OCTOBER 2025
Contributing both growth and income: Cordiant Digital Infrastructure
At City Asset Management, whenever we add an alternative investment to our portfolios, we ask ourselves three questions:
1. Can it provide both income and long-term growth?
2. Do we trust the people running it?
3. Is there value waiting to be unlocked?
With Cordiant Digital Infrastructure, we believe the answer to all three is a resounding yes. This is why we continue to hold it, even though the share price has had its ups and downs.
Cordiant is a specialist investment trust that owns the physical infrastructure behind the digital economy. This isn’t about buying shares in tech companies; it’s about owning the ‘plumbing’ that makes the internet work; fibre-optic networks, mobile towers and data centres. These are essential assets that allow data to flow, streaming to run smoothly, and cloud services to function. Demand for data keeps growing as we all use more devices, stream more video, and businesses shift to digital and AI. That means the need for this infrastructure is only getting stronger.
Cordiant’s managers use a ‘Buy, Build & Grow’ approach. They buy existing infrastructure businesses, invest to expand or improve them, and then grow their revenues by signing new contracts or adding smaller complementary businesses. The goal is to deliver at least a 9% return per year, which comes from both income and growth in the value of the assets. They do pay a dividend but keep it slightly lower than some other trusts so they can reinvest profits and grow the underlying value over time.
Despite the challenging environment of the past couple of years, when rising interest rates hurt sentiment across the infrastructure sector, Cordiant has delivered very good results. In the year to March 2025, the value of its assets grew by nearly 8%. Total return including dividends was over 11%, ahead of its target. The share price has recovered strongly but is still trading below the value of the assets it owns, something we see as an opportunity. If that gap narrows further, investors could see an additional boost to returns.
We also like the people running Cordiant. The team, led by Steven Marshall, have decades of experience in digital infrastructure and continue to invest their own money in the trust, a strong sign that they believe in what they are building. The balance sheet is robust, with no significant debt repayments due until 2029. This gives the team breathing room to keep focusing on growth. They are choosing to make ‘bolt-on’ acquisitions, which are smaller, lower-risk additions to the portfolio, and will only sell assets when they believe they can achieve a good price.
Cordiant does sit at the slightly higher-risk end of infrastructure because it is focused on growth rather than just steady income. Its share price can be volatile and may continue to be sensitive to interest rate movements. Our view is that the trend to lower rates remains and should benefit returns. We believe the potential rewards are worth it. Growing cash flows, a rising dividend, reinvestment into the business and the possibility of the share price moving closer to the value of its assets give us confidence in the trust’s prospects.
That is why Cordiant remains firmly on our buy list. We expect it to play a valuable role in client portfolios over the coming years, contributing both income and growth.
This commentary was prepared by the CAM Research Team.