HICL Infrastructure Company Limited (LON:HICL), the listed infrastructure investment company advised by InfraRed Capital Partners Limited has today announced that the Group has entered into an agreement to sell its 9.7% interest in the AquaSure Desalination PPP Project.
The value of the Group’s investment in AquaSure was increased by approximately 10% in September 2017, in line with a market transaction earlier that year. The disposal price agreed will generate a premium for the Group, of approximately 7% over the AUD150m valuation of the investment at 31 March 2018. The transaction is expected to complete during Q4 2018, subject to third-party consents.
The disposal was initiated by InfraRed as part of the Group’s ongoing strategy of portfolio optimisation; delivering incremental value to HICL’s shareholders through strategic disposals, where pricing is attractive. The forecast future returns from AquaSure were appreciably lower than the overall weighted average total return from the HICL portfolio and the disposal is therefore expected to be accretive in terms of the total return. It will also improve the correlation of portfolio returns to inflation; and increase the weighted average asset life of the Group’s portfolio.
The Company intends to use the proceeds to reduce the balance on its revolving credit facility. Following completion of the disposal, drawings on the RCF are expected to be in the region of £70m.
Harry Seekings, Director at InfraRed said: “The accretive sale of HICL’s investment in AquaSure at this time, for an attractive price that takes advantage of favourable market conditions, is right for the Company and its shareholders. The Company is committed to the Australian market and continues to seek opportunities for primary investments in Australia that are accretive to the HICL portfolio.
“This disposal exemplifies HICL’s strategy of portfolio optimisation; and the achievement of a 7% premium over the most recent valuation clearly demonstrates the emphasis placed by the Board and InfraRed on enhancing shareholder value over the long term.”
HICL Infrastructure Company Limited 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 117 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.