After a mixed 2022 for the 31 quoted Infrastructure Investment Companies (IICs) and the Renewable Energy Infrastructure Funds (REIFs), Hardman and Co reassesses the various challenges facing these stocks, five of whom – HICL, 3i Infrastructure, INPP, Greencoat UK Wind and TRIG - have market capitalisations of over £2.8bn. In particular, UK inflation of ca.10%, high energy prices (despite the recent sharp falls in spot gas prices) and rising interest rates are all impacting these quoted funds.
In 2022, only 10 of the 31 stocks saw their share prices rise. While energy price movements directly impacted those funds operating renewable generation plants, rising interest rates was a more general drag on the 31-strong sector. As such, net asset values (NAVs) were eroded by increased assumed discount rates: the NAV changes during 2022 varied significantly across the 31 funds. But their dividend payments held up, with no sector dividend cuts. Nevertheless, virtually all the dividend increases were nominal, rather than real - only Greencoat UK Wind has an inflation-linked dividend policy.
