Publication of Prospectus and Circular

RNS Number : 3504C

International Public Partnership Ld

12 April 2017

 

THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE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 IN ANY JURISDICTION INCLUDING IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR TO U.S. PERSONS.

This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the Prospectus (as defined herein). Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

The contents of this announcement, which has been issued by and is the sole responsibility of the Company, have been approved by Numis (as defined herein) solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000.

12 April 2017

Placing, Open Offer and Offer for Subscription and publication of Prospectus and Circular

Further to the announcement made on 23 March, International Public Partnerships Limited ("INPP" or the "Company") is pleased to announce its intention to raise up to £250 million by way of a Placing, Open Offer and Offer for Subscription (together, the "Initial Issue") at an issue price of 150 pence per share. The Company today published a prospectus relating to the Offering (the "Prospectus") and will post this, together with a circular and notice of Extraordinary General Meeting (the "Circular"), to shareholders tomorrow, as well as making an electronic copy of them available on the Company's website (http://www.internationalpublicpartnerships.com) and on the National Storage Mechanism web-site at. http://www.morningstar.co.uk/uk/NSM

Unless otherwise defined, capitalised words and phrases in this Announcement shall have the meaning given to them in the Prospectus.

Rupert Dorey, Chairman of INPP, said: "The raising of additional capital will support the development of our outstanding portfolio of regulated and public infrastructure assets. We continue to focus on delivering predictable, long-term and inflation-linked returns to our shareholders and believe that we are well placed to continue to grow our dividends over time as well as grow the capital value of the Company"

THE ISSUE

-- The Company intends to target £250 million of additional capital through the Initial Issue (subject to demand the size of the issue may be increased to a maximum of £330 million). The Company will also have the ability to issue up to 300 million New Shares through the Issuance Programme.

-- An Initial Issue Price of 150 pence per New Share, representing a discount of 5.48 per cent. to the Closing Price of 158.70 pence per Existing Ordinary Share as at the close of business on 10 April 2017, which is a discount of 3.46 per cent. to the estimated Ex-dividend Share Price.  The Companies shares will go ex-dividend on 20 April 2017.  The Initial Issue Price represents a premium of 6.76 per cent. to the estimated NAV per Existing Ordinary Share of 140.5 pence (as at 31 March 2017).

-- The Proceeds of the issue will be used in repayment of the Company's cash drawn portion of its existing debt facility (of which approximately £342 million is currently utilised, with £255.5 million cash drawn and £86.5 million committed in respect of letters of credit) and then, to the extent not required for repayment, to acquire Further Investments which may include Investment commitments already made by the Company as at the date of this announcement of approximately £77 million; 

 -- Under the Open Offer, existing Shareholders are entitled to subscribe for New Shares pro rata to their holdings of Ordinary Shares on the basis of 1 New Share for every 8 Ordinary Shares held as at close of business on 10 April 2017 (the "Record Date")

-- The Estimated Net Asset Value per Existing Ordinary Share (as at 31 March 2017) is an estimate of the Directors 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 other than the Directors.  

For further information, please contact

Erica Sibree                                                                                          [phone]

Amber Fund Management Limited                                

Hugh Jonathan (Corporate Broking & Advisory)                                         [phone]

Chris Gook (Sales)                                                                                 [phone]

Numis Securities, Sponsor, Broker, Financial Adviser and Bookrunner

Ed Berry                                                                                               [phone]

Mitch Barltrop                                                                                        [phone]

FTI Consulting, Financial PR 

Expected timetable

Each of the times and dates set out below and mentioned elsewhere in this announcement may be adjusted by the Company, in which event details of the new times and dates will be notified to a Regulatory Information Service. References to a time of day are to London time.

Event	Date
The Initial Issue
Latest time and date for receipt of forms of proxy	10.00 a.m. on 3 May 2017
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)	11.00 a.m. on 4 May 2017
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)	11.00 a.m. on 4 May 2017
Extraordinary General Meeting	10.00 a.m. on 5 May 2017
Latest time and date for receipt of Placing commitments	12 noon on 8 May 2017
Results of the Initial Issue announced	Before 8.00 a.m. on 9 May 2017
Admission and commencement of dealings in the New Shares	11 May 2017
Despatch of definitive share certificates for the New Shares issued in certificated form	As soon as possible after 18 May 2017

THE COMPANY

The Company is a Guernsey incorporated authorised closed-ended investment company which currently invests directly or indirectly in public or social infrastructure assets and concessions located in the UK, Australia, Belgium, Germany, Ireland, Italy and North America and it may also consider investment in other European or core OECD countries. The Company is advised by Amber Fund Management Limited and provides investors with access to Amber's network of infrastructure executives to manage the Company's existing investment portfolio and to source future infrastructure assets to provide income and capital growth.

The Existing Ordinary Shares are admitted to the premium segment of 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 which closed on 9 November 2006 and 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), and a further £594.3 million through the issue of Ordinary Shares on 28 January 2010, 25 June 2012, 18 November 2015 and 14 July 2016. The Company has also raised a total of £311.2 million through tap issues, including £75 million on 16 December 2016. The Company had a market capitalisation of £1,790 million (as at 10 April 2017) and a NAV of £1.6 billion (as at 31 December 2016). The NAV per Existing Ordinary Share (as at 31 December 2016) was 142.2 pence.

The Company also retains a committed £400 million loan facility from the Royal Bank of Scotland plc, National Australia Bank Limited, Barclays Bank plc and Sumitomo Mitsui Banking Corporation (the "Facility") and had utilised approximately £342 million of this Facility as at 10 April 2017, of which £255.5 million has been drawn down as loans and £86.5 million committed in respect of letters of credit provided by the lenders. On 31 March 2017, a consortium including the Company reached financial close on the GDN Assets, entailing a capital investment by the Group of approximately £274 million, the majority of which was funded through the Facility.

The Directors believe that the Company has the opportunity to invest in further infrastructure investments meeting the Company's investment policies.

BACKGROUND TO AND REASONS FOR THE ISSUE AND THE PLACING PROGRAMME

The Company intends to raise up to £250 million through the Initial Issue (although it can increase the size of the Initial Issue to up to £330 million). The Company will also have the ability to issue up to 300 million New Shares through the Issuance Programme. The Initial Issue comprises a Placing, an Open Offer to Qualifying Shareholders on a pre-emptive basis and an Offer for Subscription, in aggregate equalling up to 166,666,667 New Shares (based on the target size of £250 million) at an Initial Issue price of 150 pence per New Share.

Regardless of the eventual size of the Initial Issue, the Net Issue Proceeds will be used first to discharge the Group's indebtedness under the Loan Facilities Agreement (excluding letters of credit) of approximately £255.5 million and then, to the extent they are not required for repayment or to be deposited under the terms of the Loan Facilities Agreement, to finance the acquisition of Further Investments or to discharge third party debt incurred to acquire Further Investments and to meet other operational expenses of the Group's business, as a result of which the Directors anticipate that the Net Issue Proceeds are likely to be fully deployed by the end of 2017. The Net Issuance Programme Proceeds are expected to be used for the same purposes, but in the longer term.

The Directors estimate that the Company's total investment commitments until the end of the first quarter of the 2018 financial year on Further Investments are expected to be around £77 million, with £100-150 million of additional investment required up to the end of the 2019 financial year should a further investment in the GDN Assets is made. The Directors have therefore decided to raise capital by way of a combination of the Initial Issue (to fund the initial expenditure) and the Issuance Programme (for longer-term obligations) in order to ensure that the Group does not hold uninvested cash for an excessively long period.

The Company has exclusive access to a number of the Pipeline Investments where either the Group or Amber (with the right of first refusal for the Company on disposal by Amber) is bidding to acquire the corresponding Investment Capital. However, there is no guarantee that the Group will be appointed Preferred Bidder, reach financial close or that they will be acquired, or in each case if they are completed on what terms.

Amber is also engaged in developing a number of other projects which if successfully developed are anticipated to be likely to fit within the Company's investment criteria and which the Company would have the right (but no obligation) to acquire on disposal by Amber. The Group also has opportunities in mature or semi-mature stage PPP projects where it has the benefit of pre-emption rights arising from the Existing Portfolio.

All such opportunities are, in the view of the Directors, likely to bring additional value to the Company and the proceeds arising from the Initial Issue and the Issuance Programme will allow the Company to pursue such opportunities more effectively. Whilst there is no guarantee that any Further Investments (including the Pipeline Investments) will be acquired and if they are on what terms, or whether the other projects that the Investment Adviser is engaged in will be acquired by the Group, the Directors believe that the Pipeline Investments and other such projects are indicative of the attractive and suitable investment opportunities that currently exist and are expected to arise and have concluded that it is now an appropriate time to seek to raise additional capital for the Company.

The Directors believe that as a result of the strong performance of the Company to date there is demand from existing investors for further investment in the Company and from new investors for investment in the Company that cannot be satisfied in the secondary market.

The Directors believe that the proposed Initial Issue and Issuance Programme have the following principal benefits:

·         the discharge of the Group's existing indebtedness under its corporate debt facility (as at 10 April 2017, of approximately £255.5 million excluding that part of the facility used for letters of credit) will reduce the amount of interest payments made by the Company and the facility will be available for re-drawing;

·          the Net Issue Proceeds and the Net Issuance Programme Proceeds will provide the Group with capital with which to (subject to further due diligence and agreement as to the terms of any acquisition) acquire some or all of the Further Investments and to pursue other investment opportunities which the Directors believe are likely to increase as methods of procurement of public infrastructure such as public private partnerships continue to be adopted and developed in various countries;

·         the Net Issue Proceeds and Net Issuance Programme Proceeds will provide the Group with capital with which to, through the acquisition of Further Investments, further diversify the asset base in the Existing Portfolio, both geographically and across industry sectors;

·         Existing Shareholders will be able to subscribe for further Ordinary Shares in the Company and those investors who would not otherwise have been able to invest in the Company will have the opportunity to make an investment;

·          the market capitalisation of the Company will increase following the Initial Issue and the Issuance Programme and it is expected that the secondary market liquidity of the Ordinary Shares will be enhanced through a larger and more diversified Shareholder base; and

·          the Initial Issue and Issuance Programme will provide a larger asset base for the Company over which its fixed operating costs may be spread, thereby providing a reduction to the Company's Ongoing Charges Ratio.

NET ASSET VALUE UPDATE

The last Net Asset Value per Existing Ordinary Share published by the Company was as at 31 December 2016 and was 142.2 pence. The next Net Asset Value per Existing Ordinary Share due to be published by the Company will be as at 30 June 2017, and is expected to be published by September 2017. In advance of this, the Directors, based on the advice of the Investment Adviser (and taking into account the dividend of 3.325 pence per Ordinary Share declared on 30 March 2017 (which has an ex-dividend date of 20 April 2017), estimate that as at 31 March 2017 the Estimated Net Asset Value is not less than 140.5 pence per Existing Ordinary Share.

The Estimated Net Asset Value is an estimate of the Directors based on the Investment Adviser's advice and unaudited financial information of the Group. This estimate has been calculated using the same methodology as is used for the half-yearly Net Asset Values, other than in respect of the forecast cashflows of underlying projects, which have only been updated to reflect known changes in project performance to the extent these are expected to have a significant adverse impact on the total estimated net asset value.

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. As such, there can be no assurance that the Net Asset Value as at 30 June 2017 will reflect the Estimated Net Asset Value which is prepared as at 31 March 2017.

INVESTMENT OBJECTIVES AND POLICY

The Company will seek to provide Shareholders with a predictable and attractive yield on the Company's investments. The Company's intention is to provide, over the long-term, distributions at levels that are both sustainable and which preserve the capital value of the Group's portfolio of infrastructure investments over the long-term (subject, where relevant, to amortisation of the Group's investments over the term of the relevant concession period of such investments). The Company will target a minimum dividend per annum and the Company will aim to maintain and enhance the level of distributions where sustainable to do so. The Company's target dividend for 2017 is 6.82 pence per Ordinary Share which equates to a dividend yield (based on the Net Asset Value per Share as at 31 December 2016) of approximately 4.80 per cent. The Company's target dividend for 2018 is 7.00 pence per Ordinary Share which equates to a dividend yield (based on the Net Asset Value per Share as at 31 December 2016) of approximately 4.92 per cent. The Company has met its pro rata dividend target in respect of the dividend declared on 30 March 2017 for the second half of the 2016 financial year.

The Company's ability to make distributions and/or to pay dividends will be subject always to the requirements of the Law.

The Directors also believe that long-term capital growth can be achieved. The Company will target an IRR equal to or greater than 8 per cent. on the Initial Public Offer issue price of 100 pence per Ordinary Share to be achieved over the long-term and the Company hopes to achieve this through (amongst other techniques) asset development, future acquisitions, active management and prudent use of gearing. The Directors believe, based on the advice of the Investment Adviser, that there are currently opportunities to acquire Further Investments that may enhance the Company's IRR.

The Company's investment policy is to invest directly or indirectly in public or social infrastructure assets located in the UK, Australia, Europe and North America. The Investment Adviser will also consider investment in other core OECD countries, such as New Zealand, where it considers that the risk profile of a particular opportunity meets the Company's requirements.

The Group intends to continue acquiring operational and construction phase assets from Amber (or via its own asset origination activities) and/or third party vendors. The Group intends (but is not bound) to hold its investments for the long-term and may well hold its investments for the life of a project. The Group will seek to enhance the capital value of its investments and the income derived from its investments.

The target IRR and dividends noted above are targets and not profit forecasts.  There can be no guarantee that these targets will be met or that the Company will make any distributions at all.

PRINCIPAL TERMS OF THE ISSUE

The Initial Issue comprises up to 166,666,667 New Shares (with the ability to increase this) to be issued at a price of 150 pence per New Share. The Initial Issue comprises a Placing, an Open Offer and an Offer for Subscription. The Initial Issue is conditional upon, inter alia:

       ·           The Pre-emption Resolution being passed at the Extraordinary General Meeting;

·           Admission of the New Shares becoming effective by not later than 8.00 a.m. (London time) on 11 May 2017 (or such later date (being no later than 30 June 2017) as may be provided for in accordance with the terms of the Issue Agreement); and

·           The Issue Agreement becoming otherwise unconditional in all respects and not being terminated in accordance with its terms before Admission becomes effective.

If these Issue Conditions are not met, unless they are waived the Initial Issue will not proceed. Subject to those matters upon which the Initial Issue is conditional, the Directors, with the consent of Numis Securities Limited ("Numis"), may bring forward or postpone the closing date for the Placing, the Open Offer and the Offer for Subscription by up to two weeks. The Initial Issue is not being underwritten.

The Open Offer will be made to Qualifying Shareholders at the Initial Issue Price, on the terms and subject to the conditions of the Open Offer, on the basis of 1 New Share for every 8 Existing Ordinary Shares held on the Record Date.

The Offer for Subscription is only being made in the UK but, subject to applicable law, the Company may issue and allot New Shares on a private placement basis to applicants in other jurisdictions.

Dependent on the further investment opportunities available to the Group, the Directors intend to implement the Issuance Programme to enable the Company to raise additional capital in the period from the date of this Prospectus to 11 April 2018. The maximum size of the Issuance Programme is 300 million New Shares. Each Subsequent Issue pursuant to the Issuance Programme is conditional upon, inter alia:

·           the passing of the Pre-emption Resolution (and/or any further Shareholder authority required);

·            the applicable Issuance Programme Price being not less than the most recently published Net Asset Value per Ordinary Share plus any premium agreed by the Board and Numis to reflect, inter alia, the costs and expenses of the relevant Subsequent Issue;

·           Admission of the New Shares issued pursuant to such Subsequent Issue; and

·           the Issue Agreement not being terminated in accordance with its terms and the particular Subsequent Issue becoming unconditional, in each case in accordance with the terms of the Issue Agreement prior to the completion of the Subsequent Issue.

If any of these conditions are not met in respect of any Subsequent Issue under the Issuance Programme, the relevant issue of New Shares will not proceed.

Any subscriptions or applications under the Placing, Open Offer, Offer for Subscription or a Subsequent Issue will be subject to the full terms and conditions that are set out in the Prospectus.

The ISIN of the New Shares is GB00B188SR50 and the SEDOL is B188SR5.

EXTRAORDINARY GENERAL MEETING

Neither the Placing nor the Offer for Subscription is being made on a pre-emptive basis. As such the Initial Issue is conditional, amongst other things, on the passing of a resolution to disapply the pre-emption provisions in the Company's Articles in relation to the Initial Issue at the Extraordinary General Meeting convened for 5 May 2017.

The Company will tomorrow post to shareholders a circular to convene a general meeting to be held at 10a.m. on 5th May 2017 in order to seek shareholder approval of Resolutions relating to the Company's intention to raise new equity capital through the issue of New Shares pursuant to a Placing, Open Offer and Offer for Subscription at an Initial Issue Price of 150 pence per New Share (the "Initial Issue") with an ongoing issuance programme for the next 12 months (the "Issuance Programme"). The Resolution is a resolution to disapply the pre-emption rights contained in the Company's Articles in relation to the Initial Issue and the Issuance Programme to enable the Initial Issue and the Issuance Programme to be made on a non-pre-emptive basis.

IMPORTANT NOTICES

This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014.

No representation or warranty, express or implied, is or will be made to, or in relation to, and no responsibility or liability is or will be accepted by Numis, Amber Fund Management Limited or by any of their affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Numis, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company in connection with the Initial Issue and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of them nor for providing advice in relation to the Initial Issue, the contents of this Announcement or any other matter referred to herein. To the fullest extent permitted by law recipients agree that Numis shall not have any liability (direct or indirect) for or in connection with this Announcement or any matters arising out of or in connection herewith.

This announcement is not a prospectus.  Recipients of this announcement who are considering acquiring shares in the Company in connection with the Initial Issue and the Issuance Programme are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this announcement.  This announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party.  No information in this announcement should be construed as providing financial, investment or other professional advice and each prospectus investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity.  In particular, an investment in the Company involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.

The use of the proposed Issuance Programme and/or the potential acquisition by the Company of any of the investments referred to in this Announcement or the Prospectus is subject, among other things, to those projects reaching legal completion and to the Company having conducted satisfactory due diligence in relation to such investments. Although the Company has a right of first refusal for investments disposed of by the Amber group, any acquisitions will be subject to agreement having been reached between the Company and the relevant counterparty as to the terms of the acquisitions.  In addition, some of the investment opportunities are those where Amber or the Company is currently undergoing a bidding process.  There is no guarantee that they will be successful in any such bidding process. There is therefore no guarantee that any of the investments will be acquired and if they are on what terms.  Nor is there any guarantee that further suitable investments will be available.

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 or South Africa or any jurisdiction in which the same would be unlawful. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire shares in the capital of the Company in the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which such an offer or solicitation is unlawful.  Shares in the Company have not been, nor will be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any State or other jurisdiction of the United States, and accordingly may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act.  The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and investors will not be entitled to the benefits of that Act.  In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan or South Africa and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Ordinary Shares or the New Ordinary Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan or South Africa.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts.  These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.  Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.  Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The information contained in this Announcement is subject to change without notice and neither the Company, Amber Fund Management Limited nor Numis assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

 

END

 

 

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