BBGI
Global Infrastructure (BBGI)
04/04/2024
Results analysis from Kepler Trust
Intelligence
BBGI Global Infrastructure
(BBGI) has released its results for 2023. The trust saw a small
1.2% decrease in NAV over the 12 months period. This was the first
decline in NAV since IPO in 2011 and was almost entirely due to
macro factors outside of the managers' control, including an
increase to the discount rate, movements in the currency markets,
and proposed changes to Canadian tax
legislation.
Long-term performance for the
trust remains strong. Annualised returns since IPO in 2011 to the
end of 2023 equalled 8.6% on a NAV total return
basis.
The trust met its higher
dividend target for the year of 7.93p per share, a 6% increase on
2022. Dividends were fully covered at 1.4x. BBGI reaffirmed its
dividend target of 8.40p per share for 2024 - another 6%
year-on-year increase. This is also expected to be fully
covered.
The ability to maintain a
progressive dividend policy looks secure. Projected cash flows from
the existing portfolio would be enough to sustain annual dividend
growth for the next 15 years, even if no further investments were
made.
The trust fully paid down its
revolving credit facility last year, using surplus cash generated
by the underlying portfolio. BBGI made use of the facility in 2022
to make two investments, demonstrating that BBGI can grow
organically without going to the equity
markets.
BBGI Chair Sarah Whitney
said: "The investment environment has fundamentally altered over
the last 24 months, but BBGI's portfolio has all the defensive
qualities required to deliver a solid income stream. Our management
team continues to manage the company's risk profile with their
customary attention to detail and will review opportunities to
extend the life of the portfolio in order to maintain the duration
of our asset base for the benefit of shareholders in the years
ahead."
Kepler View
We think BBGI Global
Infrastructure (BBGI) possesses numerous strengths as a means to
gain exposure to infrastructure assets today.The trust continues to
offer investors a secure source of long-term income and capital
growth potential, with the small dip in NAV last year largely due
to macro factors, rather than investment decisions the managers
have made.
BBGI now has no debt on the
trust level, with management meeting their commitment to fully
repay by the 2023 year end a revolving credit facility that they
made use of in 2022 to fund two investments. That those repayments
were made entirely from surplus cash flows is a sign that the trust
can continue to grow organically, without issuing new
equity.
Dividend growth continues to
be compelling, with the 6% increase made last year being matched in
2024 with an equivalent growth target. That the trust can continue
to pay a progressive dividend for 15 years, assuming no further
investments are made, is testament to the stability of cash flows
in the underlying portfolio.
Ultimately we think BBGI sits
an interesting juncture. The trust trades at a wide discount and
the potential for rate cuts in the near term mean there is
potential for investors to enjoy an uplift to capital, as well as
the ability to lock in an attractive forward
yield.
CLICK HERE TO READ THE FULL REPORT
Visit
Kepler Trust Intelligence for more high quality
independent investment trust research.
Important information
This report has been issued by Kepler
Partners LLP. The analyst
who has prepared this report is aware that Kepler Partners LLP has
a relationship with the company covered in this report and/or a
conflict of interest which may impair the objectivity of the
research.
Past
performance is not a reliable indicator of future results. The
value of investments can fall as well as rise and you may get back
less than you invested when you decide to sell your investments. It
is strongly recommended that if you are a private investor
independent financial advice should be taken before making any
investment or financial decision.
Kepler Partners is not authorised to
make recommendations to retail clients. This report has been issued
by Kepler Partners LLP, is based on factual information only, is
solely for information purposes only and any views contained in it
must not be construed as investment or tax advice or a
recommendation to buy, sell or take any action in relation to any
investment.
The information provided on this
website is not intended for distribution to, or use by, any person
or entity in any jurisdiction or country where such distribution or
use would be contrary to law or regulation or which would subject
Kepler Partners LLP to any registration requirement within such
jurisdiction or country. In particular, this website is exclusively
for non-US Persons. Persons who access this information are
required to inform themselves and to comply with any such
restrictions.
The information contained in this
website is not intended to constitute, and should not be construed
as, investment advice. No representation or warranty, express or
implied, is given by any person as to the accuracy or completeness
of the information and no responsibility or liability is accepted
for the accuracy or sufficiency of any of the information, for any
errors, omissions or misstatements, negligent or otherwise. Any
views and opinions, whilst given in good faith, are subject to
change without notice.
This is not an official confirmation
of terms and is not a recommendation, offer or solicitation to buy
or sell or take any action in relation to any investment mentioned
herein. Any prices or quotations contained herein are indicative
only.
Kepler Partners LLP (including its
partners, employees and representatives) or a connected person may
have positions in or options on the securities detailed in this
report, and may buy, sell or offer to purchase or sell such
securities from time to time, but will at all times be subject to
restrictions imposed by the firm's internal rules. A copy of the
firm's Conflict of Interest policy is available on
request.
PLEASE SEE ALSO OUR TERMS AND CONDITIONS
Kepler Partners LLP is authorised and
regulated by the Financial Conduct Authority (FRN 480590),
registered in England and Wales at 70 Conduit Street, London W1S
2GF with registered number OC334771.