Brokers Note: GCP Infrastructure
Infrastructure investment trusts continue to be very popular with investor chasing up premiums, GCP is no exception.
Broker Liberum Capital has issued a note commenting on GCP Infrastructure’s (LON:GCP) announcement of its participation in a loan, issued to finance a biomass plant in Northern Ireland at a yield 9.55%. The £15.5 million commitment, which was financed from existing resources, is being made alongside the Government’s new Edinburgh based Green Investment Bank, and when completed the wood fuelled plant built on a 10 acre site will be the largest of its sort in the Province.
GCP now has 26 investments spread across PFI projects and renewable energy. Liberum added “this investment is in line with the portfolio yield (9.9%) and the average remaining term of 20 years compared to 19 years for today’s investment”.
The specialist Infrastructure sector trades on a premium of around 11% as the theme of investors search for income we so often discuss on WhichInvestmentTrust.com drives up investor demand.
Liberum expects that the approximate £1.4 million of extra income from the loan will support the funds progressive dividend policy which is paid quarterly. It expects the yield to increase to 7.2%. The average for the sector is 5.2%, perhaps indicating that despite GCP’s premium rating, it is arguably cheaper than lower yielding peers.
GCP Infrastructure Investments Investment Trust Metrics
|Share Price||110 pence||Dividend Yield||6.9%||5 year dividend growth p.a. = N/A|
|Total Assets/Market Cap (Million)||£261m / £287m||Gearing||0||Managed by Stephen Ellis, Ronan Kierans, Nick Parker, Rollo Wright|
|AIC Sector/Date Founded||Infrastructure / 22/07/2010||On-going charge & how much of the charge is the managers fee||0.70% / 0.90% (Charged at master fund level)||Managers direct holding: Not known|
|Discount to NAV||+9.9%||12 Month Average Discount to NAV||+9%||Financial year end: 30/09/2013.
|Total Return 1, 3, 5 & 10 years||+11%||+28%||-||-|
|Infrastructure Sector Total Return 1, 3, 5 & 10 years||+15%||+35%||-||-|
|FTSE All share index Benchmark Total Return 1, 3, 5 & 10 years||+24%||+43%||+53%||+142%|