Acquisition Activity - French Fibre Investment
5 April 2023
HICL Infrastructure PLC
"HICL" or "the Company" and, together with its subsidiaries, "the Group", the London-listed infrastructure investment company managed by InfraRed Capital Partners Limited ("InfraRed" or the "Investment Manager").
Acquisition Activity - French Fibre Investment
The Board is pleased to announce that HICL has entered into an agreement to acquire a minority equity position in Altitude's fibre-to-the-home platform ("Altitude Infra"), investing alongside other InfraRed-managed funds and co-investors which, together with HICL, will own 15.1% of Altitude Infra. Altitude Infra holds a controlling position in the largest independent wholesale fibre network in France, Altitude Infra THD. The Altitude Infra stake will be acquired from Altitude Group, which will retain a majority shareholding. The investment is accretive to HICL's key portfolio metrics, enhances portfolio diversification and improves the earnings profile of the Company. Following completion, the investment will represent approximately 2% of HICL's portfolio, by value1.
Altitude Infra is a leading owner/operator in the French fibre-to-the-home ("FTTH") market, with a c. 30% market share of the fibre footprint in the Public Initiative Networks (PIN) areas. It owns and operates 27 separate infrastructure networks awarded under the PIN scheme which together cover more than 5 million homes across France. Altitude Infra is the sole wholesale provider of FTTH fibre in its subsidised rural networks and has completed c.70% of its fibre roll-out target, with the remaining roll-out responsibilities shared between local authorities and Altitude Infra. Management of the roll-out (where appropriate) and ongoing operations is delivered through Altitude Infra's wholly owned project management and operations capabilities.The investment does not have any near-term refinancing risk.
France has an attractive market framework, underpinned by a national initiative to meet full FTTH rollout by 2025 and regulated by ARCEP, the French telecom regulator. Altitude Infra earns inflation-linked wholesale revenues generated from the sale of its broadband and network services to Internet Service Providers such as Free, Bouygues Telecom, Orange and SFR under an ARCEP tariff structure.
The investment will be funded by HICL's £650m Revolving Credit Facility ("RCF") with completion expected in Q2 2023.
In addition, the Company is in advanced negotiations to sell an existing investment and has granted a short period of exclusivity to a third-party bidder. The accretive disposal is expected to generate proceeds to materially fund the investment in Altitude Infra. Following completion of the disposal and the acquisitions of Altitude Infra and Texas Nevada Transmission (announced September 2022) the balance on HICL's RCF is expected to be c. £400m.
Active portfolio rotation remains an important lever for HICL to enhance portfolio construction, and it provides both a valuable source of funding outside of financial markets and evidence of the robustness of HICL's investment portfolio valuation.
Edward Hunt, Head of Core Income Funds at InfraRed said:
"InfraRed is delighted to have added a second high-quality communications investment to HICL's portfolio. The investment benefits from highly attractive core infrastructure attributes, with predictable inflation-linked revenues under a mature and regulated wholesale market framework. We are excited to be partnering with an operator of such high quality and strong market standing."
1. As at 31 December 2022, using the Directors' Valuation
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Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800 / info@hicl.com
Edward Hunt
Helen Price
Mohammed Zaheer
Teneo +44 (0) 20 7420 3169 / HICL@teneo.com
Haya Herbert-Burns
Matthew Thomlinson
Investec Bank plc +44(0) 20 7597 4952
David Yovichic
RBC Capital Markets +44 (0) 20 7653 4000
Matthew Coakes
Aztec Financial Services (UK) Limited +44(0) 203 818 0246
Chris Copperwaite
Sarah Felmingham
HICL Infrastructure PLC
HICL Infrastructure PLC ("HICL") is a long-term investor in infrastructure assets which are predominantly operational and yielding steady returns. It was the first infrastructure investment company to be listed on the London Stock Exchange.
With a current portfolio of over 100 infrastructure investments, HICL is seeking further suitable opportunities in core infrastructure, which are inherently positioned at the lower end of the risk spectrum.
Further details can be found on the HICL website www.hicl.com .
Investment Manager (InfraRed Capital Partners)
InfraRed Capital Partners is an international infrastructure investment manager, with more than 180 professionals operating worldwide from offices in London, New York, Sydney and Seoul. Over the past 25 years, InfraRed has established itself as a highly successful developer and custodian of infrastructure assets that play a vital role in supporting communities. InfraRed manages US$14bn+ of equity capital1 for investors around the globe, in listed and private funds across both income and capital gain strategies.
A long-term sustainability-led mindset is integral to how InfraRed operates as it aims to achieve lasting, positive impacts and deliver on its vision of Creating Better Futures. InfraRed has been a signatory of the Principles of Responsible Investment since 2011 and has achieved the highest possible PRI rating2 for its infrastructure business for seven consecutive assessments, having secured a 5-star rating for the 2021 period. It is also a member of the Net Zero Asset Manager's Initiative and is a TCFD supporter.
InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates BentallGreenOak, a global real estate investment management adviser, and Crescent Capital, a global alternative credit investment asset manager.
1
Data as at Q3 2022. Equity Capital is calculated using a 5-year average FX rate
2 Principles for Responsible Investment ("PRI") ratings are based on following a set of Principles, including incorporating ESG issues into investment analysis, decision-making processes and ownership policies. More information is available at
https://www.unpri.org/about-the-pri
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