Incremental Investment in A63 Motorway for c. £20m
21 December 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".
HICL acquires additional stake in French toll road for c. £20m, bringing total interest to 24%
· Additional 3.1% interest acquired in A63 Motorway for c. £20m on highly accretive terms
· Total return and yield significantly in excess of the bar set by alternative uses of capital
· Continued focus on disciplined balance sheet management, with live disposal activity
The Board is pleased to announce that HICL has agreed to acquire a further 3.1% interest in the A63 Motorway concession (the "A63") in France for c. £20m from a co-shareholder. Completion is expected in early 2024, subject to customary third-party consents.
The asset is a 40-year toll-road concession to design, upgrade, finance, operate and maintain a 104km section of the existing A63 between Salles and Saint-Geours-de-Maremne, in southwest France. The A63 benefits from its strategic positioning as an important trans-European transport corridor, which has resulted in historically resilient traffic performance. HICL first invested in the A63 in 2017, and InfraRed's management of the asset dates back to 2011. Following this incremental investment, HICL will hold a 24% interest in the asset.
In line with the Board's disciplined approach to capital allocation, this acquisition was carefully evaluated against alternative uses of capital, including the repurchase of the Company's shares. The Board is satisfied that the expected return and yield from this incremental investment are significantly in excess of the relevant hurdles and presents a unique opportunity to increase HICL's investment in a high-performing quality asset.
The acquisition will be funded from the proceeds of the recently announced disposals. Once the announced disposals have completed, HICL's revolving credit facility ("RCF") is forecast to be c. £135m drawn. The Company continues to benefit from live disposal activity as part of HICL's active approach to enhancing portfolio composition through asset rotation.
Mike Bane, Chair of HICL, said:
"This attractive incremental investment for HICL aligns with the Board's strict capital allocation framework. It provides greater accretion than alternative uses of capital and the investment has a well-understood risk profile. Highly disciplined balance sheet management remains a priority for the Board, including the reduction of RCF drawings over time."
Edward Hunt, Head of Core Income Funds at InfraRed, said:
"We are pleased to have increased HICL's stake in this high-quality European transport link, which InfraRed has successfully managed for over ten years. While the bar for acquisitions remains high, incremental investments such as this demonstrate the attractive risk and reward dynamic that can be captured by nimble investors in the current market in specific circumstances."
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Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800 / info@hicl.com
Edward Hunt
Helen Price
Mohammed Zaheer
Brunswick +44 (0) 20 7404 5959 / hicl@brunswickgroup.com
Sofie Brewis
Investec Bank plc +44(0) 20 7597 4952
David Yovichic
RBC Capital Markets +44 (0) 20 7653 4000
Matthew Coakes
Elizabeth Evans
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)
The Investment Manager to HICL is InfraRed Capital Partners Limited ("InfraRed") which has successfully invested in infrastructure projects since 1997. InfraRed is a leading international investment manager, operating worldwide from offices in London, New York, Seoul and Sydney and managing equity capital in multiple private and listed funds, primarily for institutional investors across the globe. InfraRed is authorised and regulated by the Financial Conduct Authority.
The infrastructure investment team at InfraRed consists of over 100 investment professionals, all with an infrastructure investment background and a broad range of relevant skills, including private equity, structured finance, construction, renewable energy and facilities management.
InfraRed implements best-in-class practices to underpin asset management and investment decisions, promotes ethical behaviour and has established community engagement initiatives to support good causes in the wider community. InfraRed is a signatory of the Principles of Responsible Investment.
Further details can be found on InfraRed's website www.ircp.com.
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