GCP Infrastructure Investments H1 Earnings Call Highlights

Key Points

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• GCP Infrastructure Investments reported £829 million NAV and said the portfolio remained in line with expectations, while half-year profit rose to £17 million as negative revaluation pressure eased. The company reaffirmed its 7 pence per share full-year dividend target.

• Management continues to execute a capital allocation plan aimed at narrowing the discount to NAV, including disposals, share buybacks and lower leverage. Since launch, the trust has completed or announced nearly £130 million of disposals and £73 million of buybacks, while net debt fell to £5 million.

• The company is preparing further asset sales in supported social housing, solar and wind, with about £200 million in the disposal pipeline. Management said these moves should feed cash back into the framework and improve portfolio mix, yield and duration.

GCP Infrastructure Investments (LON:GCP) reported a net asset value of £829 million, or 100.26 pence per share, for the six months ended March 31, 2026, as management said the portfolio continued to perform in line with expectations while the company advanced a capital allocation plan focused on disposals, buybacks and reducing exposure to selected sectors.

During a webinar following publication of the company’s half-yearly report, Phil Kent, CEO of Gravis Capital Management, said the investment trust remains focused on U.K.-based infrastructure debt backed by public sector-related cash flows. The company’s total investment value stood at £851 million at period-end, with a market capitalization of about £600 million at the end of March and approximately £630 million at the time of the webinar.

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Kent said income remains “absolutely core” to the company’s objectives, noting that GCP Infrastructure has paid a “stable and sustainable dividend” for 15 years. The company paid dividends of 3.5 pence per share during the half-year and reaffirmed its 7 pence per share dividend target for the full financial year.

Profit rises as revaluation pressure eases

The company reported profit of £17 million for the half-year, which Kent said was “materially increased” compared with the prior period due to lower negative revaluations. Total income was £24.2 million, while operating and financing costs were described as in line with budget. Finance expenses were down by around £1 million versus the comparable period, reflecting lower outstanding debt.

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Robyn MacHugh, Associate Director at Gravis Capital Management, said the portfolio saw £6.5 million of upward revaluation movements and £8.5 million of downward movements, resulting in a net negative movement of £2 million for the six-month period.

The most significant negative driver was the U.K. government’s decision to amend the indexation of Renewables Obligation buyout prices and feed-in tariffs to CPI from April 2026, which reduced NAV by 0.5 pence per share. That was partly offset by a 0.3 pence per share positive impact from higher electricity prices, driven by an elevated short-term futures curve. Other negative factors included updated assessments of curtailment and constraint levels affecting two onshore wind farms in Northern Ireland and lower inflation forecasts from the Office for Budget Responsibility.

Capital allocation plan targets discount to NAV

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Kent said the company’s share price continues to trade at a discount to NAV, which he estimated at about 23% at the time of the webinar. He said GCP Infrastructure had been “one of the first” in its peer group to set out a structured capital allocation framework in response to the discount.

Since launching the program, the company has completed or announced disposals of just under £130 million, on average at NAV, and reduced net debt from about £104 million at the start of the program to £5 million at the end of March. GCP Infrastructure has also completed £73 million of share buybacks, returning £54 million of capital to shareholders, exceeding its prior minimum commitment of £50 million.

Kent said the framework compares a natural runoff scenario with a reinvestment scenario, with the company using the share price discount to NAV as a guide for capital allocation decisions. He said that below a “gray zone” of roughly a 15% discount to NAV, the company will continue returning capital through buybacks. Within the gray zone, management may balance buybacks with new investments if opportunities are attractive and accretive to dividend coverage and portfolio risk characteristics.

“In all cases, and critically, regardless of where the share price is, whilst we’re still at a discount to NAV, we will be recycling assets more quickly than the natural amortization of the portfolio,” Kent said.

Disposals expected in social housing, solar and wind

Management said the company maintains a disposal pipeline of around £200 million. Near-term processes include a supported social housing portfolio of about £47 million, which had exchanged at the end of January and was expected to complete later in the month or early the following month. A solar refinancing of around £40 million was expected to complete within weeks, and the disposal of onshore wind assets, expected to generate around £10 million, was due to complete by the end of the month.

Kent said that if the near-term transactions complete, the company would expect to have realized about £100 million of cash by mid-July to feed into its capital allocation framework.

Management has specifically targeted supported social housing for exit. Kent said the sector has been a good performer for GCP Infrastructure, but acknowledged “a wider public market perception challenge.” MacHugh said supported social housing is among the longest-duration and lowest-coupon parts of the portfolio. Exiting the sector would reduce the weighted average life of the loans from 11 years to eight years and increase the weighted average annualized yield by about 0.3 percentage points.

Portfolio remains diversified and fully operational

As of March 31, MacHugh said the portfolio was valued at just over £850 million across 47 investments. Renewables represented just under 60% of the portfolio, PFI about 28%, and supported social housing about 15%. The construction exposure remained at 0%, and 49% of the portfolio had some form of inflation protection. The weighted average annualized yield was 8%.

MacHugh said the company is forecast to receive £280 million of principal repayments over the next four years through the normal amortization of loans, excluding any disposals or refinancing processes.

Management also discussed valuation assumptions, particularly around power prices and asset lives. MacHugh said there is a notable divergence between forecasts from external consultants AFRY and Aurora, with a peak difference of roughly £20 to £25 per megawatt hour in power price forecasts. Kent said the company uses futures curves for the near term before moving to longer-dated forecasts.

On asset lives, Kent said the company is exploring technical analysis that could support extensions, particularly for wind assets, and is encouraging borrowers to put in place enabling factors such as property rights, planning and grid connection arrangements where relevant.

Dividend coverage and shareholder base

For the half-year, adjusted earnings were £28.4 million compared with £29.2 million of dividends paid, resulting in dividend coverage of 0.97 times. Kent said that, for an income-generating vehicle, dividend coverage “at or around one” is appropriate because the company should be paying out its income to shareholders.

He also said buybacks at a discount to NAV are accretive to dividend coverage because they reduce the share count disproportionately to the reduction in NAV from the use of cash. Kent said that, while the portfolio may become smaller as disposals continue, the impact on dividend coverage could be positive if proceeds are used for buybacks.

In response to a question on shareholder demand, Kent said the company had seen some evolution in its shareholder base, including a new local government pension scheme shareholder and growth in retail holdings through platforms including Hargreaves Lansdown, Interactive Investor and AJ Bell. Cameron Gardner, the webinar operator, said Hargreaves had become one of the fund’s top three shareholders.

Kent concluded that the half-year had been “relatively business as usual” operationally, adding that the company expects further updates on disposals in the coming weeks as near-term transactions progress.

About GCP Infrastructure Investments (LON:GCP)

GCP Infrastructure Investment Limited (GCP Infra) is a Jersey-incorporated, closed ended investment company whose shares are traded on the main market of the London Stock Exchange. Its objective is to provide shareholders with regular, sustained distributions and to preserve capital over the long term by generating exposure primarily to UK infrastructure debt and related and/or similar assets which provide regular and predictable long term cashflows. GCP Infra primarily targets investments in infrastructure projects with long term, public sector-backed, availability-based revenues.

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