LONDON, UK: HICL Infrastructure Plc has agreed to dispose of a portfolio of five assets to John Laing, an international core infrastructure investor.
The portfolio is made up of HICL’s entire equity interest in four UK PPP projects; Queens (Romford) Hospital, Oxford John Radcliffe Hospital (“OJR”), Priority Schools North East Batch and South Ayrshire Schools, in addition to half of its investment in the Hornsea II OFTO2.
The total consideration for the transaction is c. £204m, which represents a small premium to the Company’s last audited valuation for the relevant assets at 31 March 2023.
This accretive transaction evidences the robustness of the Company’s net asset value, improves portfolio construction, and enhances the key metrics of yield, inflation correlation and asset life. The partial sell-down of the recently acquired Hornsea II OFTO was envisaged at the time of acquisition and demonstrates responsible balance sheet management against a challenging market environment.
Completion of all five disposals is expected before HICL’s 31 March 2024 year-end. The transaction proceeds will reduce the drawings on the Company’s Revolving Credit Facility to c. £130m.
The largest of the five assets1, OJR, was developed by Carillion plc under the private finance initiative and HICL acquired its interests in 2010 and 2012. Following the liquidation of Carillion in 2018, InfraRed’s asset management team led the project restructuring to successfully resolve all outstanding contractual obligations with the NHS client, replace the facilities management service providers and subsequently remediate outstanding defects. As a result of HICL’s ownership, the project has been stabilised and de-risked, and maintains strong relationships with key stakeholders.
Edward Hunt, Head of Core Income Funds at InfraRed said: “This accretive sale of a representative cross-section of HICL’s portfolio further demonstrates the disconnect between public and private market valuations for high-quality infrastructure assets. Since 31 March 2023 the Company has realised over £300m from asset disposals demonstrating effective capital recycling while enhancing key portfolio metrics and reducing gearing.”