strategy executives
29
Governance and fees
Board of Directors
Investment Manager
Fees
- Independent Chair, five independent non-executive directors and one 3i Group appointed non-executive director
- Committed to observe requirements of the AIC Code of Corporate Governance
- Responsibilities include:
- overall supervision of 3i Investments plc as the Investment Manager
- monitoring of investments and divestments
- Services provided by 3i Investments plc as the Company's Investment Manager include:
- origination, execution and realisation of investments
- providing valuations of the Company's portfolio on a half-yearly basis
- managing funding requirements and treasury management
- managing the portfolio
- providing support services in respect of the administration of the Company
- Tiered management fee: 1.4% p.a. in respect of the portion of the gross investment value of the Company's portfolio up to £1.25 billion; 1.3% p.a. above £1.25 billion up to £2.25 billion; and 1.2% above £2.25 billion
- One-offtransaction fee: 1.2% of the acquisition price of each new investment
- No fee on cash or other net assets
- Performance fee equal to 20% of the Company's total return in excess of 8%, payable in three equal annual
instalments, with the 2nd and 3rd instalments only payable if the performance of the Company exceeds 8% | |
in those years or is above the 8% hurdle over the three years on an annual basis | 30 |
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Disclaimer
3i Infrastructure plc published this content on 11 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2020 10:04:01 UTC