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Upcoming event | Hardman Talks: Everything you wanted to know about private equity but were afraid to ask!

BBGI is a diversified social infrastructure investment company, registered in Luxembourg. Its portfolio consists of long-term and low-risk essential infrastructure investments, which deliver stable, predictable cashflows, with progressive dividend growth and attractive, sustainable returns. It focuses on enhancing the value of its investments, which are globally diversified within highly rated investment-grade countries. Most of its investments are via Public, Private Partnerships (PPPs) or derivatives thereof. All its investments are availability-based, not demand-based, supported by government-backed revenues; hence, the cashflow line is very reliable.

  • Background: Central to BBGI’s business are its 54 essential, social infrastructure investments; they range from bridges in North America to a hospital facility in Australia. Crucially, BBGI’s equity investment portfolio comprises low-risk and public-sector-financed, availability-based infrastructure investments.
  • Operations: BBGI’s main operating jurisdictions are in North America, specifically Canada, and in the UK. Revenues from virtually all of BBGI’s investments are based on their availability, and not on the level of demand for them; hence, there is a bond-like predictability about future revenues.
  • Valuation: BBGI has built up a very successful track record since its IPO in 2011, with total shareholder returns averaging 10.8% p.a. It has consistently traded at a premium to NAV, and its shares are now trading at 27% above their NAV; the shares are currently yielding 4.2% on a prospective basis.
  • Risks: All BBGI’s cashflows are from government or government-backed bodies, thereby reducing the counterparty risk factor considerably. Owing to the absence of demand-based investments, the impact of COVID-19 on BBGI’s finances and operations has been marginal.
  • Investment summary: Although its 1H’21 NAV, at 137.8p per share, was flat, BBGI reaffirmed its target of a 7.33p dividend for 2021E, along with 7.48p for 2022E. A 7.63p payment is planned for 2023E. Apart from announcing three UK social infrastructure investments, BBGI recently raised ca.£75m gross from a share placing, thereby enhancing its cash position. Investors should note that BBGI has now integrated key ESG principles into its investment cycle.
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