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GCP Infrastructure Investments asset value benefits as inflation hedge

Mon, 29th Jan 2024 09:47

(Alliance News) - GCP Infrastructure Investments Ltd on Monday said its net asset value edged slightly higher from October to December last year, as a boost from the UK government's autumn statement in November was offset by lower forecast electricity prices.

GCP Infra invests in UK infrastructure debt. It is advised by Gravis Capital Management Ltd.

NAV per share was 109.84 pence on December 31, up from 109.79p on September 30.

NAV per share got a 0.98p uplift from the updated UK inflation forecast by the Office for Budget Responsibility that was announced by Chancellor Jeremy Hunt in his autumn statement.

Consumer price inflaton is set to fall to 2.8% by the end of 2024, before hitting the Bank of England's 2% target in 2025, Hunt said. This indicated higher inflation than previously projected by the OBR in the spring last year, when it guided an inflation rate of 0.9% for 2024.

As a partial hedge against inflation, GCP Infra's portfolio value benefits from higher inflation expectations.

GCP Infra's NAV also got a 0.18p boost from share buybacks. As of December 31, it had bought back 17.0 million shares since the launch of the programme in March last year.

Weighing against this was a lower forecast for electricity prices and a wider discount rate, taking 0.72p and 0.48p off of NAV, respectively.

"Notwithstanding the lower electricity price forecasts, the portfolio continues to perform materially in line with the company's expectations," it said. "The company's mature, diverse and operational portfolio provides defensive access to income against a backdrop of market volatility and uncertainty."

GCP Infra declared a 1.75p dividend for the October to December quarter, unchanged from the July to September quarter.

Shares were up 0.4% to 72.85p in London early Monday. They are down 25% over the past year.

By Tom Waite, Alliance News editor

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