3i Infrastructure cashes in on rush for renewable assets, 7 Oct 2024 09:53

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3i Infrastructure cashes in on rush for renewable assets

07 October 2024, 09:53

3i Infrastructure sells renewable assets at a premium / Image Source: Adobe

Offer comes at a premium to NAV
Return equals 3.5 times investment
Full-year dividend hike confirmed

FTSE 250 private equity investment trust 3i Infrastructure (3IN) announced it had received a binding offer for its 33% stake in European independent renewable energy firm Valorem at a premium to book value.

The shares added 3p or 0.8% to 344p, bringing gains over the last year to around 20% against a 16% return for the AIC Infrastructure sector.

BUYERS PAYING A PREMIUM

The offer, which comes from a group of investors including funds managed by Danish energy and infrastructure group AIP, will generate net proceeds of €309 million which is a 15% uplift to March 2024’s book value and a 31% uplift to the valuation in September 2023, before the sale process began.

The deal is expected to complete in the first quarter of next year, once regulatory clearance has been granted, and represents a 21% gross annual internal rate of return or 3.5 times the amount of the trust’s investment.

Since taking a stake in 2016, 3i Infrastructure has helped transform Valorem into one of the leading independent renewable power producers in Europe, quadrupling its EBITDA (earnings before interest, tax, depreciation and amortisation) while growing its operational base more than five-fold to over 850 MW and building a development pipeline of 6.6 GW.

The trust will use the proceeds to pay down part of its revolving credit facility, as there are no immediate funding needs among its investee companies.

SOLID FIRST HALF AND INCREASED DIVIDEND

At the beginning of October, the Jersey-based trust reported total income and non-income cash of £103 million for the six months to September, flat on the same period a year ago, and said it was on track to meet its full-year targets.

It also confirmed it would raise the full-year dividend to 12.65p per share, a 6.3% increase, with the payout fully covered by earnings.

‘We are pleased to report another good performance, which extends our established track record of consistent execution against our strategy. We have a portfolio of defensive businesses, in attractive growth markets’, commented the managers.