3i Infrastructure's results hit by macroeconomic pressures

published 28 March 2013

Investment company 3i Infrastructure revealed on Thursday that macroeconomic pressures have impacted its India arm in the second half.

Ahead of the fund's annual results, the group released a trading statement outlining its performance for the period between April 1st, 2012 to March 27th, 2013.

"The European portfolio is performing robustly, as demonstrated by the good level of income generated during the period," said Chairman Peter Sedgwick.

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"However, persisting macroeconomic and sector specific headwinds have continued to affect the performance of the 3i India Infrastructure Fund in the second half."

The European portfolio generated income of £72m for the period, down from £73.1m the previous year.

In the second half of the financial year, macroeconomic and market factors, including fuel supply issues, continued to affect investments in the 3i India Infrastructure Fund.

The share price of India energy group Adani Power decreased by 26% in the second half of the financial year which represented a further £4.8m reduction in value compared to the position at September 30th, 2012.

This week the company sold its 50% holding in Alpha Schools at a premium £21.2m to HICL Infrastructure Company.

Alpha Schools, a concession company under a private finance initiative (PFI) contract to build, operate and maintain 11 new schools in Scotland, was part of the initial portfolio seeded into the company at its initial public offering in 2007.

"The sale of Alpha Schools at a premium to its September valuation crystallises the value created in this asset through the construction phase into successful operation," said Managing Partner for Infrastructure, 3i Investments, Cressida Hogg.

"We are progressing our pipeline of investment opportunities, including Thameslink, and expect to reinvest the proceeds from the Alpha Schools sale in the European infrastructure market."

During the period, the company invested a total of £16.8m of which included the Dalmore Capital Fund and a portfolio of road build-operate-transfer (BOT) companies of Supreme Infrastructure India.

The group also made progress on the Thameslink project, which includes the upgrade of infrastructure in London to achieve 24 trains per hour in the city's centre.

At the end of the period, the company had cash balances of £179m, up from £138m reported in the latest interim management statement, reflecting the sale of Alpha Schools, income received and costs paid.

Shares fell 0.08% to 132.20p at 10:17 Thursday.