International Public Partnerships: latest update

The volatility created by recent events in the Middle East has highlighted the importance of including some steady performers in your portfolio. A good example is the £2.2 billion infrastructure investment trust, International Public Partnerships (INPP), which has just released its annual results for the year ended December 2025.

INPP’s income predominantly comes from government-backed availability or regulated revenues. On average, these increase by 0.7% for every 1% rise in inflation, with very limited exposure to broader economic conditions.¹

This allows the trust to deliver a consistently growing stream of dividends while maintaining a low correlation to other asset classes, making it an effective portfolio diversifier. INPP also benefits from a highly experienced and well-resourced management team, which has helped it to secure a place on Fidelity’s Select 50 list of handpicked funds.

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Objective and approach

International Public Partnerships aims to provide stable, long-term, inflation-linked returns, based on growing dividends and the potential for capital appreciation. It does this by investing in a diversified portfolio of infrastructure assets and businesses that meet societal and environmental needs both now and into the future.²

The portfolio comprises more than 130 assets, including educational institutions, healthcare facilities, transport networks, utilities and communication services. These are considered essential to economic productivity and the functioning of society.³

Around 82% of the holdings are fully operational, with the remainder under construction. The majority (72%) are located in the UK, with the largest sector exposures being transport, energy transmission, wastewater, gas distribution, and education.⁴

The three types of assets

The majority of the portfolio (53%) is invested in regulated assets like the Thames Tideway ‘super sewer’, the Cadent gas distribution network and the Sizewell C nuclear power station. These operate under the oversight of independent statutory regulators, which are responsible for setting allowable returns and key operating parameters.⁵

Public Private Partnerships account for a further 35% and are structured as concession-based investments. Under this model, private sector operators are responsible for building, maintaining, and operating infrastructure such as schools and police buildings in exchange for availability-based revenues.⁶

The remaining 12% of the portfolio consists of operating businesses. Two of the key examples are Angel Trains, the UK’s largest rolling stock leasing company, and BeNEX, a wholly-owned German regional rail business.⁷ 

Attractive source of income

These types of assets generate reliable revenue streams that support healthy, progressive dividends. For the year to December 2025, the trust met its distribution target of 8.58p per share, covered 1.1 times by net operating cashflows.⁸

The Board has reaffirmed its 2026 dividend target of 8.79p (a 2.5% increase) and declared a 2027 target of 9.01p, representing a further 2.5% rise.⁹ Based on the existing portfolio, it expects to sustain this level of dividend growth for the next 25 years - an unusually strong and valuable characteristic.¹⁰

At the current price of 129p, the shares offer a prospective yield of 6.8% for 2026, although this is not guaranteed. Dividends are paid quarterly in equal instalments, which is an attractive feature for income investors.¹¹

Disposals, buybacks and discount

INPP has maintained a disciplined approach to capital allocation, enabling it to fully repay its debt. It is also undertaking a £225m share buyback programme, expected to run until March 2027, of which £135m has already been returned to shareholders^.12

In 2025, the trust completed £130m of disposals across its three core segments, with all transactions achieved at or above carrying value.¹³ Despite this, the shares currently trade at a 16% discount to NAV, broadly in line with the three-year average.¹⁴

Since June 2023, INPP has made £345m of new commitments, including £254m allocated to Sizewell C.¹⁵ The latest ongoing charges figure stands at 1.09%, reflecting the illiquid nature of infrastructure assets.¹⁶

Performance

During 2025, the trust delivered a net asset value (NAV) total return of 10.6%. This was driven by strong portfolio performance and gains on asset disposals, as well as supportive foreign exchange and macroeconomic factors.¹⁷

INPP’s long-term track record is pretty good compared to the wider market. Since listing in 2006, it has generated an annualised total shareholder return (TSR) of 6.3%, broadly in line with the FTSE All-Share Index, reflecting the consistent delivery of stable, long-term cashflows.¹⁸

The shares have also proved resilient during recent market volatility linked to events in the Middle East. This is because higher inflation expectations have boosted projected revenues, largely offsetting the negative valuation impact of rising government bond yields.

What are the broker’s latest views?

The broker Investec says that the portfolio continues to perform well operationally, and the shares continue to trade at a material discount to NAV.¹⁹

“In our view, balancing share buybacks at a material discount to NAV with investment in attractive opportunities, funded through disposals, remains the right approach in the current environment.”²⁰

• More on International Public Partnerships

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• Watch: Smart investors use these investments for income - here's how 

Source:

^1,7 INPP, annual accounts to 31 December 2025
^{2,3,4,6,11,18} INPP factsheet, 31 December 2025
^{5,8,9,12,13,15,17,19,20} Investec, 27 March 2026
¹⁰ Peel Hunt, 26 March 2026
^14,16 Fidelity International

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Shares in International Public Partnerships are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.