(Alliance News) - International Public Partnerships Ltd on Wednesday announced a number of measures intended to "optimise the company's portfolio and reallocate capital to improve shareholder returns".

The Guernsey-based infrastructure investment company has completed a transaction involving the realisation of four offshore transmission owner senior debt investments.

The transaction, realised at a "modest premium" to recent valuations, will generate cash proceeds of GBP200.0 million and "enhance key portfolio metrics", the company said.

The company will retain its existing equity and subordinated interests in the four OFTOs.

International PPL intends to use GBP80.0 million of the proceeds to fully repay its corporate debt facility cash drawings in January 2024. This repayment will reduce financing costs and "is consistent with the company's previously-stated focus on efficient balance sheet management."

The company has also said it intends to invest up to around GBP85.0 million into acquiring the Moray East OFTO off the coast of Scotland.

On Wednesday, the UK Office of Gas & Electricity Markets published a notice under section 8A of the 1989 Electricity act relating to the Moray East Project. International PPL has called this "key step towards reaching financial close on the investment that the company expects to make in the project". In March 2022, Ofgem appointed International PPL as the preferred bidder of the offshore electricity transmission assets connecting to the Moray East wind farm.

At financial close in February 2024, the OFTO will be granted a 23-year revenue period. During this time, it will have "no exposure to electricity production or price but will be paid an availability-based revenue stream linked to UK inflation", the company said.

Moray East will be the International PPL's 11th OFTO investment, and will "further increase the company's contribution to the UK's transition to a net zero carbon economy". The OFTO has the capacity to transmit renewable electricity to around 1.0 million homes, increasing International PPL's total equivalent to around 3.7 million homes across its portfolio.

After fully repaying its cash drawings, the company intends to begin a share buyback programme of up to GBP30.0 million in early 2024 in an effort to "reduce the discount to the NAV at which the company's shares are trading". The company will consider increasing the allocation to the buyback as further funds become available.

International PPL said it was on track to meet its 2023 dividend target of 8.13 pence each. The remaining interim dividend of 4.07 pence is expected to be paid in June 2024. It currently forecasts a long-term projected dividend growth rate of around 2.5%, and gives a dividend target of 8.33 pence for 2024.

International PPL shares are currently trading at 137.69 pence each, up 1.7% in London at midday on Wednesday.

By Hugh Cameron, Alliance News reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.