GCP Infrastructure - Update from QuotedData
8th August 2024
Crystallising unrealised value
So far, this programme has allowed the company to significantly reduce leverage and begin returning capital to shareholders. It has also enabled GCP to start the process of restructuring the portfolio to take advantage of an increasingly attractive investment environment, reduce its exposure to merchant power prices (electricity sold into wholesale markets rather than at fixed prices), and exit some of its legacy positions.
GCP Infrastructure Investments Ltd (GCP) had a difficult 2023, as the infrastructure sector dealt with rising interest rates and stubborn inflation. However, 2024 brought an improving economic outlook, the prospect of a reversal in interest rate policy, and - for GCP's shareholders - a highly attractive dividend yield, solid portfolio execution, and the introduction of a capital recycling programme (where the adviser looks to realise existing assets to fund capital returns and new investment).
GCP remains well positioned to capitalise on this opportunity thanks to the ongoing resilience of its cash flows over the last few years. This has provided the foundation for the current capital programme and leaves the adviser in a strong position to rebalance the portfolio. Whilst the company's shares continue to trade at a stubborn discount to net asset value (NAV) of 26%, its fortunes look much more promising.
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NB: Marten & Co was paid to produce this note on GCP Infrastructure Investments Limited, and it is for information purposes only. It is not intended to encourage the reader to deal in the security or securities mentioned in this report. Please read the important information at the back of this note. QuotedData is a trading name of Marten & Co Limited which is authorised and regulated by the Financial Conduct Authority. Marten & Co is not permitted to provide investment advice to individual investors categorised as Retail Clients under the rules of the Financial Conduct Authority.
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