LONDON (Alliance News) - 3i Infrastructure PLC Tuesday said its portfolio has performed well in the final quarter of its financial year, meaning it should be able to meet its dividend target.
3i Infrastructure, a constituent of the FTSE 250, targets a total return of 10% a year and an annual distribution yield of 5.5% of opening net asset value by investing in infrastructure mainly in Europe.
Ben Loomes and Phil White, the managing partners and co-heads of infrastructure at 3i Group PLC's 3i Investments PLC, the company's investment adviser, said they expect 3i Infrastructure's total return to be "very strong" for the year ending March 31.
The company's European portfolio generated GBP79.5 million of income between April 2014 and March 30 2015, compared with GBP80.9 million in the equivalent period of the prior year. 3i also said it is continuing to evaluate its return objectives "with a view to setting a sustainable total return target and a revised dividend policy" that will take into account tough market conditions that have made it harder fort he company to invest in large infrastructure businesses at total returns and yields in line with existing targets.
Peter Sedgwick, 3i Infratructure's chairman, also supported the view that the dividend target will be met.
"The portfolio has continued to perform well in the final quarter of the year, generating good levels of income which will support the delivery of the company's dividend objective this year," Sedgwick said.
The chairman added that there have been high levels of activity in recent times for the company, following the sale of its 28% stake in Eversholt Rail Group, one of three train rolling stock leasing companies in the UK, to CK Investments SARL, a company jointly owned by Hong Kong-based Cheung Kong Infrastructure Holdings Ltd and Cheung Kong (Holdings) Ltd.
Sedgwick also said that the move to acquire a 45% stake in each of Oiltanking Terneuzen and Oiltanking Ghent in February for EUR111 million was a plus for 3i Infrastructure. With the deal expected to complete in May, 3i could finance part of the deal by issuing debt through portfolio company Oystercatcher.
"We have also been active on the investment front, and in the final quarter of the year we secured an investment alongside Oiltanking, a known and trusted partner to us since 2007 and a world leader in independent storage terminals. This new core infrastructure investment was particularly positive for the company against the backdrop of a highly competitive market," Sedgwick said.
3i Infrastructure shares were flat at 160.22 pence shortly after the market open on Tuesday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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3i Infrastructure (3IN)