HICL Infrastructure Plc (LON:HICL) has announced its Capital Markets Seminar – Strategy Update.
· HICL to target a 10%+ total return over the medium term, compared with an 8.5% NAV total return since IPO, reflecting the evolution of the infrastructure market and wider macroeconomic backdrop
· Dividend distributions remain central to HICL’s total return proposition, with existing dividend guidance for the financial years ending 31 March 2027 and 31 March 2028 unchanged and the progressive dividend policy maintained
· Higher total returns expected to be driven by a greater contribution from NAV growth, alongside continued income generation
· Selective introduction of higher returning “enhancer” investments alongside yield and growth assets expected to broaden return drivers and increase exposure to long-term infrastructure megatrends, with allocation expected to build over the medium-term up to 20% of the portfolio
· InfraRed is well positioned to deliver this strategy, drawing on its track record in constructing, expanding, operating and divesting assets for HICL over the past 20 years and its wider private funds for over 25 years
· Self-funded c.£1.6bn five-year capital allocation framework, supported by operating cashflows and capital recycling, to fund dividends, new investments and buybacks
· Continued asset rotation and investment discipline, with deployment into attractive opportunities benchmarked against share buybacks to enhance HICL’s return and growth profile
Mike Bane, HICL Infrastructure Chair, said:
“As HICL marks 20 years since IPO, the Board has set a clear strategic direction for the next phase of the Company’s development. Informed by extensive engagement with shareholders and careful consideration of the significant infrastructure market opportunity, the Board believes this is the right strategy to deliver both compelling NAV growth and attractive long-term total returns for shareholders whilst remaining anchored to HICL’s core infrastructure positioning.”
Edward Hunt, Head of Core Infrastructure Funds at InfraRed said:
“Today’s update represents a natural progression for HICL. Having successfully repositioned the portfolio over a number of years, we are now seeking to build on that foundation to best capture the continued substantial growth in the infrastructure market and deliver enhanced total returns for HICL shareholders. This approach is underpinned by InfraRed’s track record of delivering outperformance for HICL over the last 20 years through active management, and will enable the Company to deliver a compelling mix of capital growth and income from a portfolio positioned to benefit from long-term infrastructure megatrends.”
The Board and InfraRed Capital Partners, HICL’s Investment Manager, will today set out HICL’s continued strategic evolution at the Company’s 2026 Capital Markets Seminar (“CMS”).
Strategy Evolution
The strategy to be set out this afternoon marks the next phase in HICL’s long-term evolution, building on a proven track record of delivering attractive risk-adjusted returns for shareholders. Over two decades, the Company has demonstrated its ability to adapt to changing market conditions, evolving its portfolio construction and broadening its sources of return.
HICL’s predominantly UK PPP portfolio at IPO has transformed into a diversified international core infrastructure portfolio, with increasing exposure to assets providing capital growth alongside income. This evolution has been driven by structural changes in the infrastructure market, including the expansion of the investable universe, the increasing role of private capital and the emergence of new sectors aligned with long-term megatrends.
The Capital Markets Seminar will build on this established direction, with a clearer emphasis on delivering attractive income alongside increased long-term capital growth. This represents a considered progression in strategy, with the Company seeking to capture a broader range of return drivers while maintaining its focus on core infrastructure characteristics and disciplined portfolio construction.
Portfolio and Returns
Since their introduction to the portfolio in 2016, HICL’s growth assets now represent nearly 50% of the portfolio and play an important role in supporting long-term cashflows, earnings growth and portfolio outperformance. These assets provide active value creation opportunities through expansion capital, operational improvements and exposure to structural growth drivers.
As a result, the composition of returns has continued to evolve, with capital growth now contributing a material proportion of total return alongside income from the Company’s yield assets and significantly extending long-term earnings. This dynamic reflects both the changing opportunity set within infrastructure and the Company’s deliberate positioning to capture these trends.
The introduction of “enhancer” assets alongside the current portfolio of yield and growth assets represents a measured extension of this approach, targeting higher-return opportunities within a disciplined framework. These investments are expected to complement the existing portfolio by introducing additional avenues for value creation, supporting HICL’s target of a 10%+ total return over the medium term while remaining aligned with the Company’s risk parameters and overall core infrastructure focus.
Capital Allocation
The Company will set out self-funded capital allocation, designed to support both income generation and long-term value creation. This framework reflects a disciplined approach to balancing reinvestment and distributions, ensuring that capital is deployed in a way that enhances shareholder returns over time.
The Company expects to deploy c.£1.6bn of capital over the next five years into a combination of dividends, new investments and share buybacks, funded through operating cashflows and capital recycling. The recycling of capital through disposals is expected to remain an important feature of the strategy, with proceeds from disposals redeployed into opportunities that improve the Company’s return profile and portfolio construction.
No assumption is made for new equity issuance or additional leverage, underlining the self-funded nature of the strategy. This provides flexibility while maintaining balance sheet discipline. Capital will be allocated across yield, growth and enhancer assets to support income resilience, improve portfolio composition and drive long-term NAV growth. All investment decisions will be benchmarked to the returns available on share buybacks, with the proportion of investment dedicated to share buybacks expected to fluctuate depending on the share price discount.
Outlook
The Board and Investment Manager believe HICL is well positioned to deliver the next phase of its strategic evolution. The portfolio has evolved materially over time and is expected to continue benefiting from the expanding infrastructure opportunity set, while remaining focused on core infrastructure assets with resilient cashflows and strong long-term fundamentals.
The strategy is expected to support higher total returns over time, with a greater contribution from capital growth alongside continued income generation. HICL’s progressive dividend policy will be maintained and is expected to remain covered, notwithstanding a modest reduction in near-term cash dividend cover as capital is redeployed into higher-returning opportunities.
By combining income generation, disciplined capital allocation and selective exposure to higher-returning opportunities, the Company aims to enhance the growth, resilience and long-term value of the portfolio for shareholders in a higher-rate and evolving market environment
Event details
The event will be held in hybrid format at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS, with the option to watch via livestream. Formal proceedings are expected to start from 13:00 and to conclude by 15:30, followed by refreshments.
Institutional investors and sell-side analysts wishing to attend in-person should email [email protected]. Those wishing to watch via livestream can join at the following link: https://stream.brrmedia.co.uk/broadcast/6a3542f490cd59001384f163
Presentations and video recordings will be made available after the event on the Company’s website.
