INPP sees uplift in Brexit, announces fundraise

The London-listed fund eyes a £75m share issue amid what it believes will be a good environment for the attractiveness of infrastructure assets.

International Public Partnerships, a UK-listed infrastructure vehicle advised by Amber Infrastructure Group, is proposing to raise £75 million ($97 million; €88 million) through the issue of ordinary shares on the London Stock Exchange.

The proceeds are earmarked for reducing INPP’s obligations under its revolving credit facility, after the company deployed further money into the Thames Tideway project and closed the acquisition of 10 Building Schools for the Future investments. The latter deal, announced on Friday, saw INPP pay £72.6 million to UK developer Balfour Beatty.

In a statement, INPP notes that its board “has obviously taken note of the results of the UK’s referendum on EU membership,” which saw 52 percent of Britons vote in favour of their country leaving the EU.

The main short-term impact, INPP says, is being channelled through foreign exchange rates, with the pound hitting a new 31-year low this morning against the US dollar.

This is having a positive effect on the valuation of INPP’s non-UK assets, the company asserts, adding that it “continues to hedge its short term revenues from its non-UK assets to reduce the risk of volatility in its projected sterling denominated cashflows”.

INPP concedes that wider effects are harder to assess but believes that persistently low interest rates, as the UK’s central bank does “whatever it takes” to prop the country’s financial system, will depress government bond yields, making infrastructure assets comparatively more attractive.

“The Company continues to review a wide range of interesting new opportunities and notes that Brexit may well increase demand from investors for access to infrastructure assets […] which offer long duration with a predictable yield from creditworthy counterparties,” INPP said.

The company has about £35.2 million of investments commitments crystallising in 2016, with a further £103.5 million coming through before March 2018. Amber Infrastructure is also working on a number of opportunities “at an earlier stage” in which INPP may participate.