The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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BoracicLint, I too have been keeping an eye on this one and, thanks to your post, am now of the view that perhaps it is best avoided. I perused the 2022 accounts this morning and came away distinctly unsettled. Looking at the balance sheet you'd be hard pressed to find any debt (until you realise that the accounts aren't consolidated). As best I can determine they have drawn £356m of their revolving credit facility (they currently have a £375m RCF) on which they are currently paying interest at 3.5% over SONIA (SONIA is currently 4.18%) plus £163m of vendor loan notes (VLN) on which they are paying 6% (the rate is due to rise to 7% on 1 July 2025, 8% on 1 July 2026 and then 9% on 1 July 2027 to maturity).
The problem as I see it is that they already have a lot of debt and now need to find a further c£200m (after adjustment for the £25m RCF drawdown made post period end) in FY23 to fund their capital expenditure pipeline. Where's that funding going to come from? Given the current LTV there doesn't seem to be any additional scope to materially increase their RCF and the shares are already trading at a discount to NAV, which would makes raising new capital highly dilutive for existing shareholders. In the RNS on 9 March, they referred to "seeking complementary sources of growth capital" without going into any more detail; which just create further uncertainty.
Cancelling the dividend would save c£50m per annum but would still leave a further £150m to find for FY23 (let alone FY24 and subsequent). It strikes me that it was shortsighted not to have tried to raise more in the June placing and/or increased the amount of VLN. There's great business potential here but they are seriously underfunded/overstretched. The business isn't currently generating sufficient cash to even cover the dividend let alone fund the investment required. On the face of it, they've bitten off more than they can chew and may be forced to curtail their proposed investment programme if they can't raise the additional funds they need. Perhaps Thor Johnsen and Andre Karihaloo left under a cloud.
Are you refering to the 2022 accounts?
If so, the accounts are on the DGI9 website: https://www.d9infrastructure.com/investors/
Cheers, noticed Jefferies downgrade.
22 Annual report still not in place on DGI9 website.
Not invested here yet but keeping an eye on it. Jefferies has downgraded to underperform - presumably causing the drop in SP today - and quotes concern about debt and financing of the Arqiva acquisition. Total debt is now 519m or 55% of NAV, quite a bit more than the 40%ish current NAV discount. I wonder if future dividends are secure?
V Large discount here. Large Divi over 9% and still in a down trend. Three tranches bought and waiting for the next..fail to see the reasons for the huge discount.
Thank you for the swift and clear reply. Much appreciated
DGI9 plan to pay 4x1.5p = 6p total for the present year, giving a yield 6% at £1 and around 7% at the present price.
I’ve found some websites don’t show the correct yield until the actual payment has been paid.
Can someone please help. In Ian Cowie's article it mentions a 6.9% yield, on here it says 3.4% and on HL site, it says 5.1% I appreciate that different sites can use different calculations but which is nearer the yield that I would be receiving if bought today ? (I know dividends are not guaranteed, but I'm assuming the p per share won't necessarily change, if that makes sense)
Many thanks in advance.
Ian Cowie says he bought just before Christmas as " I suspect Mr Market is overdoing the drama about managerial departures and am relaxed about paying 87p a share to gain access to a growing sector".
Let's hope he's right.
I was sent the attached from JPM today:
Change of Investment Manager personnel
Digital 9 Infrastructure plc (ticker: DGI9), a leading investor in the infrastructure of the internet, announces the appointment of Ben Beaton, Co-Managing Partner of Triple Point Investment Management LLP ("Triple Point" or the "Investment Manager") to lead the established Digital Infrastructure team at Triple Point and management of DGI9, with immediate effect.
Ben's appointment follows Thor Johnsen and Andre Karihaloo stepping down from their roles as Head of Digital Infrastructure and Investment Director at Triple Point, respectively, in order to pursue other career opportunities.
Ben was instrumental in establishing DGI9 and in the development and operations of Triple Point's digital infrastructure team. James Cranmer, Co-Managing Partner of Triple Point, will continue to support Ben and the wider investment team.
Phil Jordan, Chair of Digital 9 Infrastructure plc, commented:
"To date, we have invested c.£1.2 billion in digital infrastructure, all of which contributes to facilitating increased connectivity globally through some of the most efficient and low-carbon platforms on a global basis. Our investee companies have in place established, industry-leading management teams, with whom we have business plans in place. We remain focussed on platform integration and optimisation - delivering increased connectivity around the world whilst simultaneously reducing carbon emissions. We look forward to continuing to work with the Digital Infrastructure team at Triple Point and with Ben, in particular."
Can anyone link me to Thor Johnsen (Head of Investment) and Andre Karihaloo (Investment Director) news from today that may be the catalyst for the move in D9?
Today's Sunday Times has a very good review of the Verne data centre in Iceland and how it plans to link up with underseas cables etc to help create an international data motorway powered by renewable energy. Well worth a read to help put D19's overall strategy in context.
Citywire have a very useful explanation of the infrastructure funds loss in value - it's all to do with discount rates for the funds and the rise in gilt yields.
You were right, down, off a cliff, as with CORD. I can't find any information other than the obvious £ also off a cliff!? Which doesn't make much sense to me for either DGI9 and CORD? Any info or views?
SP could really move !
Digital 9 Infrastructure PLC - Chair Jack Waters buys 20,000 shares at GBP1.08, worth GBP21,500. Senior Independent Director Keith Mansfield and Non-Executive Director Lisa Harrington each buy 18,604 shares, at the same price, together worth GBP39,999.
Got mine on 30th September in my ii account.
Has anyone received the September dividend payment yet? I note that the declaration stated around 30th September but still not seeing anything in my AJ Bell account
New placing was over subscribed. Raising it from £200m to £275m. New Shares start trading today.
Next placing will be £1.075p
Which represents a very good buying opportunity
New placing of shares at £1.075p to raise 200 million for more acquisitions
Another placing announcement
Like i said previously lets hope ii are still enamoured with this outfit
GLA