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LONDON (Alliance News) - 3i Infrastructure PLC Tuesday revealed the details of an expected move to change its targets for returns and dividends, while also saying its long-serving chairman will step down at the end of 2015.
The FTSE 250-listed infrastructure company, which invests in utilities, transportation and social infrastructure in Europe and Asia, said it is now targeting a sustainable total return of between 8% and 10% over the medium term, marking a step down from its 10% annual target. That target itself had represented a reduction from a previous aim of 12% in May 2013.
3i Infrastructure's investment adviser is 3i Investments PLC, a subsidiary of FTSE 100 constituent 3i Group PLC.
The company said it will pay a progressive annual dividend per share in future, beginning with a target dividend of 7.25 pence per share for the year ending March 31, 2016. It had previously aimed to pay a dividend of 5.5% of opening net asset value each financial year.
3i Infrastructure said the new total return target is "consistent" with the returns that can be made from core infrastructure and primary projects, as well as the returns "embedded" in its current portfolio, including the completion in April of the sale of its 28% stake in Eversholt Rail Group, one of three train rolling stock leasing companies in the UK.
Separately, 3i Infrastructure said Chairman Peter Sedgwick will step down at the end of calendar 2015, having been in the job since January 2007. It didn't provide any comment on Sedgwick's replacement.
The news came as 3i Infrastructure reported a total return of 24.6% on net asset value in the year ended March 31. Its net asset value was GBP1.32 billion at that stage, an increase from GBP1.11 billion at the same point of the prior year. It increased its full-year dividend to 7.0 pence from 6.70p, equivalent to 5.7% of net asset value at the start of the financial year. It expects to pay a special dividend of 17 pence per share due to the sale of its Eversholt Rail stake and a new revolving credit facility.
"I am pleased to report a strong total return of 24.6% on opening NAV for the year, which is materially above our annual target, and the highest since our IPO in 2007. The board is announcing a revised total return target, providing increased flexibility for future investment, as well as a new dividend policy designed to maintain dividend progression each year for our shareholders," Sedgwick said in a statement.
"There is clear evidence that competition for infrastructure assets has increased. We have therefore revised the company's return target to position the company to continue to deliver an attractive total return, with a progressive annual dividend, to shareholders," Sedgwick added.
Ben Loomes and Phil White, the managing partners and co-heads of infrastructure at 3i Group PLC's 3i Investments PLC, said their investing decisions will take market conditions into account.
"Given market conditions, we continue to take a disciplined approach towards making new investments and are focusing selectively on those investments that are value-enhancing to the Company and its shareholders. The European portfolio continues to perform well and we continue to manage actively our investments to drive further value for shareholders," they said.
3i Infrastructure shares were down 0.1% at 163.42 pence on Tuesday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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