Hardman & Co Insight: 2026 ‒ Will the IIC/REIF NAV worm turn?
REIF wind-downs, plunging NAV discounts and “ajar” equity markets, but...Undoubtedly, 2025 was a difficult year for Infrastructure Investment Companies (IICs) and Renewable Energy Infrastructure Funds (REIFs). Investors have seen underperformance against the FTSE 100, widening NAV discounts, several delistings, managed wind-downs (MWDs) and regulatory issues in both the UK and in the US. The question for investors is: where do we go from here? On the one hand, yields for some REIFS are well over twice those of 10-year gilts, and, generally, IICs have met their dividend expectations. On the other hand, however, the NAV discounts have widened, especially for REIFs.
What are the prospects for the 8 quoted IICs and the remaining 17 REIFs? Back in 2023, there were 31 quoted sector funds. While the IICs, with the notable exception of Digital 9 Infrastructure, have generally held their own of late, the opposite is the case for the REIFs, virtually all of which are currently trading at heavy discounts to NAV.
The shrunken 25-strong group now commands a much-reduced market capitalisation of ca.£19.1bn, weighted 58% in favour of the IICs. During 2025, after making various adjustments for the delisted funds, the IIC subsector rose by 3.7%, while the REIF subsector was down by a depressing 17.6%. Over the same period, the FTSE 100, driven by mining, defence and bank stocks, increased by almost 22%, while the FTSE 250 was up by a more modest 9%.
3i Infrastructure is an investment company. Co. invests in infrastructure businesses and assets. Co.'s portfolio consisted of Elenia, an electricity distribution; Anglian Water Group, a water utility; Oystercatcher, an oil product storage terminal; Cross London Trains, a passenger train fleet; ESVAGT, an emergency rescue and response vessels and wind farm maintenance support vessel; Infinis, a generator of electricity from landfill gas; TCR, ground support equipment in airport; Wireless Infrastructure Group, communication tower; and Valorem, an onshore wind developer. Co. invests in various sectors, such as utilities, transportation/logistics, natural resources/energy, and communications.
Bluefield Solar Income Fund is a closed-ended investment company. Co. invests in a portfolio of solar energy assets, each located within the U.K., with a focus on utility scale assets and portfolios on greenfield, industrial and/or commercial sites.
GCP Infrastructure Investments is a closed-ended investment company. Co. is focused primarily on investments in U.K. infrastructure debt. Co. invests in a partially inflation-protected portfolio of loans and assets, primarily in the renewable energy, social housing and private finance initiative sectors. Gravis Capital Management Limited is the appointed investment adviser and alternative investment fund manager to Co. The investment adviser has advised on debt structures in a variety of infrastructure sectors, including a variety of renewable energy sectors, healthcare, education, court buildings, specialized offices, registered social landlord accommodation and transport.
Greencoat UK Wind is an investment trust company that engaged in the renewable infrastructure fund, with an objective to provide investors with an annual dividend that increases in line with Retail Price Index inflation. Co. invests in unlevered operating the U.K. wind farms predominantly with a capacity of over 10MW, which sell the power produced and associated green benefits to creditworthy the U.K. offtakers under route-to market power purchase agreements. Co.'s investment portfolio is managed by Greencoat Capital LLP, which acts as its Investment Manager. As of Dec 31 2017, the net asset value of Co.'s total investments was £1.41 billion.
NextEnergy Solar Fund is a closed-ended investment company. Co.'s investment objectives are to provide investors with a dividend that increases in line with Retail Price Index over the long term. Co. invests in solar Photovoltaic plants located in the U.K. Co. is managed by NextEnergy Capital IM Limited. As of Mar 31 2017, Co. had total investments at fair value of £415.9 million.
Renewables Infrastructure Group is a closed-ended investment company, investing in and managing a portfolio of investments in renewable energy infrastructure project companies. Through its subsidiaries, The Renewables Infrastructure Group (UK) Limited, and The Renewables Infrastructure Group (UK) Investments Limited, Co. invests in operational renewable energy generation projects, primarily in onshore wind and solar PV segments, across the U.K. and Northern Europe. InfraRed Capital Partners Limited is Co.'s Investment Manager.
SDCL Energy Efficiency Income Trust PLC. SDCL Energy Efficiency Income Trust PLC is a United Kingdom-based closed-ended investment company. The Company is focused on providing investment solutions for energy sectors for the betterment of environment and infrastructure. Its investment business is primarily focused on clean energy and energy efficiency project finance. The Company also provides its services and solutions for healthcare, manufacturing, transportation and retail sectors.
Sequoia Economic Infrastructure Income Fund is a closed-ended investment company. Co. invests in a diversified portfolio of senior and subordinated economic infrastructure debt investments through its subsidiary Sequoia IDF Asset Holdings S.A. Co.'s investment objective is to provide investors with regular, sustained, long term distributions and capital appreciation from a diversified portfolio of senior and subordinated economic infrastructure debt investments. Co. is managed by International Fund Management Limited.
US Solar Fund plc is a United Kingdom-based closed-ended investment company. The Company's investment objective is to provide investors with dividends, by investing in a diversified portfolio of Solar Power Assets in North America and other Organization for Economic Co-operation and Development (OECD) countries in the Americas. New Energy Solar Manager Pty Limited is the investment manager of the Company.
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