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Phoenix showing signs of new life, says Panmure Liberum

There is ‘new life’ emerging at Phoenix Group (PHNX) which is freeing up plenty of cash, says Panmure Liberum.

Analyst Abid Hussain retained his ‘buy’ recommendation and target price of 880p on the Citywire Elite Companies AA-rated insurance group, which was trading down 6.1% on Monday morning at 629p after mixed first half results.

Hussain said the results offered a ‘good set of earnings across the key metrics that matter, including operating capital generation, helped by strong product fundamentals’.

He said there is ‘clear operational leverage emerging, benefiting both the pensions and savings and annuity segments, with margins increasing across both’.

This has led to strong balance sheet capital coverage and debt leverage reducing.

‘Tying this together, we forecast the jaws between free cash and dividends to expand, resulting in a cumulative excess cash position by full-year 2027, even after allowing for further debt reductions,’ said Hussain.

‘This provides management with the option to increase capital distributions, reinvest for growth, or both.’

Posted similar on ADVFN but the reality is as follows.

In 2023 there were 6419 GP premises in the UK. The PHP/Assura combination will be just over 1100 premises, so c.17% of the market. Hardly a dominant position in what is widely accepted as a fragmented market. So over 5000 premises are owned by other parties. Would be amazed if this goes to Phase 2 based on these numbers.

30 year gilt rates have hit 5.69% today so no incentive to buy shares yielding 7.5%, the risk margin just isn’t wide enough to tempt buyers………..

Welcome LTI………

Interesting article here sighting several analyst’s views on BSIF and TRIG after recent updates……..

https://citywire.com/investment-trust-insider/news/stormy-second-quarter-nixes-renewable-recovery/a2472295

Reply from BSIF this morning re recent outages mention in their latest RNS………

The planned DNO outage at West Raynham ended in early August, and the site is now fully operational. This outage formed part of a broader grid reinforcement programme, which is expected to reduce the frequency of future DNO outages. Planned DNO outages are not covered by insurance.

Of the two significant turbine outages, one turbine is expected to return to service by the end of the month and qualifies as an insurable event. The second turbine is currently awaiting parts to complete the necessary repairs, and an insurance claim is actively being pursued

Thought the paragraph on Actual Generation vs Forecast was vague re the outages so I’ve literally just emailed BSIF to ask if the DNO and turbine outages are fixed and if they are covered by insurance. Will post when I know more.

International Public Partnerships Limited has announced the appointment of Jamie Hossain as the new lead portfolio manager, effective from September 1, 2025. Jamie, who has been with the company since its IPO in 2006, succeeds Chris Morgan and brings extensive experience in investment strategy and portfolio management. This leadership transition is expected to ensure continuity in shareholder engagement and strategic direction. The company will present its interim results for the first half of 2025 in early September, maintaining its commitment to transparency and stakeholder communication.

AV/ - Strong interims, bright future

Aviva released a good set of H1 results on Thursday. These cover performance to the end of June, so pre-date the closing of the Direct Line acquisition on 1 July. In the period, operating profit of £1.1bn was +22%; SII OFG of £0.9bn was +20%; the COR improved 80bps y/y to 94.6%; and the Solvency II cover ratio of 206% is +3pc YTD. The Solvency II ROE was 16.7%, up 430bps y/y, while the IFRS ROE of 20.6% is +580bps y/y. An interim dividend of 13.1p has been declared, +10% y/y, with guidance maintained for MSD growth in DPS beyond FY 2025, alongside a post 2025 “cadence of regular and sustainable capital returns…at an increased level to reflect the higher share count following the Direct Line acquisition”. As the CEO says, “trading has been very good right across Aviva”. Some metrics to evidence this include growth of 16% in net flows (to £5.8bn) in its leading UK wealth franchise (£209bn of AUM); general insurance sales were +7% and operating profit +29%; and health in-force premiums were +14%. The closing of the DLG acquisition is transformational for the Group, which now has 21m UK customers (4 in 10 adults), with material cross-selling opportunity. An “In Focus” event in November will provide further details on the integration of DLG and its impact to the Group’s targets. Stepping back, the Group now has >70% of operating profit coming from capital-light businesses, with diversified earnings across geographies and product lines and huge scale. There is a huge value creation opportunity here as it integrates DLG; unlocks efficiencies in revenue (cross-selling) and cost; sharpens its portfolio (surely a sale of the non-core India and China units – and the unlocking of the capital tied up in these units – is going to be on the cards in the not too distant future); and, from 2026 onwards, shrinks the share count. AV/ has had a very good run of late, but at 12.5x forward earnings (per Koyfin) it is not expensive here.

UBS raises Aviva price target to 740 (700) pence - 'buy'

International Public Partnerships (INPP), the £2.3bn infrastructure fund that surprised investors with a £250m investment in Sizewell C nuclear power plant project last month, has sold down part of its 10% stake in Angel Trains.

The investment company has agreed to sell 1.6% of the rolling stock leasing company to London-based Arjun Infrastructure Partners for £32m at an “attractive premium”.

Analysts at its corporate broker Deutsche Numis estimated the transaction was priced at 28.5% above the previous valuation at 31 December. They said this could add 2.5p to net asset value (NAV) per share which stood at 144.7p at the end of last year, but which they believe has grown to 146.59p.

The market liked the validation of Amber’s valuation and shares in the 7%-yielder rose 1.5% to 125.2p.

With the stock trading at a 16% discount to NAV, INPP will use the money to support its ongoing £200m buyback programme and help fund the plan to invest £50m a year up to 2030 in the construction of the nuclear plant in Suffolk.

INPP will own 8.4% of Angel Trains after the sale, which is expected to close in the next few weeks, and will retain a seat on the board through fund manager Amber Infrastructure.

Including today’s part disposal and the £49m made from last month’s sale of loans to the UK’s school buildings programme, INPP has realised over £345m of proceeds since July 2023, equivalent to 13% of the portfolio of energy transmission, social, transport and digital infrastructure assets.

INPP chair Mike Gerrard said: “The company remains focused on optimising its portfolio while supporting both capital returns and attractive reinvestment opportunities.”

International Public Partnerships Ltd on Monday reported the partial disposal of its stake in Angel Trains to a vehicle managed by European infrastructure fund manager, Arjun Infrastructure Partners.

The London-based global infrastructure investor said the disposal relates to a minority part of its investment in Angel Trains, around 1.6%. It said it will retain an approximate 8.4% stake in the company.

Angel Trains is the UK's largest rolling stock leasing company, possessing an asset base of over 4,000 vehicles.

International Public Partnerships expects the transaction to realise around GBP32 million, with it anticipated to close in the coming weeks.

The company noted that the sale price represents "an attractive premium" to the last published valuation at December 31, adding that it will retain access to board representation and active governance through Amber Infrastructure Group, its investment adviser.

The transaction proceeds are earmarked to support the company's ongoing share buyback programme worth up to GBP200 million, as well as to support future investment commitments.

This buyback scheme is anticipated to run until the end of March next year, with International Public Partnerships noting that it has spent around GBP88 million so far to repurchase shares.

"The company remains focused on optimising its portfolio while supporting both capital returns and attractive reinvestment opportunities," said Mike Gerrard, chair of International Public Partnerships.

Hey GS,

They increased the buyback last month by £10 million up to a potential £60 million.

They also advised on the 16th July that they have so far reaquired 50 million shares, delivering a cumulative 2.6p per share increase in the nav.

Hope this helps

Blackfriars

Further to the recent announcement re the preferred bidder status and £250 million investment in Sizewell C, does this make INPP a more attractive or less attractive investment? Interested to hear other shareholder’s thoughts, thanks.

James Carthew, QuotedData’s head of research, said: “This is a big-ticket, high-profile investment for INPP, but it looks like it might be a good one. INPP gained experience of these types of big-ticket projects by backing Tideway (the Thames Super Sewer). COVID-19 caused a nine-month delay and a £233m cost overrun on the Tideway project and this contributed to a fall in INPP’s NAV over 2020. This time around INPP appears to have worked to minimise its exposure to the risk of a construction overrun. In fact, I’m struggling to identify where INPP’s risk is in this deal. Although, maybe, a future government might ask the same question and seek to renegotiate it.”

James Carthew IT specialist at Quoted Data-: Foresight Solar’s shares have been climbing since the turn of the year and are now about 20% off their lows. The buyback is useful but I suspect some shareholders are hoping for something more dramatic. With the potential disruption from zonal pricing no longer a threat, it will be easier for bidders to put a value on the business. I don’t want to see these trusts taken over, but these discounts are still too wide and are bound to attract attention.

Here is the link to the Edison research on INPP released this morning………

https://www.edisongroup.com/research/operational-and-financial-performance-on-track/BM-1863/

The UK Competition & Markets Authority has given the green light for Direct Line Insurance's takeover by Aviva. The motor and home insurer accepted a GBP3.7 billion cash-and-shares takeover offer from its larger peer back in December. Direct Line shareholders will receive 0.2867 of an Aviva share, 129.7p in cash, and up to 5p in dividends payments for each Direct Line share held. Because of the share element, Direct Line shareholders will hold 12.5% of the enlarged group.The UK competition watchdog had opened an inquiry into the acquisition in May, and on Tuesday announces it will not refer the deal to a phase 2 investigation.

Oldbutnotwisa, exactly the type of investment I’m overweight in. Sure to be a denouement at some point in the future and being paid 7.5%/8.0% (paid quarterly from September), you’re being paid to be patient. If the share price never moves then it’s double your money in approx 9 years (depending how recently you purchased). Not sure what else an equity investment can provide. Oh and they’re stilling trading on 15% discount to nav. And finally, there is the outside possibility of a special dividend to my mind given the wording in their year end results re distributions.

Well worth a listen, the big take for me is that 85% of the FGEN assets cover the dividend 1.32x. The other 3 growth assets make up the other 15% and will eventually be sold when they reach scale in 2 or 3 years. This is the icing on the cake for me.

Also, the company has the lowest debt to equity ratio in the renewables IT sector at just over 28% and yielding 10%, not sure what else investors can expect from an equity shareholding…….

https://www.proactiveinvestors.com.au/companies/news/1073769/foresight-environmental-infrastructure-targets-10-dividend-yield-with-diversified-green-assets-1073769.html?rel=scroll