I’ve recently been buying shares in a listed infrastructure investment trust called International Public Partnerships or INPP. In simple terms, this is the kind of steady, inflation-linked infrastructure money-making machine that shouldn’t be sitting on a chunky discount, especially now it’s added Sizewell C to the mix. INPP is meant to be the calm corner of the market: long-dated contracts, mostly government or regulated revenues, and a dividend that edges up year after year.

David Stevenson

That doesn’t mean the fund is boring and does nothing. Quite the contrary, in fact – as the recent full-year numbers showed, last year was actually very busy, even hectic. Despite this, the shares still trade at a mid-to-high-teens discount to NAV. The trust produced a 10.6% NAV total return (including dividends), one of its best years since launch back in 2006, while also running a pretty active playbook: selling mature assets at (or above) book value, buying back shares, and committing serious money to Sizewell C under the Regulated Asset Base model.

Fund details

· Share price: 128p

· NAV 153p with net assets £2.76bn

· Yield 6.7%

· 10-year NAV return 96%

· Discount 17% (average 18%)

Impressive 2025 numbers

Here’s a quick summary of the 2025 numbers, using City analysts’ commentary to flesh out the narrative. NAV per share ended 2025 at 151.5p (up 4.7% over the year), and once you add dividends, you get a 10.6% NAV total return.

JP Morgan (Overweight) had pencilled in 151.0p, so it’s a small beat rather than a shocker, but they still nudged up their live NAV estimate and slightly raised their steady-state return assumption. Analysts at Jefferies called it steady progress on NAV and dividends, but also flagged how much of the story is now about capital rotation and the gradual drawdown into investing in Sizewell C. Panmure Liberum went further, basically saying: this is a standout year, and INPP sits in that rare sweet spot of high income plus inflation linkage plus long visibility.

At the portfolio level, the assets delivered about a 10.2% return – roughly 120 basis points above the weighted average discount rate INPP started the year with. In plain English, the underlying projects performed better than the valuation model already assumed. A bit of macro helped too: higher short-term inflation assumptions added around 2.6% to the value, and foreign exchange chipped in roughly 0.5%. Higher risk-free rates were a small drag, but not enough to have a big impact.

In terms of portfolio positions, one success was BeNEX (German regional rail), with fair value up 35.1% after a run of concession wins and renewals; it now operates across 14 of Germany’s 16 federal states, covering about 67 million train kilometres a year. Tideway (the Thames “super sewer”), which is INPP’s single biggest asset at about 15.8% of the portfolio, added 7.6% as it moved through late-stage commissioning; JP Morgan notes that by March 2026, it had already diverted more than 19 million tonnes of sewage from the Thames. Cadent (gas distribution, c15.6% of value) dipped modestly (about -0.9%), mainly around regulatory updates; the RIIO-3 Final Determination was better than the draft, and there’s a CMA appeal in motion that isn’t yet being counted as upside in the valuation.

Here’s a simple snapshot of the major holdings.

Sizewell C is the headline change to INPP’s story. Financial close landed in November 2025, with INPP committing £254m of equity, drip-fed at roughly £50m a year over five years (with the first £35m going in during Q4 2025). What makes it different is the structure: it’s under the Regulated Asset Base (RAB) model, so INPP earns a fixed regulated equity return of 10.8% in real terms from day one. The cash yield is expected to be around 6%, and once you add CPIH inflation, the manager talks about a low-teens IR

Analysts also like that this isn’t a “blank cheque” construction bet. The construction-weighted average cost of capital (WACC) is fixed at 6.7% for the entire pre-completion period, with no regulatory resets. And there’s a Government Support Package designed to stop costs spiralling onto investors: if things breach certain thresholds, INPP isn’t forced to commit more than the original amount, and there’s a discontinuation compensation mechanism in really ugly scenarios. Panmure Liberum highlights the manager’s view that even then, returns should still come out north of 9%.

The bigger point is what Sizewell C does to the trust’s shape. Mature PPP assets tend to amortise i.e they generate cash, but the asset base gradually declines. Sizewell C is the opposite — the RAB compounds as equity are deployed, so NAV can keep building into the 2030s. Panmure Liberum reckons the deal adds roughly 0.3 percentage points to portfolio returns, nudges up the inflation linkage, and extends the portfolio’s dividend-supportable life from around 20 years to more than 25. JP Morgan’s take is similar: the incremental returns look better than simply buying back shares, even if the project risk is obviously higher.

The portfolio asset valuations are credible

One reason brokers sound comfortable about INPP’s NAV is that it has been selling assets in the real world at (or above) the values shown in the accounts. In 2025, it sold about £130m of assets at or above carrying value, taking disposals since June 2023 to more than £385m — roughly 14% of the portfolio. The highlights: a 49% minority stake in the Moray East offshore transmission link sold to Daiwa for about £40m; minority stakes in a bundle of UK education PPPs; and a partial stake sale in Angel Trains for roughly £32m. Jefferies and JPMorgan both point to this as “transaction evidence” supporting the valuation marks across the book.

At the same time, INPP has committed more than £345m to new investments (including Sizewell C) and has spent money on buybacks, even as the discount remains wide. The buyback programme was expanded to £225m (authorised to run to March 2027). By the time of the results, more than £135m had been completed, which management says has added roughly 1.6p to NAV per share. JP Morgan estimates there’s roughly £90m still available — around 4% of the market cap — which should provide some ongoing support for the share price

INPP hit its 2025 dividend target of 8.58p per share and covered it 1.1x by portfolio cash flows. It’s also sticking with the familiar 2.5% annual growth pattern: targets are 8.79p for 2026 and 9.01p for 2027. The line that keeps popping up in broker notes is the time horizon: management says it can keep paying progressive dividends at that pace for at least 25 years, even if it doesn’t do another deal. For income investors, that kind of visibility is the whole sales pitch.

My bottom line?

Ok, so let’s put this all together. The fund is selling assets at or above NAV. Dividends are steadily rising. The life expectancy of the asset base has also increased. Most revenues are government-backed or regulated.

Yet the shares trade at a persistent mid-to-high-teens discount, whereas for the first decade or so the fund traded at a persistent premium. Brokers suggest a few potential catalysts that could unlock value: continued buybacks; more evidence of disposals; investors becoming comfortable that Sizewell C really does add duration and compounding.

Panmure Liberum also reckon there’s a policy angle: they say it’s a bit odd that listed vehicles like this can provide daily-priced access to strategic UK infrastructure yet still get left out of some pension reform thinking. Strip it back, though, and the argument is straightforward: if you believe in inflation-linked cash flows, long dividend visibility, and a manager who can recycle capital sensibly, the current discount looks hard to sustain forever.

With the stock around 127p versus a NAV in the low-150s pence, you’re looking at roughly a 17% discount. Panmure Liberum pegs the prospective net total return at about 10% a year, made up of a yield of a bit over 7% plus dividend growth of 2.5%, and emphasises that about 98% of revenue is either government-backed or regulated. When 30-year gilts are in the mid-5% range, that spread starts to look pretty attractive.