Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices.As a 31-strong group, its combined market capitalisation is now £26.2bn (the valuation of the suspended Asian Energy Impact – formerly ThomasLloyd Energy Impact – is assumed as being zero). During 2023, all members of the group have seen their share prices drop. The most pronounced falls have occurred in the shares of the less mature funds, which lack the revenue base to underpin their former ratings. While the FTSE-100 rose by just over 2% during 2023, shares – on an unweighted basis – of the most valuable 10 funds fell by ca.11%.
During both 2022 and 2023, no IIC/REIF IPOs were undertaken; in 2021, there were nine such IPOs. For a combined sector that has raised ca.£10.3bn of new funds since 2020, the 2023 fundraising levels were paltry. To be sure, 3i Infrastructure raised £102m (gross) and Gresham House Energy Storage raised £50m (gross), but there were no other major sector offerings. Instead, consolidation, not expansion, became the new sector mantra.
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.
Bilfinger Berger Global Infrastructure SICAV is a closed-ended, diversified investment company. Co.'s primary investment objective is to invest in a diversified portfolio of operational (or near operational) Public Private Partnership / Private Finance Initiative infrastructure assets or similar assets.
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.
John Laing Environmental Assets Group is a closed ended investment company. Co. is an environmental infrastructure investment fund which aims to provide shareholders with a sustainable dividend, paid quarterly, that increases in line with inflation, and to preserve the capital value of its portfolio on a real basis over the long term through the reinvestment of cash flows not required for the payment of dividends. Co. invests in a portfolio of environmental infrastructure projects that have the benefit of long term, predictable, wholly or partially inflation-linked cash flows supported by long-term contracts or stable regulatory frameworks.
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.
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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