International Public Partnerships H1 Earnings Call Highlights

Key Points

• NAV and dividends increased: NAV per share rose to 153.4 pence, delivering an annualized total NAV return of 8.2%. INPP reaffirmed its 2026 dividend target of 8.79 pence per share and reported improved operating cash-flow cover of 1.3 times.
• Capital recycling is funding higher-return investments: INPP has realized or committed to realize more than £440 million of assets while reinvesting or committing over £480 million, with new investments targeting average returns above 11%. The company also extended its £225 million share-buyback program through September 2027.
• Portfolio performance remained resilient: The infrastructure portfolio maintained a 9.1% discount rate, with 99% of revenues regulated or contracted and strong availability across offshore transmission and PPP assets. However, INPP reduced its equity investment in digital-infrastructure company toob to nil amid U.K. alternative-network headwinds.

International Public Partnerships LON: INPP reported higher net asset value, improved dividend cover and continued progress in its capital-recycling strategy for the six months ended June 30, 2026, as management highlighted resilient valuations despite volatility in government bond markets.

Net asset value per share increased 1.9 pence to 153.4 pence during the period. Including dividends paid, the company generated an annualized total NAV return of 8.2%, according to Lead Portfolio Manager Jamie Hussein of Amber Infrastructure, INPP's investment adviser. Total NAV remained approximately £2.7 billion when rounded.

Hussein said NAV growth was principally supported by portfolio distributions arriving in line with, or ahead of, forecasts and by the passage of time bringing future cash flows closer. The weighted average discount rate used to value the portfolio remained unchanged at 9.1%.

“The overall picture is one of strong operational results and resilient valuations broadly in line with expectations,” Hussein said.

Dividend target reaffirmed

The board reaffirmed its 2026 dividend target of 8.79 pence per share, representing 2.5% growth from the prior year. It also maintained a 2027 target of 9.01 pence per share. The first quarterly interim dividend of 2.19 pence was declared for payment on September 15.

Dividend cover from operating cash flow rose to 1.3 times for the first half from 1.1 times a year earlier. Chief Financial Officer Mohammed Anwar said the increase largely reflected cash-flow timing and that cover was expected to normalize toward its historical range of 1.1 to 1.2 times for the full year.

Management said INPP has raised its dividend by at least 2.5% annually since its 2006 listing. Based on existing portfolio cash flows, the company expects the dividend to continue growing at that rate for at least 25 years without requiring additional investments.

Capital recycling supports new investments

A central focus of the presentation was INPP’s strategy of selling mature assets and redeploying proceeds into investments with higher expected returns. Since mid-2023, the company has realized or committed to realize more than £440 million of investments, equivalent to around 17% of the portfolio, while reinvesting or committing more than £480 million.

Hussein said the new commitments, including the Moray West offshore transmission owner project where INPP is preferred bidder, have an average projected return above 11%. That compares with the portfolio’s 9.1% weighted average discount rate.

During the period, INPP sold a minority stake in the Moray East Transmission project for approximately £40 million while retaining a 51% holding and control. After the period end, the company agreed to sell nine school projects for around £58 million, with completion expected in the fourth quarter. Management said both transactions were agreed at premiums to the most recently published valuations.

INPP has also committed approximately £290 million across Sizewell C, BeNEX and Moray West. Following the period end, it committed roughly £40 million to BeNEX, its German rail platform, to support a newly awarded concession expected to generate a low-teens return. Management identified a nearer-term pipeline of approximately £1 billion across regulated assets, public-private partnerships and operating businesses, though it cautioned that no pipeline opportunities are guaranteed to convert.

The company extended its share-buyback program through September 30, 2027, while leaving its maximum size unchanged at £225 million. About £150 million of shares have been repurchased to date, contributing around 1.9 pence per share of NAV accretion, including £27.7 million spent during the first half.

Hussein said the pace of repurchases has moderated as INPP’s share-price discount to NAV narrowed and management identified more attractive investment opportunities. The company may use its recently upsized £350 million corporate debt facility as a short-term bridge when investments close ahead of asset sales.

Portfolio performance and valuation

Anwar said changes in government bond yields and investment risk premia had only a marginal effect on the half-year valuation because INPP maintained its 9.1% discount rate. He said asset sales at or above NAV, as well as transaction activity in private infrastructure markets, supported the valuation approach.

The portfolio comprises 135 investments in nine countries, with a weighted average life of approximately 41 years. Management said 99% of revenues are regulated or contracted and characterized the portfolio as largely insulated from changes in asset usage, passenger volumes or power prices.

• Cadent performed strongly against its RIIO-2 commitments and is focused on RIIO-3 objectives.
• Tideway reached handover in August, transferring day-to-day tunnel responsibility to the operator.
• INPP’s 11 offshore transmission assets achieved 99.4% availability during the period.
• PPP investments delivered 99.8% availability, above a target of more than 98%.
• Angel Trains traded in line with expectations, while BeNEX won two additional rail concessions, including one awarded after the period end.

The exception was toob, a digital infrastructure investment facing structural headwinds in the U.K. alternative-network market. INPP decided after the period end not to provide further capital and reduced its equity investment to nil. Anwar said INPP retained a £2.6 million investment ranking equivalently to senior debt, while the equity exposure represented less than 1% of NAV.

Inflation protection and sustainability activity

Management said the portfolio’s inflation protection improved to 0.8% from 0.7%, meaning a sustained 1% increase in long-term inflation would be expected to increase returns by 0.8%, or NAV per share by roughly 12 pence.

Head of Sustainability Dan Watson said Tideway had diverted 21.7 million tons of sewage from the River Thames since August 2024. INPP’s offshore transmission assets can transmit renewable power equivalent to the needs of an estimated 3.7 million homes, while its rail investments supported more than 244 million passenger journeys.

The company also continued decarbonization initiatives across its social-infrastructure portfolio, completing 80 solar feasibility studies to date and advancing air-source heat-pump projects at two Calderdale schools. Watson said such projects would be pursued where their economics were attractive and aligned with public-sector partners’ needs.

About International Public Partnerships (LON:INPP)

INPP is a global infrastructure fund that invests in high-quality infrastructure projects and businesses that are sustainable over the long-term. INPP aims to provide our investors with stable, long-term, inflation-linked returns, based on growing dividends and the potential for capital appreciation.

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