Insider: Scramble to buy this income play

International Public Partnerships in demand

International Public Partnerships is in fundraising mode. The £1.3 billion public infrastructure investment firm run by Amber Infrastructure has just raised £330 million of extra capital after issuing new shares at 150p each, a premium to net asset value (NAV).

It had initially asked for just £250 million, but the issue was oversubscribed by three times and existing shareholders scooped up 93% of the open offer shares.

That money will help pay off debt – £342 million is currently utilised in cash and letters of credit – and for further investments.

And insiders have enthusiastically participated in the cash call. Amber chief executive Giles Frost, a qualified lawyer, bought 300,000 at the placing price, chairman Rupert Dorey 129,000, and director John Le Poidevin 32,000. Add in some smaller purchases and a separate buy of 10,000 shares by non-exec John Mangelaars at 170p, and the board sank way over £700,000 into the business.

While this bunch of director trades are part of a placing, rather than an independent director deal, they are nonetheless relevant in terms of having skin in the game, which is only ever a good thing where rank and file shareholders are concerned.

Eight years ago they were worth little more than 100p and, since £300 million IPO in its former guise - Babcock & Brown Public Partnerships - in 2006, INPP has also returned significant sums to shareholders.

Back then, the company set an initial annualised target dividend payment of 5.25p per share and said it would target a progressive dividend policy. Based on the issue price of 100p, the long-term target Internal Rate of Return was 8%-plus.

In fact, the shares have delivered a 9.5% annualised total return since the float, and RBC Capital, which initiated coverage in March, predicts shareholders can expect a total return of 12p per share annual average from 2017-2020 - 5p in NAV growth and 7p in dividends. The broker thinks the shares are worth 165p.

Currently, INPP trades at a 10% premium to December NAV – although some think it’s closer to 7% given the transactions and unwind of the discount rate - compared to a 14.5% peer group average premium. “Cheapest in the sector,” says Investec Securities.

Catch-up

And, finally, a word on “little known AIM share" Everyman Mediawhich we featured here three weeks ago.

Since then, we’ve heard that director and ASK Central co-founder Adam Kaye has bought a further 50,000 shares at 130.25p. And today, Blue Coast Private Equity - on whose board sits Everyman non-executive director Michael Rosehill - says it just picked up 350,000 shares, taking its stake to 11.8 million, or 19.7% of the business.

Directors began buying in March at around 124p. They’re now worth 154p. Keep watching.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.