HICL Infrastructure portfolio performing in line with expectations

(Sharecast News) - HICL Infrastructure said on Wednesday that its portfolio performance remained in line with expectations during the period from 1 October to 28 February, as capital expenditure programmes across its growth assets continued to support EBITDA expansion and resilient cash generation across the portfolio. The FTSE 250 infrastructure investor said in its interim statement that the operational performance of its assets remained robust, with NAV performance and cash generation tracking forecasts.

Cash generation from the group's public-private partnership portfolio also remained in line with expectations, underpinning dividend cover consistent with market guidance.

Chair Mike Bane said the company had 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".

HICL said it completed the disposal of seven UK PPP assets for £225m during the period in line with their carrying value as part of its active capital recycling strategy.

The proceeds were being used to repay the company's revolving credit facility and fund committed growth investments.

As of 28 February the facility had £50m drawn, while the company held a cash balance of £147m following receipt of the sale proceeds and after a £60m repayment.

The remaining proceeds were expected to allow the facility to be fully repaid by 31 March.

Part of the proceeds has already been allocated to investment commitments, including £50m for HICL's equity stake in Affinity Water and around £66m to fund deferred equity contributions to the Blankenburg tunnel and B247 projects due later in 2026 as those assets transition into operation.

The company said it had also resumed its share buyback programme, acquiring £4m of shares since 1 January.

Total buybacks since the start of the programme now amounted to £154m, with the board describing repurchases as an accretive use of capital at the current share price discount.

HICL said it would continue to assess buybacks against other investment opportunities while maintaining balance sheet strength and prioritising a progressive dividend.

Bane said the company had also been engaging with shareholders following the withdrawal from the proposed combination with TRIG.

"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," he said.

"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."

Across the portfolio, HICL highlighted continued progress at several assets.

At Affinity Water, a new chief executive, Mark Garth, was appointed as the business focussed on delivering its AMP8 investment programme, while the group expected distributions from the asset ahead of 31 March.

At London St Pancras High Speed, international train path bookings were slightly ahead of forecast and the company noted progress toward the potential entry of a second cross-Channel operator following announcements by Virgin Trains regarding prospective services from St Pancras.

Fortysouth, the telecoms tower operator, delivered 16 new towers during the period and was pursuing additional co-location opportunities to support EBITDA growth.

The company also completed an oversubscribed refinancing, which allowed debt margins to step down earlier than expected.

HICL reiterated its dividend outlook, saying it remained on track to deliver a total dividend of 8.35p per share for the year ending 31 March, up 0.1p on the prior year, with forecast cash cover of around 1.1 times.

The board also reaffirmed its target dividend of 8.5p per share for the year ending 31 March 2027.

On the valuation outlook, the company said inflation had tracked slightly below its forecasts in the UK and France and slightly ahead in New Zealand, with no material impact expected on its 31 March NAV.

UK government bond yields had fallen by around 20 basis points since the September valuation, while yields in the US, Canada, New Zealand and the eurozone remained broadly flat.

HICL said recent transaction activity, including its own disposals, provided no strong evidence for a change in discount rates ahead of the March valuation review.

Looking ahead, the company said the outlook for core infrastructure assets remained supportive, citing renewed political backing for infrastructure investment, resilient transaction volumes and strong private market demand for long-duration, inflation-linked assets.

It added that structural trends including digitalisation, energy demand linked to artificial intelligence and supply-chain resilience were expected to support long-term investment across communications, utilities, transport and social infrastructure.

At 0950 GMT, shares in HICL Infrastructure were up 0.5% at 120.39p.

Reporting by Josh White for Sharecast.com.