International Public Partnerships (LON:INPP) outlined what management described as another year of strong performance in a 2025 investor presentation, pointing to net asset value (NAV) growth, a covered and rising dividend, and ongoing capital recycling through asset sales, share buybacks, and reinvestment into new opportunities.
2025 results: NAV growth and dividend targets extended
Portfolio Manager Jamie Hossain said NAV per share rose to 151.5 pence at 31 December 2025 from 144.7 pence a year earlier, an increase of 4.7% (6.8 pence). He emphasized the NAV growth was driven by underlying portfolio performance and capital allocation decisions, including divestments at attractive prices, rather than a lower discount rate; the weighted average discount rate increased marginally to 9.1% from 9.0%.
The company reported operational cash dividend cover of 1.1x, meaning day-to-day portfolio cash flows covered dividends with about 10% surplus. Hossain said that surplus can be used for share buybacks or reinvestment into new opportunities. Ongoing charges fell to 1.09% from 1.14%, which management attributed to a revised fee arrangement implemented in July.
Portfolio positioning: inflation linkage and revenue security
Hossain characterized INPP as an investor in “essential public infrastructure” with long-term contracted or regulated revenues, predominantly backed by governments or independent regulators. He said 98% of portfolio revenues are government-backed, regulated, or long-term contracted, with 2% carrying market risk. Management also highlighted 70% inflation linkage at the portfolio level, noting that for every 1% rise in long-term inflation above base case assumptions, returns are expected to increase by 0.7%.
Addressing the current geopolitical backdrop, Hossain said the portfolio has “no material direct exposure” to energy commodity prices or the affected Middle East region and that revenues remain contracted or regulated with government or government-backed counterparties across “stable investment-grade markets.” He added that while share price sentiment can be affected by broader market moves, the portfolio is intended to be defensive and non-cyclical, citing a share price correlation of 0.5 against the FTSE All-Share during the referenced period.
In the Q&A, management said inflation linkage varies across assets (including differences between RPI and CPI linkages and some floors), but emphasized that the overall 0.7 figure reflects blended impact across the portfolio. Hossain said the company expects inflation linkage to increase over time to 0.8 as it deploys capital into its pipeline.
Capital allocation: realizations, buybacks, and reinvestment
Management reiterated the capital allocation framework introduced in June 2023: recycle capital from lower-returning assets, then return capital through buybacks while shares trade at a discount to NAV, or reinvest into higher-returning opportunities.
Hossain said the company signed about £130 million of transactions during the period across PPPs, regulated assets, and operating businesses. Since June 2023, total realizations exceeded £385 million (about 14% of the portfolio), with all transactions completed at or above published valuations, which management said validated the robustness of NAV.
He also said more than £135 million had been returned to shareholders through buybacks to date, with the board reaffirming a buyback program of up to £225 million through March 2027. Management said the buybacks have generated about 1.6 pence per share of NAV accretion so far. In the Q&A, Hossain said the board views buybacks as a tool to impose discipline while shares trade at a discount, but also noted that buybacks alone are not expected to close the discount.
On reinvestment, Hossain said the company has committed more than £345 million to new investments since June 2023, with projected returns exceeding both the returns of divested assets and the returns implied by share buybacks. He said all new investments are funded through realizations and surplus operating cash, and noted a corporate debt facility is available but not currently drawn.
Valuation drivers: discount rates and inflation assumption update
CFO Muhammad Anwer said discount rates have “broadly remained stable” for the first time in three years, with the weighted average discount rate up 10 basis points since 30 June 2025 to 9.1%, which he attributed largely to capital recycling. He stressed management is “not calling the bottom” on discount rates, but said the direction was “encouraging” and supported by transaction evidence.
Anwer said buybacks added about 1 pence per share of value during the period and 1.6 pence cumulatively since the program began, with approximately £136 million deployed, putting the program just over 60% through the stated target.
He also highlighted the effect of updated inflation assumptions, stating the company increased its long-term UK CPI assumption to 2.5%, contributing a roughly £62 million uplift. Foreign exchange was slightly positive, adding 0.9 pence per share. He described overall portfolio cash flow movements as broadly neutral, with some “overs and unders,” and said the net return was largely the discount rate unwinding over time.
In response to a Q&A question, Anwer said the company’s projected net return calculation does not assume any narrowing of the discount to NAV; it is based on forecast cash flows and the current share price.
Operational updates: Tideway, Cadent, OFTOs, Sizewell C, and digital
On regulated assets, Hossain said 2025 was a milestone year for Tideway, with the tunnel becoming fully connected in February. Commissioning, including storm testing, was ongoing, with handover to Thames Water targeted for the first half of the current year. He reiterated that Thames Water’s situation is not expected to have a material impact on INPP’s Tideway investment because revenues are regulated independently by Ofwat.
Cadent performed in line with expectations and delivered a strong cash yield, Hossain said. He highlighted Ofgem’s RIIO-3 final determination in December 2025, which he said was more favorable than earlier draft proposals and consistent with INPP’s June valuation assumptions. He noted Cadent has sought an independent review by the Competition and Markets Authority on certain aspects, and INPP’s valuation reflects Ofgem’s final determination; any positive CMA outcome would be upside not currently included.
For OFTOs, Hossain said Ofgem concluded post-period end that an offshore cable outage at Beatrice OFTO was beyond the company’s reasonable control, resulting in no revenue deductions. Paid availability across the OFTO portfolio for the year was 99.6%, above the 98% license target. INPP also sold a 49% minority stake in Moray East OFTO to Daiwa Energy & Infrastructure, realizing approximately £40 million at a premium to the last published valuation, while retaining majority ownership and board representation.
Hossain provided additional detail on Sizewell C, describing it as the first UK nuclear power station to be financed through a regulated asset base model. INPP reached financial close in November and made an initial investment of about £35 million, committing £254 million of equity in total to be deployed over up to five years for a 3% shareholding. He said the investment generates a cash yield of about 6% per annum on invested capital from financial close, and that the real allowed return on equity during construction and early operations is set at 10.8% plus CPIH inflation, implying projected returns “in the low teens” through to the early 2040s. He said there is no exposure to power prices or demand risk, and that the framework provides downside protection against construction cost overruns.
In operating businesses, management said Angel Trains’ fleet was fully leased and that a partial disposal in August realized about £32 million at a premium to the prior valuation. BeNEX recorded a strong year, including winning a new concession and re-winning two existing ones, contributing to a valuation uplift. In digital infrastructure, toob and Community Fibre were described as progressing in network build-outs; toob reached EBITDA positive during the period, and INPP committed an additional £8.8 million post-year end to support a move toward positive operating cash flows. Community Fibre was also EBITDA positive and expected to generate positive operating cash flows in the first half of the current year. Management said the digital investments together represent less than 2% of NAV.
Head of Sustainability Daniel Watson also highlighted selected portfolio outcomes, including Tideway diverting more than 19 million tons of wastewater from the Thames since August 2024, more than 700,000 patients treated across healthcare investments, and portfolio assets supporting over 14,000 jobs. He said the company published the fifth edition of its sustainability report with updated disclosures aligned with TCFD, SFDR, and the EU Taxonomy, completed around 50 solar PV feasibility studies across UK PPP projects, and refreshed its quantitative climate risk assessment using Moody’s RMS Climate Risk Screening Tool.
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.
