Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Latest deal shows 3i Infrastructure is undervalued and investors should snap up the shares

News that 3i Infrastructure (3IN) is selling its 25% stake in Attero at a significant premium to its valuation just four months ago confirms for us the market is undervaluing the shares.
The investment trust, which comes from the same stable as 3i Group (III), a core shareholder and one of the best performers on the FTSE 100 over the past decade, has found life harder on the stock market since interest rates started going up last year.
The sale of Attero, one of the largest waste treatment and recycling firms in the Netherlands, representing 4% of the portfolio at the end of March, is expected to net €215 million or 31% more than the most recent valuation of €164 million.
Richard Laing, chair of 3i Infrastructure, described Attero as ‘a most successful investment, experiencing substantial growth’ since 2018, but said while the trust aims to hold stakes for the long term it would sell where this generates significant additional value for shareholders.
While it would be a stretch to say the entire £3.6 billion portfolio is worth 30% more than its March valuation, the deal suggests the trust is fairly prudent in the way it values its assets.
‘Not only does (the sale) continue management’s strong track record of being able to deliver attractive exits to crystalise value from its portfolio through the cycle, but in our view, it is also suggestive of conservative valuations for wider portfolio companies, which continue to exhibit strong operational performance and growth in line with expectations,’ comment analysts at Numis.
Prior to the sale of Attero, the portfolio consisted of 13 assets across five ‘megatrends’ which the managers believe are shaping the world around us: energy transition (42% of the portfolio), digitalisation (22%), globalisation (22%), demographic change (8%) and renewing social infrastructure (6%).
In the year to March 2023, the fund generated an NAV (net asset value) total return of 14.7%, comfortably above management’s target annual return of 8% to 10%. 3i Infrastructure also raised its 2023 and 2024 dividend target by 6.7%.
Liberum analyst Joseph Pepper views 3i Infrastructure as ‘one of the best-placed funds to deliver attractive NAV return in a capital-constrained environment due to its active management of core-plus companies which provides a plethora of internal levers for growth, including via disposals’.
While the fund trades on a relatively narrow 5% discount to NAV, ‘we do not view this as demanding given management’s strong track record of delivering returns ahead of its 8% to 10% target (14% annualised NAV total return since IPO) and the attractive return potential of portfolio companies going forward,’ adds Numis.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Feature
- Is active fund management a waste of time?
- Popular funds: big changes? We look at 12 widely-held names
- Not all bad news: Here are 10 stocks benefiting from the cost-of-living crisis
- Can emerging markets make the transition away from fossil fuels?
- Emerging markets: technology at the forefront, overtaking developed world on oil consumption
- Our 2023 share picks have absolutely smashed it: up 23% against a flat market
- Gilts are in demand: we explain how to buy and reasons for doing so
Great Ideas
News
- Wildfires and strikes cause investors to worry about airlines and holiday companies
- Unilever flexes its pricing power muscles, but market share losses are a concern
- Ocado’s technology arm gets investors excited again
- Liontrust shares remain in the doldrums as GAM takeover sees new twist
- Revealed: the shares which shone as the FTSE 100 has bumper week