A FTSE 250 dividend inventory — most likely my favorite one just lately — spiked 17% at the moment (6 February). It was funding belief BBGI International Infrastructure (LSE: BBGI).

Surprisingly, this wasn’t sufficient to high the mid-cap index gainers, as iron ore pellet producer Ferrexpo surged 21% greater.

Usually I’d be delighted to see one of these one-day rise from a inventory in my portfolio. And I’m actually not complaining, particularly because it had been drifting considerably aimlessly over the previous yr. But, it’s nonetheless bittersweet…

What occurred

BBGI has agreed to be acquired by Canadian pension fund supervisor British Columbia Funding Administration for £1.06bn. 

Underneath the phrases of this proposed all-cash deal, BBGI shareholders like myself will obtain 147.5p per share. It is a premium of 21.1% to the closing share price yesterday, and 20.1% greater than the earlier three-month common. 

On the provide, CEO Duncan Ball mentioned: “Since its launch in 2011, BBGI has grown to become one of the UK’s largest listed infrastructure funds, with a globally-diversified portfolio of 56 low-risk, core infrastructure assets that deliver sustainable and long-term index-linked cash flows. Over this period, we have delivered a total net asset value [NAV] return of 176.3%.”

The precise return has been much less, thoughts, because the belief has been buying and selling at a double-digit low cost to NAV. Certainly, simply final week (31 January), I wrote: “I think [BBGI] shares look very attractive at 121p.This leaves them 18.4% below the portfolio’s net asset value (NAV) of 148p, as at 30 June.”

I ended with: “If and when interest rates move lower, I think the share price could recover strongly as investors reassess the high-quality income on offer.”

It seems the fund isn’t ready about to search out out — the share price won’t have bounced again — and the board is recommending shareholders vote via the deal.

Why am I unhappy?

For me, it’ll convey this funding firmly again into constructive territory. Certainly, once I issue within the dividends I’ve acquired, the full return will likely be round 10% since I invested slightly below a yr in the past.

Not unhealthy, however I used to be anticipating much more over time. BBGI’s portfolio is made up of high-quality initiatives like healthcare amenities, tunnels, and toll bridges. The form of issues that aren’t going wherever and have a tendency to throw off dependable money to fund dividends.

The ahead dividend yield had crept above 7%, whereas administration was just lately boasting that BBGI had one other 15 years of dividend progress left within the tank from its current portfolio. Hey ho.

What is going to I do?

BBGI plans to declare an interim dividend earlier than the deal is accomplished. If I take that, the provide price will likely be decreased by the dividend quantity. The present share price of 143p largely displays this.

I received’t be hanging round now, although. I’ll promote up and transfer on.

A lot of worth round

That is the second enterprise in my portfolio within the final couple of months to be acquired at a major premium. Small-cap AI agency Windward rocketed 70% greater within the days main up to Christmas.

What this proves is that there’s nonetheless plenty of unrealised worth about at the moment in low cost UK shares. I count on much more shareholder worth to be unlocked throughout the FTSE 350 this yr.