3i Infrastructure (3IN ) has taken advantage of its comparatively high stock rating with a share issue priced at 330p to raise up to £294m.

The £3bn portfolio of energy transition, social infrastructure and digitalisation companies wants the money to replenish its credit facility and make a mix of follow-on and new investments. 

Analysts said the timing of the fundraise was unusual, coming mid-way between the release of its last 30 September valuation in November and the publication of its 31 March net asset value (NAV) in May.

Stifel’s Iain Scouller said investment companies would normally launch an equity issue after an NAV update to avoid any doubt the shares were being sold below asset value, a move that would dilute existing shareholders.  

‘The last published NAV was 320p (ex the 5.575p dividend) at 3 September 2022,’ said Stifel analyst Iain Scouller this morning. ‘Following the positive January trading update we raised our NAV expectations at 31 March 2023 from 320p-335p to 333p-350p. Therefore, while this equity issue is at a premium to the September NAV, it is probably at a discount to the 31 March 2023 NAV.’

Winterflood analyst Emma Bird said: ‘We note that 3IN is looking to raise equity at stale valuations as at 30 September 2022, which investors may be hesitant to support considering valuation shifts in public markets and the lag in private market valuations.’

Scouller believed shareholders would probably be ‘relaxed’ about the potential dilution as the revaluation was still two months away.

Bird said 3IN was being opportunisitic and grabbing ‘first-mover advantage’ in the race for investors’ capital at a point when other infrastructure funds were trading at discounts below NAV, preventing share issues. 

She called for the company to provide more information: ‘Given the tightness of financial conditions, we would encourage the board to provide better visibility on potential commitments and specify a target raise.’

The share issue comes as 3IN waits for cash from the disposal of energy transition business Attero, which it announced in last month’s trading statement. Attero was valued at £129m, or 4% of NAV, in September. The sale is expected to take three or four months.

In a falling market, 3IN shares slipped 2.1% to 334.2p. After recovering from a sector sell-off following the mini-Budget last September, the shares closed last week with a one-year gain of 1.4% including dividends. They have provided a total return of 90.8% over five years, one of the best in the sector.  

3IN’s chair Richard Laing said: ‘The company continues to deliver strong performance and, since its IPO in 2007, 3iN has delivered an annualised total shareholder return of 12.3% to 31 December 2022. There is strong momentum across the portfolio and the investment manager has identified significant opportunities to invest further in the portfolio.’