Firm Placing, Open Offer & Of
16 December 2009
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO U.S. PERSONS. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE INCLUDING IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA.
International Public Partnerships Limited
Firm Placing, Open Offer and Offer for Subscription
Further to the announcement of 10 December, International Public Partnerships Limited ("INPP" or the "Company") is pleased to announce its intention to raise up to £100 million by way of a Firm Placing, Open Offer and Offer for Subscription. The Company has already received commitments to subscribe for £28 million pursuant to the Firm Placing from a mixture of existing shareholders and new investors. The Open Offer element is for £21 million so all existing shareholders can participate in the fundraising, and in addition there is an excess application facility. The Offer for Subscription is for up to £51 million to enable new investors to participate in the fund raising.
A prospectus relating to the issue will be published tomorrow and will be posted to shareholders and will be made available on the Company's website (http://www.internationalpublicpartnerships.com).
Highlights:
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proceeds will be used to finance the acquisition of further investments and/or discharge third party debt
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proceeds are anticipated to be invested within 6-12 months
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estimated Net Asset Value not less than 112 pence per Existing Ordinary Share;
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Issue price of 113.75 pence per New Share
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All investors on the register as at the next record date (expected to be early April 2010) will be entitled to the 2H2009 distribution. The target distribution for 2H2009 is 2.775 pence per share.
INPP will target a minimum dividend of 5.70 pence per Ordinary Share for 2010 and offers investors the prospect of capital growth over the long term (targeting an IRR of 8 to 9 per cent on the Initial Public Offer issue price of 100 pence per Ordinary Share).
The Company intends to deploy the funds raised in further investments having substantially the same characteristics as its existing investments as well as paying down its existing debt facility (currently drawn GBP58m). The Company expects that any surplus capital raising proceeds would be invested within 6-12 months.
Expected timetable
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Record Date for entitlements under the Open Offer |
14 December 2009 |
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Ex-entitlement date for the Open Offer |
17 December 2009 |
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Latest time and date for receipt of forms of proxy
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12:00 noon on 13 January 2010
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Extraordinary General Meeting |
12:00 noon on 15 January 2010
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Latest time and date for payment in full under the Firm Placing and settlement of relevant CREST instructions (as appropriate)
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11:00am on 18 January 2010
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Announce the result of the Firm Placing through a Regulatory Information Service Notification |
18 January 2010
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Admission and commencement of dealings in the New Shares issued under the Firm Placing
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21 January 2010
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Latest time and date for receipt of completed Subscription Forms under the Offer for Subscription and payment in full under the Offer for Subscription and settlement of relevant CREST instructions (as appropriate)
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11:00am on 22 January 2010
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Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer and Offer for Subscription and settlement of relevant CREST instructions (as appropriate)
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11:00am on 22 January 2010
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Announce the result of the Open Offer and Offer for Subscription through a Regulatory Information Service Notification
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26 January 2010
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Admission and commencement of dealings in the New Shares issued under the Open Offer and Offer for Subscription
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28 January 2010
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THE COMPANY
The Company is a limited liability, Guernsey incorporated authorised closed-ended investment company. The Company offers Shareholders an exposure to investment in infrastructure assets, particularly those with a public or social character such as those developed by public bodies under private finance initiative ("PFI") or public private partnership ("PPP") procurement.
The Existing Ordinary Shares are admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. The Company raised £300 million in its initial public offer (the "IPO") which closed on 9 November 2006. It subsequently raised a further £84 million through the issue of C Shares on 17 April 2008 (which converted into Existing Ordinary Shares on 30 June 2008). The Company had a market capitalisation of £430.9 million (as at 11 December 2009), and a NAV of £419 million (as at 30 June 2009).
Amber Fund Management Limited (the "Investment Adviser", "Operator" or "AFML"), an investment manager authorised and regulated in the UK by the FSA, acts as investment adviser to the Company and operator of the Partnership.
BACKGROUND TO AND REASONS FOR THE ISSUE
The Company acquired its interests in the Existing Portfolio through a series of transactions since the IPO. Since July 2008, the bulk of investments made by the Group have been made utilising its committed £100 million corporate debt facility which is currently drawn to approximately £58 million.
The Company expects to deploy the Issue proceeds into Further Investments and, to the extent not used for Further Investments, in repayment of the Company's existing debt facilities. The Directors believe that the Issue proceeds are likely to be deployed within six to 12 months. The sources of Further Investments, include:
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A portfolio of eleven Pipeline Investments being developed or bid on by the Investment Adviser or the Group with an aggregate capital value estimated at between approximately £268 million and £338 million*. The Company has a right of first refusal to acquire projects fitting its investment criteria disposed of by Amber.
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Opportunities in mature or semi-mature stage PPP projects developed by third parties who have approached the Company or the Investment Adviser seeking new long term investors.
The Directors believe that the Issue will have the following benefits:
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The Company will be able to seek to acquire Further Investments (including the Pipeline Investments) that it believes will be accretive to the value of the Company and will further diversify the Company's asset base;
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The Company will be able to repay existing borrowings, which will be available for re-drawing;
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Existing Shareholders and New Shareholders will have the opportunity to subscribe for further Shares in the Company;
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The Company's market capitalisation will increase, and secondary market liquidity in the Ordinary Shares is expected to be enhanced; and
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The Company's fixed running costs will be spread across a wider Shareholder base.
PRINCIPAL TERMS OF THE ISSUE
The Company is targeting a capital raising of £100 million (with the ability to increase this by up to 20 per cent.) by way of an Issue of New Shares at an Issue Price of 113.75 pence per New Share, representing a discount of 1.1 per cent. to the Closing Price of 115 pence per Existing Ordinary Share as at the close of business on 11 December 2009 and a premium of 1.6 per cent. to the Estimated NAV per Existing Ordinary Share of 112 pence (as at 30 November 2009).**
The Company examined a number of options for raising equity and concluded that the combination of a Firm Placing, the Open Offer and the Offer for Subscription allows Existing Shareholders to participate in the Issue by subscribing for their Open Offer Entitlements on a pre-emptive basis as well as applying for further New Shares under the Open Offer, while providing the Company with the flexibility to raise the desired quantum of equity capital from new investors via the Firm Placing and Offer for Subscription. The Issue comprises a Firm Placing of 24,604,914 New Shares, an Open Offer of 18,735,733 New Shares and an Offer for Subscription of up to 44,571,441 New Shares, in each case at the Issue price of 113.75 pence per New Share.
Application has been made for the New Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. The New Shares will rank pari passu in all respects with the Existing Ordinary Shares.
EXTRAORDINARY GENERAL MEETING
As the Firm Placing and Offer for Subscription are not on a pre-emptive basis, the Issue is conditional, amongst other things, on the passing of a resolution to disapply pre-emption provisions in the Company's Articles at the Extraordinary General Meeting convened for 15 January 2010. At the Extraordinary General Meeting, resolutions will also be proposed to amend the Articles to enable Shareholders to elect to receive dividends in the form of new Shares rather than cash and to authorise the Directors to allot any such Shares but the Issue is not conditional on the passing of such resolutions. Further details of all Resolutions are contained in the EGM Circular circulated to Existing Shareholders at the same time as this document.
INVESTMENT OPPORTUNITY
An investment in the Company will provide Shareholders with exposure to the PPP/PFI infrastructure asset class and other infrastructure assets falling within the Company's investment criteria, which the Directors believe is attractive because of: attractive yields relative to the asset risk profile;
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likelihood of long-term stable cashflows and growth potential in the asset class;
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high barriers to entry;
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predictable, low volatility returns;
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limited exposure to changes in the business cycle;
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creditworthy counterparties;
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the experience and track record of the Amber Infrastructure Team; and
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the development and origination capacity of Amber and its investment pipeline.
The Directors believe the Company's trading history suggests that market performance of the Company's Shares tends to be relatively uncorrelated with the listed UK equity market generally. An investment in the Company made at the time of the IPO in November 2006 over the period to 11 December 2009 has outperformed the FTSE All Share Index by 31.0 per cent. A Shareholder who acquired Existing Ordinary Shares in the IPO had, at 11 December 2009, seen a total return before tax of 26.4 per cent.***
INVESTMENT OBJECTIVES AND DIVIDENDS POLICY
The Company will seek to provide Shareholders with long-term distributions at levels that are sustainable and which preserve the capital value of the Group's Investment Portfolio over the long-term. The Directors believe that long-term capital growth can also be achieved. The Company will target a minimum dividend on its Ordinary Shares of 5.55 pence per Ordinary Share per annum4 and will aim to maintain and enhance this distribution. The Company's target distribution for 2010 is 5.7 pence per Ordinary Share.****
Distributions on Ordinary Shares are expected to be paid twice a year, normally in respect of the six months to 30 June and 31 December by way of dividend.
Where Admission occurs before any dividend is declared in respect of the period to 31 December 2009 the New Shares will be entitled to any distribution that is declared in respect of the six months to 31 December 2009.
The Company will target an IRR equal to or greater than 8 per cent.**** on the IPO issue price of 100 pence per Ordinary Share over the long-term. The Directors believe there are currently opportunities to acquire Further Investments that may enhance the Company's IRR.
SUMMARY INVESTMENT POLICY
The Company's investment policy is to invest in public or social infrastructure assets in the UK, Europe, Australia, North America and, in due course, in other parts of the world.
The Group intends to continue acquiring both operational and construction phase assets from Amber and/or third parties. The Group intends to hold its investments for the long-term to provide income and capital growth and aims to enhance the capital value of its investments and the income derived from its investments through ongoing management of the Investment Portfolio.
The Group intends to acquire Further Investments within any of the following parameters:
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investments with characteristics similar to the Company's existing assets;
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investments in assets or concessions having a public infrastructure character and in respect of which availability, property rental, or predictable user demand based payments are or will become payable; and
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investments in infrastructure assets or concessions which have high barriers to entry and expect to generate an attractive total rate of return over the life of the investments.
While there are no restrictions in this respect, the Group will, over the long-term, seek a spread of investments geographically and across industry sectors to achieve a broad risk balance in the Investment Portfolio.
THE EXISTING PORTFOLIO
The Existing Portfolio consists of interests in Investment Capital in 14 projects developed under the UK Government PFI scheme; 21 projects developed under the UK National Health Service LIFT programme, 14 PPP or other-type projects located in Australia, Belgium, Canada, France, Germany, Ireland and Italy and an investment in Angel Trains. The Existing Portfolio consists predominantly of interests in Project Entities which have:
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direct or indirect entitlement to public sector or government backed revenues;
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finished construction or are in construction of public or social infrastructure facilities for provision of services relating to health facilities, schools, government offices, courthouses, police and custodial facilities, rail infrastructure and rolling stock, transport concessions, showgrounds and a road tunnel or which are operating transport concessions; and
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contractual structures that generally provide for the majority of construction and operational project risks to be "passed down" by the Project Entity to subcontractors subject to pre-defined liability caps.
Footnotes:
* "Capital value" reflects the Director's current unaudited estimate, based on the advice of the Investment Adviser, of the total development cost in terms of capital expenditure of a project as included in the bid submission for a project. It includes both debt and equity contributions and it is not the acquisition price for, or the value of, any interest that may be acquired by the Group in the Pipeline Investment(s).
** The Estimated Net Asset Value is an estimate of the Directors, based on the advice of the Investment Adviser, and based on unaudited financial information of the Group, but using the same methodology as is used for the half-yearly Net Asset Values. This Estimated Net Asset Value and the information that has been used to prepare it has not been audited or reviewed by any person outside the Amber Group other than the Directors. There can be no assurance that the Net Asset Value as at 31 December 2009 will reflect the Estimated Net Asset Value which is prepared as at 30 November 2009.
*** Total shareholder return is capital appreciation of the Ordinary Shares plus dividends.
**** These are targets only and not profit forecasts. There can be no assurance that these targets will be met or that the Company will make any distributions whatsoever.
For further information:
Bianca Francis
Amber Fund Management Limited
+44 (0)20 7939 0558
bianca.francis@amberinfrastructure.com
Nick Westlake
Numis Securities Limited
+44 (0)20 7260 1345
n.westlake@numiscorp.com
This information is provided by RNS
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