How Gravis is unlocking worth for GCP Infrastructure Investments Limited

GCP Infrastructure Investments Limited (GCP) doesn’t simply present loans after which maintain them to maturity. It has a protracted monitor document of stepping into naissant sectors earlier than they’re crowded and refinancing as soon as they mature. It additionally actively manages investments, working to reinforce providers and worth and lengthen the lifetime of belongings. As utilities sectors have advanced, so too has GCP.

Over the previous couple of years, Gravis has been actively recycling capital out of the portfolio through disposals, refinancings and prepayments. The proceeds have been used to pay down debt, purchase again shares, and construct the case that GCP Infrastructure Investments Limited (GCP)’s shares are price greater than the market is presently paying for them.

The framework: capital allocation with a transparent set off

For a lot of the 2010s, listed utilities firms traded at a premium to internet asset worth (NAV), as buyers had been pleased to pay barely extra for safe, inflation-linked revenue in a near-zero rate of interest global community. That reversed when central banks started elevating charges from late 2021 and share costs throughout the sector started to commerce at large reductions to NAV.

It was in opposition to that backdrop that the board adopted its capital allocation coverage in December 2023, a direct response to “the disconnect between share value and NAV.”

The capital allocation coverage got down to return £150 million to shareholders by way of accelerated disposals, lowering debt, funding buybacks and rebalancing the portfolio away from sectors like supported dwelling and equity-like renewable positions.

At its Capital Markets Day in February 2026, the board up to date the framework to be specific about how future capital could be used: the place GCP’s share value trades at greater than a 15% low cost to NAV, proceeds from disposals and refinancings would proceed to fund share buybacks; under that threshold, GCP would additionally begin weighing new capital allocation alternatives alongside continued return of capital.

Proof factors: disposals validating NAV

Several transactions over the summer time illustrate the sample, and each checks whether or not GCP’s revealed NAV is a good reflection of what the underlying belongings are literally price:

• Solar debt financing recycling capital at NAV (30 June 2026). GCP launched c.£40 million of third-party senior debt financing in opposition to a portfolio of ground-mounted photo voltaic initiatives it beforehand held on an unlevered foundation. The transaction was priced materially in keeping with the belongings’ valuation within the 31 March 2026 NAV, and freed up c.£40 million of money, leaving GCP with a smaller residual fairness publicity.
• Anaerobic digestion (AD) sale in keeping with NAV, RCF absolutely repaid (8 July 2026). A £3 million AD challenge sale priced at NAV, which was additionally the transaction that allowed GCP to totally repay its revolving credit score facility (RCF), taking the excellent debt steadiness to zero.
• Onshore wind sale at a premium to NAV (20 July 2026). GCP accomplished the sale of two operational onshore wind initiatives, Winscales Moor and Burton Wold, at a c.13% premium to their valuation within the 31 March 2026 NAV. Day-one money proceeds had been c.£10.3 million, with an additional c.£0.8 million of tax-related proceeds and c.£0.6 million of deferred consideration to comply with. Selling above ebook worth is about as direct a proof level as a reduced belief can supply: the market paid extra for the asset than GCP’s personal NAV stated it was price.
• £31.5 million prepayment, materially in keeping with NAV (17 August 2026). Following a change of management, a mortgage, secured in opposition to a portfolio of operational renewable vitality initiatives, repaid in full 9 years forward of its authentic 2035 maturity. The compensation was materially in keeping with the mortgage’s valuation in GCP’s 30 June 2026 NAV, and the RCF remained absolutely undrawn.

Individually, every transaction is a routine piece of portfolio administration. Collectively, they construct a monitor document: belongings are altering palms at or above the values GCP has attributed to them, which is the clearest proof accessible that the NAV is just not overstated, and, by extension, that the low cost to it’s unwarranted.

Share buybacks: capital returned, not simply recycled

Every one of many disposals above explicitly directs extra money towards GCP’s buyback programme whereas the low cost stays large, beneath authority renewed on the AGM on 12 February 2026. This isn’t new: within the quarter to 30 June 2026 alone, GCP purchased again over 19 million shares, including 0.57 pence per share to NAV. Since inception of the buyback programme in 2023, GCP has purchased over 125 million shares for a complete consideration of c.£98 million.

Buying again shares at a reduction is itself value-accretive for remaining shareholders (every pound spent buys greater than a pound of internet belongings), which is a part of why the board has stored the mechanism working at the same time as market situations have shifted.

The outcome: a narrowing low cost

The clearest scoreboard for all of that is the share value low cost to NAV itself. GCP’s shares commerce at a c14% low cost to NAV as we speak (14 September 2026), with a share value of 84.00p in opposition to a NAV of 98.60p and a dividend yield of 8.29%*. That’s down materially from its widest low cost of just about 45% recorded in October 2023 and even the 26% low cost in the beginning of 2026. It now sits throughout the 15% threshold set out within the capital allocation framework above, the extent at which GCP has stated it should begin weighing new investments once more alongside continued shareholder returns.

None of this ensures the low cost retains narrowing. Markets can and do transfer in opposition to an organization, no matter its personal execution. But the sample of disposals at or above NAV, a totally repaid credit score facility, and a sustained buyback programme is a compelling reply to the query of whether or not the board and capital allocation adviser are actively working the steadiness sheet on shareholders’ behalf, fairly than ready passively for sentiment to show.

*Source: The Financial Times, 14 September 2026. Data supplied by LSEG.

Important Information

This article has been ready by Gravis Capital Management Limited (the “Investment Adviser” or “Gravis”) and is for info functions solely. It is just not meant for distribution to, or use by, any individual or entity in any jurisdiction or nation the place such distribution or use could be opposite to native legislation or regulation. Any recipients of this text exterior the UK ought to inform themselves of and observe any relevant authorized or regulatory necessities of their jurisdiction and are handled as having represented that they can obtain this text with out contravention of any legislation or regulation within the jurisdiction by which they reside or conduct commerce.

This article shouldn’t be thought-about as a suggestion, invitation or inducement that any investor ought to subscribe for, eliminate or buy any such securities or enter into every other transaction within the GCP Infrastructure Investments Ltd (the “Company”) or every other fund affiliated with Gravis.  The deserves and suitability of any capital allocation motion in relation to securities ought to be thought-about rigorously and contain, amongst different issues, an evaluation of the authorized, tax, accounting, regulatory, monetary, credit score and different associated points of such securities.

No enterprise, illustration, guarantee or different assurance, specific or implied, is made or given by or on behalf of the Company, the Investment Adviser or any of their respective administrators, officers, companions, workers, brokers or advisers or any different individual as to the accuracy or completeness of the data or opinions contained on this article and no accountability or legal responsibility is accepted by any of them for any such info or opinions or for any errors, omissions, misstatements, negligence or in any other case for every other communication written or in any other case. In addition, neither the Company or the Investment Adviser undertake any obligation to replace or to right any inaccuracies which can grow to be obvious. The info on this article is topic to updating, completion, revision, additional verification and modification with out discover.

Past efficiency is not any assure of future efficiency.

Gravis Capital Management Ltd is authorised and regulated by the Financial Conduct Authority; registered in England and Wales No: 10471852 and its principal place of commerce is 24 Savile Row, London W1S 2ES.