Debate continues to rage about the effectiveness of share buybacks, but there is no doubting the 10% uplift Cordiant Digital (CORD ) secured this month after the investor in ‘plumbing of the internet’ announced plans for a £20m repurchase spree to tackle its heavily-discounted price.

The shares rallied from 83.6p on 9 February to 93.3p four days later and although the price has moderated to 90.5p, the gap to underlying net asset value has narrowed from 24% to 16%.

The spike reflects the market’s surprise given the board of the £844m portfolio had previously frowned at buybacks, saying there were better places to deploy precious capital.

But with the shares not recovering from the autumn selloff as quickly as other infrastructure funds, and moreover trading on a discount that until recently was wider than Digital 9 Infrastructure (DGI9 ) which suffered the unexpected departure of two fund managers last year, the board decided to act. 

‘The board is disappointed at the discount to NAV at which the company’s shares have been trading, although it notes that many other alternative asset companies have been similarly impacted by market conditions,’ said chair Shonaid Jemmett-Page.

Share buy-backs were until recently a rarity in the listed infrastructure fund sector, but Cordiant’s move follows Aquila European Renewables (AERI ), which set aside up to €20m for its share purchases earlier in the month.

Cordiant’s rally still leaves it about 10p below its 100p launch price two years ago. Ben Newell, analyst at Investec, the investment company’s corporate broker, said the lack of progress was at odds with the 3.3% yielder’s covered dividend and strong revenue growth which saw it reiterate its 4p per share dividend for the year to 31 March.

A trading update accompanying the buyback announcement showed revenues from its three main investments rose 8.8% to £146m in the nine months to 31 December. These are Polish independent broadcasting and telecoms infrastructure group Emitel, Czech multi-digital infrastructure platform Ceske Radiokomuikace (CRA) and New York data centre Hudson Interxchange.

Stifel’s Iain Scouller said: ‘Cordiant remains our favoured pick in the Digital sector given the more stable and robust platform. However, we do think more progress on the “build” part of its strategy would be helpful as it is a key reason to invest in the sector.’

Jemmett-Page said CORD was looking to do something about that. ‘The company’s pipeline of opportunities continues to increase with a number of high-quality opportunities with attractive growth potential in the UK, western Europe, and the US currently under review,’ said Jemmett-Page.