Mixed news for 3i Infrastructure

A pre-close trading update reveals that the UK-listed infrastructure investment firm has generated healthy income from its portfolio during April to September this year. But declines in the Indian equity markets and junior debt market hit the value of two of its investments.

3i Infrastructure, the listed UK infrastructure investment vehicle, saw strong income generation during the period 1 April to 29 September 2011 according to a pre-close trading update issued by the firm today ahead of half-yearly results to be announced in early November.

The firm said its portfolio had generated income of £36.7 million (€42.5 million; $57.2 million) during the period, allowing it to meet its target interim dividend distribution. This compares with income generation of £69.3 million during the year to March 2011, which was more than double the income generated in the previous year.       

In addition, the firm delivered realisation proceeds of £91.2 million during the period. The realisations included the £55.5 million sale of a junior debt holding in broadcasting network NGW Arqiva and the “full repayment at par” of a junior debt holding in utility Thames Water. The firm now has a cash balance of £310 million, up from £248 million at the end of June this year.    

However, the firm said a 23 percent fall in the share price of energy giant Adani Power during the period – “reflecting falls in the Indian equity markets and specifically the quoted power sector” – had impacted the value of the company’s share of the $1.2 billion 3i India Infrastructure Fund. In addition, the unhedged fund saw foreign exchange losses in the period as sterling appreciated by 7 percent against the rupee.     

Furthermore, the firm said that declines in junior debt market pricing over the last two months meant that the mark-to-market value of its holding in French telecoms firm Telediffusion de France had declined by £6.6 million since 1 April. 

Following the announcement, broker Oriel Securities said it was adjusting its net asset value (NAV) estimate for 3i Infrastructure down slightly to 116p-118.5p from 117p-120p. 3i Infrastructure said it would report on its six-month results to 30 September – including its NAV at that date – in early November.  

3i Infrastructure listed on the London Stock Exchange in March 2007, raising £703 million in an initial public offering. It then raised an additional £115 million through a placing and open offer in July 2008.

3i Infrastructure is a wholly owned subsidiary of 3i Group, the London-based international investor in private equity, infrastructure and debt management.