REG - HICL Infrastructure - Interim Statement and Capital Allocation Update

HICL InfrastructureAnnouncement

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RNS Number : 2188V  HICL Infrastructure PLC  04 March 2026

4 March 2026

 

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").

 

Interim Update Statement and Capital Allocation Update

 

The Board of HICL is issuing this Interim Update Statement, which relates to
the period from 1 October 2025 to 28 February 2026.

 

Mike Bane, Chair of HICL said:

 

"HICL has delivered robust operational performance during the period, with
capex programmes driving EBITDA growth, alongside resilient cash generation
across the portfolio, supporting our confidence in achieving our target
dividend cash cover of 1.1x for the year. We have continued to execute our
disciplined and flexible approach to capital allocation, completing
divestments and resuming accretive share buybacks.

 

Following the withdrawal from the proposed combination with TRIG, the Board
has been engaging extensively and constructively with shareholders, covering a
wide range of matters including the Company's long-term objectives and
strategic priorities on a standalone basis. These discussions highlight the
widespread appreciation of HICL's high quality portfolio, strategy and active
approach, as well as support for the continued evolution of the Company's
return profile. With good underlying investment performance, and the portfolio
well-positioned for both capital and income growth, your Board looks forward
to building on this progress and continuing to create shareholder value."

 

 Key Highlights
 ·         Portfolio performance in line with expectations, with capex programmes across
           HICL's growth assets continuing to drive EBITDA growth.
 ·         Active capital recycling completed, with the £225m disposal of seven UK PPP
           assets completed in the period in line with carrying value, which will enable
           full repayment of the Company's RCF and funding of committed growth
           investments.
 ·         Disciplined and flexible capital allocation with share repurchases resumed,
           recognising that buybacks are an accretive use of capital at current discount
           levels, alongside investment, distributions and balance sheet priorities.
 ·         Dividend outlook reaffirmed, with the Company on track to deliver its target
           dividend of 8.35p per share for the year ending 31 March 2026 (forecast cash
           cover of c.1.1x) and reiterating its target dividend of 8.50p per share for
           the year ending 31 March 2027.
 Capital Allocation
 ·         The Company's approach to capital allocation remains focused on balance sheet
           strength, shareholder distributions and accretive investment that advances the
           Company's strategic priorities.
 ·         Divestments and investments continue to be selectively pursued where they
           improve portfolio construction, with the return available on share buybacks
           providing a benchmark against which to assess capital allocation decisions.
 ·         As at 28 February, the RCF was £50m drawn and the Company had a cash balance
           of £147m, including sale proceeds received from the disposal of seven assets
           and after a £60m RCF repayment. The RCF is to be fully repaid by 31 March
           2026 from the remaining sale proceeds.
 ·         £50m of the sale proceeds was allocated to fund HICL's equity commitment to
           Affinity Water, as previously disclosed. Proceeds of c.£66m will be allocated
           to funding the existing equity commitments to Blankenburg tunnel and B247, due
           in September and December 2026 respectively, also as previously disclosed.
           This contribution meets HICL's deferred equity obligations as these assets
           successfully complete construction and move into their operational phase.
 ·         The Company has resumed buying back its own shares, with £4m acquired in the
           period since 1 January 2026 and £154m now acquired since the start of the
           programme, which the Board considers to be an effective allocation of capital
           at current discount levels. The Company expects to continue to pursue share
           buybacks, at its discretion, where these represent the most attractive use of
           capital, while preserving the Company's balance sheet and prioritising a
           progressive dividend.
 ·         Attractive opportunities to make further investments are considered by the
           Company where returns exceed those available from share buybacks. The
           Investment Manager sees significant opportunity within the existing portfolio,
           in particular, in the form of incremental equity stakes and follow-on
           investments to support growth. In such situations, the Company is well placed
           to maximise value from incumbent positions in high quality assets. Currently
           the Company is pursuing several live opportunities within the existing
           portfolio, of modest size, which compare favourably to alternative uses of
           capital.
 ·         The Company is also pursuing further selective accretive divestments to fund
           rotation into attractive investment opportunities, whether in the form of
           further asset acquisitions or share buybacks. The Board will also consider
           more opportunistic asset disposals in special situations where outsized
           returns are available and the economic case for sale is compelling.
 Portfolio Performance
 ·         Operational performance across the portfolio in the period was in line with
           expectations, demonstrating the resilient nature of the underlying assets. NAV
           performance and cash generation remain in line with forecast.
 ·         HICL's growth investments continue to perform well, progressing significant
           expansion capex programmes and delivering EBITDA in line with expectations.
           Notable updates are included below:
 ·         o  At Affinity Water, the management team remains focused on delivering the
           AMP8 business plan. During the period, the company appointed Mark Garth as
           Chief Executive Officer, who brings significant sector experience from United
           Utilities particularly in relation to achieving industry-leading operational
           performance. HICL continues to expect distributions from Affinity Water ahead
           of 31 March 2026. The Company notes the publication of the UK Government white
           paper on water sector reform, which is largely consistent with the final
           recommendations of the Cunliffe Report, many of which are expected to be
           beneficial for strong performers such as Affinity Water.
 ·         o  London St. Pancras High Speed performed well in the period, with
           international train path bookings slightly ahead of forecast. The period saw
           further progress in relation to a potential second international operator on
           the route, including announcements by Virgin Trains regarding its intentions
           for cross‑Channel operations from St. Pancras and approach to rolling stock
           procurement having been awarded depot capacity by the UK rail regulator. The
           launch of new services remains subject to further regulatory approvals and
           delivery milestones; however, this progress reduces barriers to an increase in
           international train paths which would ultimately increase the valuation of
           HICL's investment.
           o  Fortysouth delivered 16 new towers during the period and is actively
           progressing incremental co-location opportunities, both of which are expected
           to support continued growth in EBITDA in line with HICL's valuation
           assumption. The company recently completed an accretive refinancing which was
           c.30% oversubscribed, and which enabled a step-down on debt margins earlier
           than forecast, underlining the quality and long-term visibility of
           Fortysouth's revenues.
 ·         Cash generation from the PPP portfolio continues to be in line with
           expectations, underpinning dividend cover in line with market guidance.
 Financial Performance and Valuation
 ·         The Company remains on track to deliver its target dividend of 8.35p per share
           for the financial year ending 31 March 2026, a 0.1p increase on the prior
           year, supported by cash generation that is in line with expectations. Forecast
           dividend cash cover for the year end is anticipated to be in line with
           previous guidance at 1.1x. The Board also re-iterates its target dividend of
           8.50p per share for the year to 31 March 2027.
 ·         Latest actual inflation is tracking slightly below HICL's forecast for the
           period ending 31 March 2026 in the UK and France, and slightly ahead
           for New Zealand. Overall the Company expects no material impact on its 31
           March 2026 NAV from actual outturn inflation.
 ·         Long term government bond yields in the UK have decreased slightly, by
           approximately 20 basis points, since the Company's valuation at 30 September
           2025. Over the same period, overall movement in bond yields in the United
           States, Canada, New Zealand and the Eurozone has been relatively flat.
           Transaction activity in the period, including direct experience from HICL's
           recent disposals and InfraRed's broader platform, reinforces the Investment
           Manager's view that there is no strong evidence to support a movement in
           discount rates. This will be reviewed as at 31 March, in line with the
           established portfolio valuation process.
 Shareholder consultation
 ·         The Company's Chair and Senior Independent Director (SID) are undertaking an
           extensive consultation programme with shareholders which is expected to
           conclude shortly. Over the last six weeks, they have met 23 investors,
           representing over 47% of the register..
 ·         Discussions have been wide-ranging and constructive, spanning portfolio
           construction, NAV performance, capital allocation and corporate governance.
           The Board expects to update shareholders on the conclusions of this
           consultation at the annual results, scheduled to be published in May.
 ·         Shareholder discussions also highlight widespread appreciation of HICL's high
           quality portfolio, strategy and active approach, as well as focusing on the
           continuing evolution of the Company's growth and returns profile. The Company
           expects further shareholder engagement on the strategic direction of the
           Company over the course of the Annual Results investor roadshow, ahead of a
           capital markets event planned for shortly thereafter.
 Market and Outlook
 ·         The outlook for core infrastructure continues to strengthen, underpinned by
           renewed political commitment to infrastructure investment, resilient
           transaction activity and strong investor demand for long‑duration,
           inflation‑linked assets. Structural megatrends continue to drive long‑term
           investment requirements across communications, utilities, transport and social
           infrastructure, reinforcing the attractiveness of infrastructure as an asset
           class.
 ·         In an environment characterised by rapid technological change, significant
           geopolitical instability and broader macroeconomic uncertainty, the role of
           essential infrastructure assets has become increasingly important. Advances
           such as artificial intelligence are reshaping economic activity and driving
           higher demand for reliable energy, transport and digital networks, while
           geopolitical tensions and supply‑chain disruption have reinforced the
           strategic value of resilient, domestically anchored infrastructure.
 ·         This is increasingly being recognised in private markets, as transaction
           volumes for high-quality infrastructure assets remain strong, underpinned by
           robust private market valuations (as demonstrated by HICL's disposal
           activity), and significant dry powder available for deployment. Public markets
           have seen defensive infrastructure and utility company share prices increase
           strongly in recent months. This constructive market backdrop supports ongoing
           asset rotation and disciplined reinvestment at attractive risk‑adjusted
           returns.
 ·         Against this backdrop, HICL is well positioned to progress its strategy. The
           portfolio benefits from inherently defensive characteristics, including
           inflation linkage, long asset lives and limited exposure to interest rate
           volatility.  The Company's business model is self‑sustaining; successful
           disposal activity, increasing free cash generation and a strong balance sheet
           position drives the continued delivery of the investment proposition. This
           platform provides the Board with significant capital allocation flexibility,
           assessing selective new investment opportunities against further share
           repurchases, to support long‑term NAV and dividend growth.

 

 

 

-Ends-

 

 

 

 

Enquiries

InfraRed Capital Partners Limited               +44 (0) 20 7484
1800 / info@hicl.com (mailto:info@hicl.com)

Edward Hunt

Mark Tiner

Mohammed Zaheer

 

Brunswick                               +44 (0)
20 7404 5959 / hicl@brunswickgroup.com (mailto:hicl@brunswickgroup.com)

David Litterick

 

Investec Bank plc
 
            +44(0) 20 7597 4952

David Yovichic

Denis Flanagan

 

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 leading long-term investor in
infrastructure assets, with a diversified portfolio of predominantly
operational investments generating stable, inflation-linked cashflows. Since
becoming the first infrastructure investment company to be listed on the
London Stock Exchange, HICL has established a strong track record of investing
in essential assets that support the delivery of public services and
long‑term value creation.

The Company's investment strategy is focused on delivering a total return for
shareholders consisting of sustainable dividend growth and long‑term NAV
accretion, enabled by highly visible cashflows, long asset lives and active
portfolio management. HICL's portfolio is positioned towards the lower end of
the infrastructure risk spectrum and is underpinned by disciplined capital
allocation, strong cash generation and a self‑funding model.

Further details can be found on the HICL website www.hicl.com
(http://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, Miami, Seoul, Madrid, Frankfurt
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
(http://www.ircp.com/) .

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