3i Infrastructure hopes portfolio sales will boost share price
3i Infrastructure has sounded an optimistic note about its future after selling part of its portfolio, despite the trust’s share price continuing to plateau.
In a trading update today, the FTSE 250 trust noted that it had finally completed the sale of its stake in French independent green energy operator Valorem, with hopes that this could boost its share price.
In October, the trust said it would be selling its 33 per cent share in Valorem for around €309m (£258m), a 21 per cent gross annual return.
The trust’s largest assets include airport equipment supplier TCR, Esvagt, a provider of purpose-built, high performance maintenance vessels to offshore wind farms and renewable energy group Infinis.
In the performance update, 3i Infrastructure noted that TCR had just been selected as a supplier at JFK Airport’s Terminal One, expanding its presence in the North American Market.
Income at 3i Infrastructure was in line with expectations, up 18 per cent from last year to £58m, with the trust on track to deliver its targeted dividend.
“In a potential ‘higher for even longer’ environment, we believe capital growth will be an important component of total returns, and 3i Infrastructure has a strong track record of execution in this regard,” said Winterflood analysts in a report last month recommending the trust.
“Additionally, the fund’s share price discount has widened substantially over 2024, which, in our view, offers an attractive entry point,” they added.
3i Infrastructure’s share price discount to its underlying assets has slowly widened over the last two years, now reaching more than 15 per cent.
Since 2022, the trust’s share price has flatlined, failing the match the strong growth it showed in its first 15 years after floating.
This has come despite a 42.6 per cent growth in underlying asset value in the same time period.
3i Infrastructure’s share price is down 2.8 per cent in the last year, while underlying asset value has grown more than 10 per cent.
“We continue to see good earnings momentum in the portfolio, driven by our strategic focus on prioritising growth investments in our existing portfolio companies,” said Scott Moseley and Bernardo Sottomayor, managers of 3i Infrastructure.
“Transactions in the private markets demonstrate continued demand for high-quality infrastructure companies, such as those held by 3i Infrastructure, and the potential latent value within our portfolio.”