FTSE 250-listed fund GCP Infrastructure Investments (LON:GCP) has sold two operational onshore wind projects at Winscales Moor and Burton Wold. The company completed this disposal at a 13% premium to the latest net asset value (NAV) of these projects.
The sale demonstrated that demand for high-quality renewable infrastructure assets remains high. Shares in GCP Infra rose on the positive news in early dealings.
The FTSE 250 company continues to make good progress with its capital allocation programme. GCP Infra is using the cash from asset sales to reduce debt and fund share buybacks.
Bumper ‘day one’ proceeds
The wind assets sale delivered immediate cash proceeds of £10.3 million. In addition, a further £1.4 million of proceeds are due to GCP Infra.
‘The cash proceeds will be used in line with the company’s published capital allocation policy,’ said GCP Infra. Furthermore, the disposal has reduced its exposure to equity-like interests in the onshore wind sector.
GCP Infra added that a supported social housing disposal continues to progress. This sale will repay circa £47 million of loans to the company. Completion is expected in the coming months.
The fund stressed that its revolving credit facility remains fully undrawn.
GCP Infra aims to provide shareholders with sustained, long-term distributions. Additionally, the fund seeks to preserve capital through exposure to UK infrastructure debt. Or via its exposure to similar assets with predictable long-term cashflows.
The company is selling assets to cut debt, fund share buybacks and improve its risk versus reward profile.
Investors had been expecting the onshore wind disposal update. However, Winterflood analyst Ashley Thomas was ‘reassured by the 13% NAV premium achieved’. This premium reflects GCP Infra’s ‘relatively conservative power price assumptions and asset life assumptions’, according to Thomas.
Progress with asset disposals and buybacks has helped shares in GCP Infra rally 10% year-to-date. Yet the stock remains more than 20% lower on a five-year view. GCP Infra trades at a near-18% discount to NAV and offers a high 8.5% dividend yield.
We think the re-rating process could have further to run as more asset disposals are completed.
Read the press release here: https://www.londonstockexchange.com/news-article/GCP/onshore-wind-sale-for-approximately-ps11-million/17694641
