Net Asset Value(s)

RM Infrastructure Income PLC

17 July 2023

 

RM Infrastructure Income Plc

("RMII" or the "Company")

LEI: 213800RBRIYICC2QC958

Net Asset Value

NAV Performance The Company's NAV % Total Return for the month of June was 0.75%, which brings the NAV % Total Return for the quarter to 1.31%. The NAV % Total Return over the last twelve months was 4.95% and inception to date 40.87%. The Ordinary Share NAV as at 30th June 2023 was 91.68 pence per share. This monthly NAV return of -0.927 pence per share arose primarily from the ex-dividend effect of the 1.625 pence per share ordinary dividend for the period Q1 2023, declared and paid in June 2023. Otherwise, there was positive interest income, net of expenses, of 0.687 pence per share and an increase in portfolio valuations of 0.01 pence per share. Summary for June 2023 (pence per share) Net interest income +0.687p Change in portfolio valuations +0.011p Payment of Dividend (Q1 2023) -1.625p Net NAV Movement -0.927p Market Update Overall, a challenging period for fixed income products which continue to be dominated by the persistent UK inflation backdrop. This has been highlighted by the continued increase in UK government yields, especially at the front end of the UK yield curve which has led to further UK gilt yield curve inversion. Indeed, the 2-year government bond yield has risen 350bps since June 2022 of which circa 180bps has occurred during 2023. Credit spreads, as measured by the Markit ITRX European Crossover Index, saw a limited reduction in the risk premium opening at 425bps in April and closing at 400bps at the end of the quarter. Given the shape of the UK yield curve, which has seen its inversion widening during the quarter, RM is of the view that we have probably seen the tightest point for credit spreads in the near to medium-term as credit conditions are set to deteriorate with financing becoming more expensive. In light of the above and although it is disappointing to report a lower than target NAV % Total Return for the quarter, we believe RMII has maintained its medium to long-term outperformance versus other observable benchmark loan and bond indices in Q2 2023 as outlined in the below table: Total Return (%) 1yr 3yr 5yr RM Infrastructure Income NAV 4.95 23.67 32.60 RM Infrastructure Income Share Price -19.41 9.79 -3.82 S&P European Leveraged Loan Index 5.37 1.27 -4.15 Ishares Core Corp Bond UCITS ETF GBP -6.06 -19.36 -7.27 Portfolio Update The Investment Manager remains confident with regards to the low interest rate sensitivity of the portfolio. This is largely driven by the short average duration nature of the portfolio, which is currently 1.91 years. This in turn means that loans can be repaid relatively quickly and reinvested within the higher yielding environment. This can be evidenced by the weighted average yield of the portfolio, which has increased to 10.02% at the end of the reporting period, a widening in yield of 37bps versus Q1-2023 or 129bps versus same period last year. In conjunction with this, the Investment Manager has been seeking to increase security with a move up the capital structure by recycling this capital into senior secured loans and reducing mezzanine or junior lending exposure. We outline below the key investment activities for Q2 2023: New investments ·      Hotel & Leisure, Ref 99: c.£2,880k Material Repayments: ·      Asset Finance, Ref 60: c.£1,500k ·      Hotel & Leisure, Ref 69: c.£950k Post period end, in line with the stated objective of exiting the Company's exposure to its non-core asset-backed lending - Ref 60, the Company received a further repayment of £1.5m, bringing the outstanding balance down to c.£5m. Shareholder consultation update On 23 May 2023, the Company announced that as part of its review of the Company's strategy, it would undertake a shareholder consultation. Since that announcement, the Board, the Investment Manager, and the Company's joint brokers have consulted widely with RMII's major shareholders. In general, consulted shareholders were overwhelmingly supportive of the Company's management and performance, as well as its investment focus and strategy. Shareholders did however highlight the Company's small scale which has created challenges in generating improved liquidity in the Company's shares and restricted the Company's ability to grow. To that end, it was determined that reducing the size of the Company through a partial exit opportunity would only exacerbate these challenges. The Board remains conscious of the size of the Company, the discount to which the shares trade and the need to maximise shareholder value and the Board expects to put forward proposals regarding the future of the Company as soon as possible.

The Company also announces that the Monthly Report for the period to 31 June 2023 is now available to be viewed on the Company website:

https://rm-funds.co.uk/rm-infrastructure-income/rm-funds-investor-monthly-fact-sheets-2/

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For further information, please contact:

RM Capital Markets Limited - Investment Manager

James Robson

Thomas Le Grix De La Salle

Tel: [phone]

FundRock Management Company (Guernsey) Limited - AIFM

Chris Hickling

Dave Taylor

Tel: [phone]

Apex Listed Companies Services (UK) Ltd - Administrator and Company Secretary

Brian Smith

Ciara McKillop

Tel: [phone]

Singer Capital Markers Advisory LLP - Financial Adviser and Broker

James Maxwell

Asha Chotai

Tel: [phone]

Peel Hunt LLP - Financial Adviser and Broker

Luke Simpson

Liz Yong

Tel: [phone]

About RM Infrastructure Income

RM Infrastructure Income Plc ("RMII" or the "Company") is a closed-ended investment trust established to invest in a portfolio of secured debt instruments.

The Company aims to generate attractive and regular dividends through loans sourced or originated by the Investment Manager with a degree of inflation protection through index-linked returns where appropriate. Loans in which the Company invests are predominantly secured against assets such as real estate or plant and machinery and/or income streams such as account receivables.

For more information, please see

https://rm-funds.co.uk/rm-infrastructure-income/

 

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