The Fund recorded a gain of 0.91% in February (C Accumulation GBP), helping to recover some of the prior month’s loss. A majority of underlying portfolio companies contributed positively, and the broader listed infrastructure sector was buoyed by news of potential M&A activity as it became public knowledge that two companies held within the Fund had been subject to approaches from potential suitors.

BBGI Global Infrastructure, which owns a portfolio of public-private social infrastructure project investments, announced it had reached agreement with British Columbia Investment Management Corp. on the terms of a recommended all cash offer. Under the terms of the offer, BBGI shareholders will receive 147.5p per share (adjusted for dividends subsequently declared), which is comparable to the last published NAV of 147.40p (at 30^th June 2024) and represents a 21.1% premium to the closing price of BBGI on the day immediately preceding the announcement of the proposed transaction.

The Board of Assura, a specialist REIT focusing on the provision of modern primary care facilities, was forced to react to media speculation and acknowledge it had received an unsolicited approach from Kohlberg Kravis Roberts & Co (KKR) and USS Investment Management Ltd, and was reviewing the proposal. Shortly afterwards, KKR announced it had submitted four indicative non-binding proposals to the Assura Board regarding a possible cash offer, with the most recent being at 48p per share. We await further news.

While there is no guarantee that either transaction will complete, this news flow does shine a light on the sector and the potential latent value on offer. If public market will not rate companies appropriately, others will move opportunistically to take control of the assets. Although the proposed takeover prices for BBGI and Assura may appear attractive in comparison with recent trading levels, and have certainly benefitted the Fund’s near-term performance, we do not view either offer as being particularly attractive and believe value will be left on the table for the potential acquirors. 

During the month, existing positions in International Public Partnerships and The Renewable Infrastructure Group were added to at attractive levels, in the manager’s view. The Fund also subscribed to new shares in water utility Pennon as part of the company’s £490m rights issue. The Fund closed the month with a useful cash balance (in excess of 5%) to be deployed in income-generative opportunities. This balance will be bolstered through the imminent maturity of a Heathrow Finance Bond, which represents approximately 1.3% of Fund assets.