3i Infrastructure benefits from junior debt appreciation

In its pre-close update for the six months ending September 30, the infrastructure investment company saw its junior debt portfolio jump in value by 20% while its overall investments ‘continue to perform satisfactorily’.

UK-listed 3i Infrastructure has said its portfolio continues to perform well and its junior debt portfolio has jumped in value over the past half year.

Cressida Hogg

In its pre-close update for the six-month period ending September 30, the infrastructure investor made £32 million (€35.2 million; $51.1 million) of investments, including a further £5 million investment in a junior facility issued by Irish energy firm Viridian. Earlier in the period 3i Infrastructure made an additional investment in 3i Osprey LP, the special purpose vehicle through which 3i Infrastructure and 3i Group hold their interests in Anglian Water. This £23.9 million investment resulted in 3i Infrastructure increasing its stake in Anglian Water by 1.3 percent to 10.3 percent, which the company previously described as a “successful investment” and “providing a very strong yield”.

The remaining £3.5 million of investments comprised further drawdowns to 3i Infrastructure’s existing holdings in Alpha Schools in Scotland and India’s Adani Power.

The company said in the update its portfolio “continues to perform satisfactorily” and deliver a “satisfactory yield”.

3i Infrastructure’s final results for the six-month period, due to be reported in November, are set to benefit from an increase in the valuation of its junior debt portfolio, which the company said has increased in value by 20 percent on a mark-to-market basis since the end of March. In its full year results to March 31, the value of the junior debt portfolio was £91.9 million.

As of September 30, the company had cash balances of £330 million and no debt. The £225 million revolving credit facility which it put in place in March last year has not been drawn upon.

3i Infrastructure’s managing partner Cressida Hogg said while the investment environment is getting better, it nevertheless remains tough: “While there is evidence of an improvement in the market outlook, the pace of the recovery differs across geographies and conditions for new investment remain challenging. We are encouraged by the pipeline of investment opportunities for the second half, although market volatility means final-stage completion risk on individual deals remains high.”

The firm’s valuation of its portfolio as at September 30 will be published with its half-year results in November. In its full-year results for the year ending March 31 the portfolio was valued at £536.7 million on an investment basis and £862.4 million on a consolidated IFRS basis.

3i infrastructure is 33 percent owned by London-listed private equity investor 3i Group and is part of the FTSE 250 index.