3i Infrastructure plc (3IN) Earnings Call Transcript & Summary

Good morning, everybody. Ladies and gentlemen, welcome to 3i Infrastructure's Full Year Results Presentation. First of all, a very warm welcome to those in attendance here at RBC's offices, and thanks to RBC for hosting today's presentation. Welcome, too, to those of you who are watching this presentation via the live webcast. The presentation will be available on the 3i Infrastructure website later today. I will make a brief introduction, then hand over to Scott Moseley and Bernardo Sottomayor, the joint Managing Partners and Co-heads of European Infrastructure at 3i. They will talk about the portfolio and the performance of the underlying businesses during the year. Then, James Dawes will focus on financial matters. Finally, we'll have a Q&A session. The company has had another excellent year, and I'm delighted to report that in the year, we significantly exceeded our return target of 8% to 10% per annum over the medium term with a total return on opening net asset value of 14.7%. Our high-quality, resilient and differentiated portfolio is performing well overall, delivering strong value growth in real terms. We ended the period with a net asset value of 336.2p per share. In a moment, Scott and Bernardo will take you through the drivers of that strong portfolio growth and performance. Historically, our shares have traded at a premium to NAV. But in this past year, we have seen significant volatility in the markets. This has impacted our share price, which has not kept pace with the strong growth in our NAV. However, despite this more challenging macro backdrop, we did still outperform the broader market with a total shareholder return of minus 6.9% in the year ahead of the FTSE 250, which returned minus 7.9% in the same period. Since IPO, the outperformance has been most impressive. The company has delivered an annualized total shareholder return of 11.7%, again, outperforming the FTSE 250 which produced 6.1% per annum over the same period. This morning, we announced our final dividend of 5.575p per share. That delivers a full year dividend of 11.15p per share, an increase of 6.7% on last year's total dividend and right on our target, and it was fully covered by income. We have grown the dividend every year since IPO, and we have set a target dividend for the coming year of 11.9p per share. That's another year-on-year increase of 6.7%. We were pleased with the results of our capital raise earlier this year and would like to thank our shareholders for their continued support. James will talk more about our flexible funding model. Once again, this has been another excellent year, and we are confident that our company and its portfolio are well positioned to continue to build on our strong performance. Thank you. And now over to Bernardo and Scott.

Thank you, Richard. Thank you all for coming today. We are very happy to present yet another set of strong full year results. At the half year results in November, we spent some time explaining our strategy. We invest in growing companies, supported by mega trends that provide long-term demand support and earnings growth and correlated to the GDP cycle. Those companies operate within stable markets, often with oligopolistic characteristics that provide a reasonably predictable base level of cash flows. But most importantly, we actively manage our investments, setting strategies and supporting incentivized management teams to execute them. We also put in place the right capital structures in each case. We assist with M&A and many times, reposition the infrastructure story of the business. That's creating value in our portfolio companies from acquisition to exit. As a result of this deliberate strategy, we have built a resilient, diversified and differentiated portfolio that is consistently producing outstanding returns. Our track record is top quartile. Since 2015, when we designed this strategy, we have delivered a net annualized NAV return of 19% per annum. GBP 100 invested at 3iN's IPO in 2007 would now be worth GBP 490. But the key point we want to emphasize today is that the strategy is designed to continue to deliver growth through reinvestment. In 2022, overall underlying portfolio company earnings grew 18% across the portfolio. This is real value growth that is driving the return on our NAV, not changes in discount rates or on exit assumptions. That growth in earnings allowed our companies to invest over GBP 400 million into growth CapEx this year. These opportunities were driven by the underlying markets in which the companies operate, which are growing. And our team works closely with our portfolio company management teams to select the optimal investment plans. We guide our companies to target returns for these additional investments consistently above our valuation discount rates and therefore, value accretive. Thoughtful execution, combined in most cases with precontracted revenues underpin the immediate link to incremental cash flow generation. And the cycle is set up to repeat without need for significant equity investment from 3iN. And because the CapEx is invested into companies we already manage, in our view, it is probably lower risk than that associated with making new portfolio acquisitions. In fact, on a risk-adjusted basis, we believe that these are very high-quality returns. The growth reinvestment cycle I have just described provides visibility that 3iN's portfolio is structurally positioned to continue to generate value for shareholders. But the point is perhaps best illustrated with examples. As an example of the innovation our team brings in value creation, it's hard to look past Infinis, where we have turned a finite and declining baseload power revenue-generating business into a renewables platform by converting end-of-life landfill sites to a pipeline of solar PV projects that will provide long-term contracted cash flows, extending the economic life of the company, whilst creating above-target returns. Along the way, we also acquired and developed a portfolio of power reserve assets and batteries, which benefit from the growing volatility in the U.K. power system as renewables outweigh baseload plants. This strategy was behind the strong performance of Infinis this year, not just high power prices. And we believe that it will continue to add value to the platform and play a complementary and synergistic role to the renewable asset base. Not all of this upside was clear to us at acquisition. But we very early on identified the areas of strong operational and business development expertise already present in the business. And we leverage the most out of those by bringing broader energy knowledge into the Board, which helped us collectively to select and action the new growth avenues. In TCR, we have seen its rental model coming out stronger and revalidated through the COVID period. This results in strong demand for additional equipment and the long-term rental contracts, giving TCR the opportunity to expand its revenue-generating asset base across the globe. We have supported TCR establishing a presence in new regions, including through targeted M&A that is expanding its addressable market. And we have enabled all of this new CapEx potential by replenishing its capital facility and refinancing it into the long-term investment-grade facilities already in place since 2019, which continue to provide TCR with a very low, stable and competitive cost of capital. A high-caliber management team in place brings it all together to an EBITDA currently growing at over 25% annually and with ample market space yet to be addressed. But there's always more to do. And working jointly with the TCR team, we constantly review and prioritize new potential areas of expansion, including new regions as mentioned, but also new equipment categories such as catering trucks or complex large-scale sale and rent-back deals with flagship carriers. But every new potential rental contract is priced to a range of predefined target returns and a set of assumptions. Prioritizing growth opportunities is important because human resources are limited and new talent requires training and time to be merged into the TCR culture. But we also monitor the expansion of the underlying operational platform across new countries and different continents, including the training of new staff, health and safety and technical standards and procurement aspects, to name only a few. Finally, we have been actively working with TCR around energy transition in its broader aviation sector with the aim of making the company ready to lead the trend by proactively bringing sustainable solutions to its customers and turn what could be a potential risk into an upside. In Joulz, we have carved out a B2B division of one of the Dutch public grid operators, which had installation and long-term rental of industrial transformers and meters as its core business. Cutting the operational links from the parent company entity meant considerable early involvement of our team with Joulz to replace IT systems, select new providers and fill in numerous missing top and intermediate management positions. But at acquisition, we had already identified the bigger picture business opportunity here. And playing to the energy transition trend and Joulz's home markets, we added solar energy, EV charging and batteries capabilities to the business. This involves screening and executing on selected small but crucial add-on M&A, mostly led by our team, given that the lack of previous -- given the lack of previous expertise in Joulz for acquisitions. All of which allowed Joulz to forge a pioneering position in offering energy as a service solutions to new large industrial buildings, such as distribution centers. We have in parallel strengthened the management team who is now bringing all of these ingredients together and to accelerate the growth of the contracted revenue base. I could go on talking about other companies, but the active management and growth dynamics we pursue are all common across the portfolio. Thank you. I will now hand over to Scott.

Thanks, Bernardo. Good morning, everyone. It's important to emphasize that the portfolio company growth CapEx that we are describing is usually discretionary in nature. And that with the exception of DNS:NET, the business plan supporting our valuations are fully funded. Our companies are conservatively geared, usually targeting investment-grade capital structures with additional facility headroom available to part fund their growth investment. We also note that 3iN itself has no permanent gearing. James will provide additional detail around the low-risk financial profiles within our portfolio companies later. But I would like to highlight here that our team was very active locking in long-dated, low-cost financing structures across the portfolio when those terms were available in anticipation of potential interest rate increases. We will doubtless continue to experience volatility in financial markets in the coming year, but we are very comfortable that our portfolio companies are appropriately insulated from financial market-induced turbulence. In addition to the initiatives that Bernardo has already described, our active management strategy also includes ensuring that our portfolio companies are prepared for an eventual exit at an optimal moment in time. We have a proven track record of successfully repositioning our businesses for sale to buyers with a lower cost of capital than 3iN. And we remain confident that we will continue to create value in this fashion. Sustainability is now firmly part of the value-creation conversation. This year, we established a dedicated team within the investment manager focused on sustainability aspects of our portfolio. We focus on sustainability, not only because it is important to us that we are responsible custodians of our investments, but also because we firmly believe that sustainability is a value driver in its own right. A good example of that is Attero. Together with 3iN's co-shareholders, we have now launched a formal process to divest Attero. You'll appreciate that there isn't a lot that we can say about that process today other than to confirm that it has formally launched. But it's worth noting that during our ownership, in addition to supporting the market-leading energy from waste operations, Attero is now positioned as a high-growth renewables platform. We are also actively evaluating additional divestment candidates beyond Attero and we'll keep shareholders updated as appropriate. Attero delivered the strongest percentage return across the portfolio during the year, but it was not alone in growing value, as you can see from the chart on the screen. The consistency of performance illustrates the depth of quality across the portfolio and underlines the effectiveness of the strategy that we have designed. Our one negative valuation movement in the year was DNS:NET, which continues to experience operational challenges in relation to its fiber rollout. After a period of prioritizing backbone fiber installation around selected areas of Berlin, DNS:NET is now focused on activating homes along that backbone. DNS:NET is not alone in experiencing operational challenges associated with delivering the expected ramp-up of homes connected. But as a result of the operational delays that we are experiencing as well as recent tightening of debt financing in that particular sector, we have decided to reduce the valuation. Consistent with our active ownership approach, we have strengthened the management team through a number of experienced executive appointments as well as embedding members of our own team on the ground within business in Berlin to provide day-to-day support. Whilst there is work to be done, and the rollout nature of the investment implies less certainty than we see in our other portfolio companies, we remain confident that our investment in DNS:NET will prove successful, and we anticipate continuing to invest further equity as originally envisaged. Looking forward, although it is still early in the current financial year, based on the strength of portfolio performance that we are currently seeing, we are pleased to report that the outlook for portfolio returns in this current financial year is positive. It's noteworthy that some of the strongest momentum is being experienced in the portfolio's largest assets. In particular, we are currently seeing strong trading momentum within TCR, Tampnet, ESVAGT, Valorem, Infinis, GCX and Joulz. ESVAGT continues its remarkable transformation and is currently in advanced discussions around further wind vessels beyond those that we announced last year. More than 70% of ESVAGT's contract backlog is now provided by high-quality offshore wind support contracts. Since we acquired the stake in -- the additional stake in the company in 2022, contracted revenue has grown 26%, ahead of our expectations at the point of reinvestment. Similarly, since we acquired -- since we recently acquired the additional stake in TCR, earnings have grown approximately 25%, also ahead of our expectations at the point of reinvestment. Tampnet's earnings grew 23% last year, and that strong momentum has continued into the current financial year. We are seeing tangible demand growth from Tampnet's customers who are realizing the importance of its unique fiber-based infrastructure, to ensure security of energy supplies as well as its potential to facilitate the energy transition offshore. We're also feeling good about our recent acquisition of Future Biogas. Future Biogas is one of the largest producers of biomethane in the U.K., operating 11 anaerobic digestion plants under long-term contracts. Although the acquisition amount was relatively modest at the point of investment, Future Biogas fits squarely into Infinis' expertise and comes with an ambitious pipeline of opportunities that may lead to a period of rapid growth. So overall, things are looking good. Before I hand over to James, I would like to express our appreciation to 3iN's shareholders for their continued support, particularly during the recent equity raise, which provided us with useful additional funding flexibility to ensure that 3iN is best placed to support our portfolio companies' full growth potential. Thank you.

Thanks, Scott. Good morning, everyone. You heard from Scott and Bernardo about how we delivered that 14.7% return, outperforming our target return again. And that outperformance was achieved without the benefit of a large realization during the year. As I explained at the half year results, we were well positioned for the change in the inflation and interest rate environment. Refinancing risk continues to be well managed. Scott explained how we work proactively to fix or hedge portfolio company debt interest. And the result is that we have no significant refinancing requirements in the next 3 financial years. Our portfolio companies provide essential services, and they have established market positions. That means our valuations and returns are positively correlated to inflation, thanks to a good balance of contractual revenue indexation and pricing power at contract renewal. High and volatile power prices during the year benefited our renewable energy generators. They were able to sell their power forward at higher rates than in previous years. Our valuations include the effect of windfall taxes in Europe, and the U.K. electricity generators levy. Before I talk more about our strong return for the year, I want to discuss funding. You've heard from me before about our flexible funding model. We aim to be symmetrical around 0 cash over time. We currently have GBP 5 million of cash on the balance sheet and our GBP 500 million drawn into our RCF. We restructured our RCF in July 2022 to be GBP 900 million, currently maturing in November 2025. We have another 1-year extension option available under the facility agreement, and we expect to exercise that option after the summer. That improved RCF structure gives us important flexibility in funding with around GBP 400 million currently undrawn. We also decided to seek additional flexibility through issuing new equity. The GBP 100 million we raised gave us that flexibility, paying down some of our RCF drawings and giving us headroom to pursue growth opportunities in the current portfolio. New investment activity is currently focused on the existing portfolio to take advantage of those accretive opportunities you heard about earlier. As Scott said, we've launched a process to realize our investment in Attero. We look to realize assets when the timing is right, with a focus on shareholder returns. The visibility of available credit through the RCF gives us the flexibility to do the right thing at the right time. You can see the strength of our performance across the portfolio on this slide. Many companies outperformed expectations, Attero, Valorem, Tampnet, TCR, Ionisos, Infinis and Joulz. That's a long list. Scott explained the delays in the rollout of DNS:NET, our only underperformer. Overall in the year, we generated a portfolio return of 15.1%. Our approach to valuation hasn't changed. We make long-term assumptions for inflation and interest rates, and we haven't changed those assumptions over the life of the company. Our long-term inflation assumption remains 2% for U.K. and European CPI after the first 2 years of the projections. Our discount rates are consistent with these long-term assumptions. This slide shows the movement in our weighted average discount rate over the life of the company. You can see that our discount rates have been very stable. Our weighted average discount rate now is 11.3%, the same as it was at half year and also the same as it was in March 2008. The increase from 10.9% to 11.3% over this year reflect a change in portfolio mix, following the sale of the European projects portfolio and our new investment in GCX. I've also shown the discount rate range for the core-plus portfolio on this chart. It's quite a tight range around that average and consistent with our target returns. Our valuations of TCR and ESVAGT, including their discount rates, were validated by third-party investors in the syndication processes that took place in the year. Our benchmark for discount rates is the private market for infrastructure assets. Our net asset value is GBP 3.1 billion. This chart shows the progression in NAV for the period. Working from the left-hand side, you can see our opening NAV was GBP 2.7 billion or 298.1p per share. That's after paying the final dividend for last year. We delivered a capital return of GBP 320 million, reflecting that portfolio performance we've just talked about. We had an FX gain of GBP 25 million after hedging. Around half of this came from a gain on U.S. dollar exposure, mostly in Tampnet. We added U.S. dollar hedging to the program when we completed the investment in GCX, but have made this gain earlier in the year. Total income added GBP 158 million and together with nonincome cash of GBP 44 million, we have GBP 202 million to support the dividend and costs of running the company. That's 41% higher than last year and reflects our larger portfolio and strong income-generating capacity that I've talked about in the past. Our dividend target was well covered for the full year. After we deduct costs of GBP 109 million, the NAV is GBP 3.1 billion or 336.2p per share. Richard announced the final dividend of 5.575p per share, meeting our target for the year, that will be paid to shareholders on the 10th of July. We'll go ex-div on the 15th of June. So our portfolio is continuing to perform well with positive trading momentum into the new financial year. We have flexibility around funding. With strong cash generation and conservative levels of gearing at portfolio company level. We are focused on growing our companies, our existing companies, rather than adding to our portfolio. And we expect the RCF to be repaid over time by realizations. I'll now hand back to Scott for Q&A. Thank you.

Thanks, James. So just ahead of Q&A. I think we've got microphones circulators. So if you'd wait for the mic, so that it's picked up by the webcast, that would be great. And just state your name and institution, please, before you start your questions. Should we start with Alex?

It's Alex Wheeler, RBC. Three from me, please. The first is regarding the 33% leverage number that you gave. Given the growth opportunities available, I'm interested to understand what level you'd feel comfortable increasing that to going forward. Second question, one of the slides showed a strong balance of contribution to portfolio returns from company assets. And I'd be interested to understand, should we be thinking about a similar balanced view for FY '24? Or are there certain assets that are more in focus? And then finally, on Future Biogas, you talked about significant follow-on investments potentially in new anaerobic digestion plants. I'd be interested to know if you could give us a level of investment or an indicative number there.

Thanks, Alex. Perhaps I'll start with the first, and then I'll hand across to Bernardo for the second. I think that the point that we emphasized in relation to portfolio company gearing is that really, we target investment-grade structures at the underlying asset level. And our team is deeply experienced in forming us a view as to where that might break. So for each company really, leverage is determined by its own sort of individual characteristics and our views as to where the appropriate level of leverage for that company might fall. But overall, we are looking to maintain conservative leverage positions. And predominantly, we've set structures up that include committed CapEx facilities to prefund a lot of the organic CapEx programs that we're foreseeing. Do you want to talk about portfolio returns?

Yes. Well, in terms of outlook, I'm not going to try and predict who is going to perform the best next year. But as we mentioned in our speeches, we're seeing really strong momentum around TCR in particular. ESVAGT as it continues to expand into the wind offshore SOV markets and the prospects of winning new contracts. GCX is another one offering potential very interesting potential opportunities. Valorem, always strong momentum, very good at developing pipeline. And same for Infinis for the same reasons. So I don't want to mention all of them. But I think there's a good number of our portfolio companies that we see continuing to experience good momentum going into 2024.

And with regard to Future Biogas, we're quite excited by this one, in part because it offers some comparables to Valorem in that it's a developer which has a proven track record of developing, which is now moving into an ownership model. So we're an ideal capital partner for that play. The build-out is quite modular. So typically, the plants are done on a sort of individual contract-backed basis. So again, it's discretionary. It's hard at this point in time to predict exactly how that growth pipeline is going to unwind. But the important message is that we have control over it and the contracted backed nature of the arrangements give us good comfort that it's readily financeable. Iain?

It's Iain Scouller from Stifel. I've got a couple. First one is on the dividend. I mean given the strong cover of 1.35, the prior rate of inflation, and the fact that you're now levered, which is obviously beneficial to income, I'm surprised that you're not increasing the dividend by a bit more than you are. So I was wondering, talk a bit about the thinking around that. And then the second one is the Attero write-up stands out. I mean that's up 42%. If you could just talk a bit about trading and activity there. Is that now being valued on an imminent sales basis?

No problem. Thank you. I guess there are 2 aspects to the first question. There's a sort of strategic and a technical piece. Why don't -- James, if you start with the technical evaluation of the dividend? And then maybe, Richard, you could comment on the strategy.

Yes. Well, for the current year dividend, we want you to think that we'll do what we say we're going to do. So we've delivered the target. And hopefully, that's what you're expecting. When we're thinking about the target for the following year, we take a number of things into account, one of which is the sustainability of the dividend progression. So we look at the income generating capacity from the underlying portfolio, what we want to do with those companies. So we think that the 6.7% increase in the target was the appropriate balance given the various factors we looked at.

I think James has said it all, really. I'd just add that we are, of course, a total return stock, and that's what we are in that. But our progressive dividend policy remains in place.

Bernardo, if you want to do Attero.

On Attero -- well, the Attero valuation reflects the current trading momentum of the company, primarily. And for that, obviously, the higher power prices have helped a lot as the company rolled its hedges at much higher levels than it had in the previous hedges. And as policy, the company hedges 3 years out, typically. So that was a factor. But in terms of the rest of the business, the trading momentum is also good. Gate fee is holding up pretty well and that also contributed. It doesn't -- I think as we prepare the sale of the business and prepared all the vendor due diligence, as we normally call it, to offer potential bidders. We've obviously reviewed some of our assumptions in terms of maintenance or long-term maintenance, and that was taken in, in the valuation. But when you put an asset for sale, you also -- and that's not in the valuation, we also try to highlight potential upsides and growth areas, which, in this case, we'll obviously have to go along with additional CapEx and things like carbon sequestration or the biomethane upside, which is also quite substantial in the business. So all of those are not in but are obviously points that we want leaders to value.

Tom Pocock, Peel Hunt. Just a couple on -- around the dividend, really. So I just wanted to get a bit more detail you had on what the non-income cash part of the sort of cash receipts for this year comprised. And also, just any more detail you had on sort of why that total GBP 202 million amount was 40% -- 41% higher than last year. And then on a slightly related note, I think you mentioned GBP 109 million of costs just now in your presentation. But I think in the report, we talked about sort of GBP 66 million around operating costs, and just what the difference between those 2 numbers is.

Sure. Thanks, Tom. James, do you want to take that?

Yes, if I can do the second one. So we've got finance costs as well, so we've materially drawn into the RCF. So that's in the overall cost number. In terms of the non-income cash, Attero was a decent chunk of that in the year. But why 41% higher? Well, we're fully invested and we're drawing into RCF. So our portfolio is now GBP 3.6 billion. At the half year point in the previous financial year, we were sitting on about GBP 250 million of cash on invested cash and about GBP 100 million of the WIG vendor loan note from when we sold that investment. So we were long cash and we've invested that and we told people at the time we expected to invest it, and we have. So the portfolio is bigger and therefore, we're getting more income.

Chris Brown from JPMorgan. Just a couple of questions on inflation. You mentioned you used 2% after the first 2 years. Can you talk about what you use in the interim? And also on inflation, I just wondered if you've got a rough estimate of how much contractual inflation linkage there is across portfolio versus pricing power?

Thanks, Chris. Have you finished writing yet?

Yes. So in the first 2 years, we use some consensus forecasts. We think that in the short term, they have a better chance of having a bit more accuracy to them than they do beyond 2 years. So that's what we do. I mean in the past, when inflation has been below the long-term target, obviously, that was fed into our models. Now that it's higher than the long-term target, so that's fed into the models. We use the latest inflation forecast when we're striking the valuation, so what we had at the end of March. So that's what's in there. In terms of contractual, I don't have a figure for you as in the split. I mean it varies across the company. So I mean, ESVAGT, for example, for the vessels for the long-term contracts, the vessels will have an element of contractual indexation in there, which links to sort of the running cost of the vessels and then the CapEx cost, which obviously was incurred at the start of the contract. Essentially, that's not inflation indexed. So it depends across the companies, but that's why we talk about a good balance across the portfolio. Infinis is another example. The renewable obligation certificates, which is a big chunk of the earnings, 40-ish percent of the revenue of Infinis, that is direct U.K. RPI linkage.

Yes. So that segues into just another quick, if I may. Just on -- could you say roughly what percentage exposure of revenues of the businesses are exposed to merchant power prices? What that rough exposure would be?

So we have a soft rule of thumb, which is we don't want more than 10% exposure. If we look at the valuation of the portfolio to merchant power, we're well below that at the moment. I don't have the exact number. No, I mean, we can maybe work through on an asset-by-asset basis. Do you want to have a go at that, Bernardo?

Yes. So it's easier. So the 3 companies we have with some exposure to merchant power prices are Attero, Valorem and Infinis. So -- and each case is slightly different. So -- and Attero is about 20% of the revenue. And as I was saying, it typically -- the company typically hedges power prices out 3 years. Valorem, it's wind farms or the majority of its wind farms operates under a 15-year contracts for difference. So it's fixed power prices. Where they have some exposure is in that short period between the new wind farms being commissioned and rolling into their CFD, so that period is around 12 months. A bit more, a bit less, depending on the case. So it's limited there. And on Infinis, as James was saying before, a good chunk of the revenues is ROCs, it's about 40%, and the rest is baseload merchant but hedged out at about 3 years as well. But the -- on Infinis, for instance, the solar PV rollout program is meant to be done under long-term contracts. So we do not expect to increase our merchant power exposure through that.

Are there are any more questions?

Fiona Huang from Jefferies. Just 2 questions. I guess, broadly speaking, since we don't really see that much power transaction in the public domain, can you give us a broad idea what the current infrastructure realization exit environment is like? And then second, could you provide some dividend coverage guidance pro forma after Attero's sale? Or if you have any other sale in mind?

No problem. I can have a go at the first question. And perhaps, some -- James can take the second.

Yes.

So we're still seeing healthy transaction data points within the private markets. Just yesterday, one of the Australian super funds, I think it was University Super, announced it was investing AUD 1 billion, so what's that -- GBP 530 million, into the Vantage Towers transaction at a gain at 26x EBITDA multiple, and that was for a 5% stake without control. So I think there's certainly sufficient data points to suggest that, that valuation environment is holding up. If anything, perhaps there's a slightly weaker market environment at the very core or project's end of the spectrum as the spread between fixed income and those returns are often narrow. But in the market in which we are operating, we're seeing very healthy demand and a combination of GPs that really need to get capital to work that have already raised money as well as LPs who are looking to develop their own direct investment programs that's underpinning that investment environment. In relation to the dividend, I'll hand over to James.

The guidance is linked to the sustainability. We do expect the dividend target to be covered by income even if we do realize Attero. But I haven't got a multiple that I'm going to give out.

Are there any other questions? It looks like we might be finished. Thank you very much for attending, and we look forward to seeing you again next time.