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‘Stable’ 3i Infrastructure weathers the storm

The UK-listed infrastructure investor has reported its results for the six months ending September 30, saying it is ‘delivering stability in a volatile market.’ Total portfolio return for the half year was £16.3m.

UK-listed 3i Infrastructure said today it is continuing to deliver steady returns in a challenging market environment as it reported its results for the six month period to September 30.

3i Infrastructure’s portfolio delivered a total return of £16.3 million (€18.2 million; $27 million) over the half-year period, equivalent to 1.8 percent on opening shareholders’ equity. The infrastructure investor commented that it has been able to “preserve its net asset value in difficult conditions.” 3i Infrastructure’s EBITDA of its underlying equity investments grew 11.8 percent from the prior corresponding period, generating income from dividends and interest of £15.5 million.

The company’s portfolio value on an investment basis was £573.5 million at the end of September, down £2.9 million from the corresponding point in time last year. On a consolidated IFRS basis, its portfolio value was £847 million, a rise of £1 million from the September 2008 figure.

3i Infrastructure also maintained its robust balance sheet position, reporting a cash balance of £330 million at the end of September. This cash balance together with 3i Infrastructure’s portfolio value of £573.5 million put the company’s total net asset value at just over £906 million.

Cressida Hogg

Cressida Hogg, managing partner for infrastructure at 3i Investments said despite an encouraging deal pipeline in the second half, conditions for infrastructure investment continue to be challenging: “Completion risk remains high, due to uncertainty in the macro outlook and ongoing volatility in asset pricing. Nonetheless, with financial resources to invest, a strong track record and premium market access through the investment adviser [3i Investments], 3i Infrastructure is well positioned to take advantage of market opportunities as they arise.”

In a pre-close trading update published in October, the company said it made £32 million of commitments in the six months ending September 30, including a £23.9 million investment in Anglian Water which increased its stake in the company to 10.3 percent. It also revealed its results had benefitted 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.

Based on the yield generated by its assets, 3i Infrastructure announced an interim distribution of 2.2 pence per share, equivalent to 2 percent of shareholders’ equity. After deducting the interim dividend, the company’s diluted net asset value per share on an investment basis at the end of September was 108.6 pence, down from 109.2 pence the previous year.

3i infrastructure is 33 percent-owned by London-listed private equity investor 3i Group and is part of the FTSE 250 index. At the end of September the company had a portfolio of 15 investments, including seven direct investments and the 3i India Infrastructure Fund.

This morning 3i Infrastructure shares on the London Stock Exchange were trading at around 102 pence. In March they had been trading at less than 80 pence.