3i Infrastructure eschews India for developed markets

Investment company 3i Infrastructure has decided to rebalance its investment strategy in favour of less volatile investments in more developed markets.

After lifting the total return 59% to £89.1m in the year to end-March, the FTSE 250 closed-ended vehicle said it was lowering its return objective to an annual measure of 10% total return per year from a previous longer-term objective of 12%.

Chairman of the board Peter Sedgwick said: "Our investments in the European portfolio continued to perform in line with, or above, our expectations. The performance of the India Fund, however, continued to be affected by challenging conditions."

As such, the board resolved the manager would make no more new investments in the subcontinent to rebalance the portfolio away from India in favour of core infrastructure and public-private partnerships (PPP) in developed markets.

Cressida Hogg, Infrastructure Managing Partner at the investment manager 3i Investments, added that the company was assessing a number of opportunities in the target areas of core and social infrastructure to develop the fund's investment pipeline.

Having increased the dividend per share to 6.49p from 5.94p in 2012, Sedgwick added that after assessing the company's investment strategy, the board had lifted its dividend objective from 5% to 5.5% of opening net asset value (NAV).

Net asset value at the period end stood at 125.2p, up from 121p a year before.

Cash balances stood at £179m at year end, but £31m of which will be used for the payment of the proposed final dividend, £3m for further investment in the Dalmore private finance initiative (PFI) fund, £60m for an investment in the UK Department for Transport's Thameslink improvements and £25m set aside for any residual cash calls by the 3i India Infrastructure Fund.

As such, since the year end the company replaced its previous banking arrangements with a new £200m, three-year revolving credit facility with a syndicate of five major banks, which it intends to use as a bridge to equity, to be refinanced through equity issuance in due course.

Shares in 3i Infrastructure were down 0.05p at 131.15p at 10:53 on Thursday.

OH