HICL Infrastrct PLC - Interim Update Statement
Interim Update Statement
The Board of
"HICL's performance since
"The Company has focused on value enhancement through active asset management within its PPP portfolio. Performance of HICL's demand-based assets has been good, with traffic on the toll roads once again ahead of expectations.
"The Board notes the draft determination on Affinity Water's business plan that was published in July. The regulator has accepted a number of Affinity's performance commitments, and acknowledged the company has addressed many of the regulator's concerns, which gives us some confidence. However, elements of the feedback represent significant challenges for the company and constructive negotiations continue.
"Although acquisition activity has been relatively muted in the period since
· The Group has a portfolio of 118 investments located in the
· The Company completed its previously announced investment in the Blankenburg Connection PPP project in
· As previously reported, HICL's partnership with
· The Investment Manager will continue to consider opportunities to optimise key portfolio metrics by making selective strategic disposals that take advantage of ongoing, favourable market conditions. In addition to creating value in excess of that which could be delivered by continued ownership, the rationale for disposals could include realising certain minority positions with limited potential to increase ownership; or the mitigation of portfolio exposure to certain commercial risks.
· Cash generation from the portfolio has been in line with the expectations in the
· PPP projects represented 71% of portfolio value at
· The Group's demand-based investments represented 21% of portfolio value at
· Regulated assets represented 8% of portfolio value at
- The regulator has accepted a number of Affinity's performance commitments, and acknowledged that the company has addressed in its re-submission many of the concerns raised; however,
- The feedback from the regulator includes a number of adverse elements which may impact the valuation of the Group's investment (see
Dividends and Financing
· The Company announced a final quarterly interim dividend for the financial year ended
· The Company announced a first quarterly interim dividend for the financial year ending
· As outlined in the 2019 Annual Report, the Board does not intend to offer a scrip dividend alternative going forward. In lieu of this, the Company's registrar
· The Board re-affirms the target dividend guidance of
· Based on the announced acquisition activity and scheduled commitments to existing investments, the Investment Manager estimates that the Group will have a funding requirement of approximately
· The Board and Investment Manager continue to assess market conditions when considering potential funding activities, including consideration of capital raising.
· As at
· The next valuation of the Group's portfolio will be as at
· Key valuation considerations for Affinity Water are expected to include i) analysis of the latest draft determination in relation to its business plan for AMP7, and ii) the impact of the prevailing negative political environment on valuations of private sector investments in
Company and Governance
· The Company's Annual Report for the year ended
· The Company held its Annual General Meeting ("AGM") on
· Following shareholder approval at the AGM of the Board's authority to issue up to 10% of outstanding shares on a non pre-emptive basis during the next 12 months, the Company's current tap capacity is approximately 179.1m shares (limited by the AGM authority).
· As in previous years, and aligned to corporate governance best practice, the existing Directors offered themselves for re-election at the AGM on
· During the period, the Investment Manager continued its proactive approach to political engagement on infrastructure funding in the
· An updated Key Information Document, based on the costs disclosed in the 2019 Annual Report, was published on the Company's website on
Market and Outlook
· The Investment Manager continues to seek appropriate opportunities across the key market segments identified in the Company's Acquisition Strategy and pipeline activity remains healthy. These are: PPP projects; regulated assets; demand-based; and an opportunistic approach to assessing corporate assets (e.g. rolling stock) with contracted revenues.
· The Group has successfully managed a number of projects through construction into operations and as a result the portfolio exposure to construction risk is at a historically low level. The Investment Manager continues to review opportunities to invest in greenfield PPP projects in its core geographies (
· The Group's exposure to assets with GDP correlation is currently at its target level and the Group has limited appetite to make further investments in this market segment at present.
· Market dynamics continue to drive competition and keen asset pricing. Pricing discipline remains a key focus of the Group. These market conditions are also favourable for selective strategic disposals. The Investment Manager and the Board will continue to consider opportunities to make value accretive disposals which improve the Company's diversification and portfolio metrics.
1 This is a target only and not a profit forecast. There can be no assurance that this target will be met.
With a current portfolio of 118 infrastructure investments, HICL is seeking further suitable opportunities, which are positioned at the lower end of the risk spectrum, in three target markets segments: PPP projects; regulated assets; and demand-based assets.
Further details can be found on the HICL website www.hicl.com.
Investment Manager (
The Investment Manager to HICL is
The infrastructure investment team at InfraRed consists of over 80 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
Further details can be found on InfraRed's website www.ircp.com.
This information is provided by RNS, the news service of the
Quick facts: HICL Infrastructure Company Limited
Market Cap: £3.41 billion
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