Analysts’ concerns over the possible ‘stale’ pricing of 3i Infrastructure’s fundraise this week have not deterred investors, with the placing drawing in £100m after costs.

This may be less than the £3bn investment company was looking for, however, or could have taken given the £555m drawn on its credit facility, but indicates investors remain keen on infrastructure funds after a bruising second half last year from rising interest rates and gilt yields.

That might bode well for AT85 Global Mid-Market Infrastructure Income, which is looking to float and end a drought in investment company listings that has endured for over 14 months. Its initial public offer closes on 23 February giving it under two weeks to convince investors to buy its shares at ‘par’, rather than buy several of the existing funds on a discount to net asset value (NAV).

3i Infrastructure will issue 30.9m new ordinary shares at 330p which will begin trading next Tuesday. The issue price offered a 3.4% discount to last Friday’s close and a 3.1% discount to the trust’s dividend-adjusted NAV on 30 September.

Some analysts questioned the latter, saying the NAV issued with half-year results in November was out of date and the real NAV could be above the issue price, thereby diluting shareholders’ stakes. The closed-end fund revalues its portfolio twice a year, meaning the next update is two months away.

Liberum analyst Shonil Chande doubted these concerns this morning. ‘This placement represents an increase of share capital by 3.5% but will, according to our estimates, not result in any meaningful dilution in NAV.’

JPMorgan’s Christopher Brown agreed, saying the issue was only ‘marginally dilutive’, reducing his current ‘live’ NAV estimate by 0.1p to 333.1p per share. That could change for better or worse once the next valuation was done, he said, suggesting investors take a broader view given that in the past ‘when 3iN has had excess cash, it has returned that cash to shareholders and, thus, there is an element of quid pro quo with shareholders to run a more efficient funding model.’ 

In the end, 3IN’s decision to apply ‘soft premption’ and give existing shareholders their full pro rata share of the placing at the expense of new investors may have defused any row.

Winterflood’s Emma Bird, who was critical when the placing was launched on Monday, said this ‘shows the board’s alignment in protecting shareholder value and we commend this’.

Stifel’s Iain Scouller, who also felt the issue was probably priced below the current, but unknown, NAV, said: ‘We are a bit surprised that only £100m was raised and whilst the announcement talks about a scale-back, we assume demand was just above £100m and the scale-back makes a nice round number, rather than there being significant excess demand. The company did not set a target, but it could have issued up to £294m of shares if the demand were there and the board and manager wanted to take the cash.’

Brown said the limited scaling back of subscriptions ‘implies that existing shareholders were prioritised at the expense of simply maximising the issue proceeds, which should result in a better aftermarket’.

Shares in 3IN, one of the best performers in its sector over five years, eased 2p to 330p, slightly below Brown’s NAV estimate, which he described as ‘very attractive’ given the ‘well diversified portfolio and long-term track record of adding value’.

3i Infrastructure (3IN ) will use the money to repay some of its credit facility and provide funds for new investments.

Richard Laing, chair of 3IN’s board, was pleased with the support from shareholders. ‘The proceeds will provide the company with useful additional flexibility to fund attractive discretionary growth opportunities in our portfolio, such as a recent £28m commitment to acquire Future Biogas, which as a sister company to Infinis will form the largest producer of green gas in the UK.’