HICL Infrastructure to expand share buyback by £100m

(Sharecast News) - HICL Infrastructure announced a significant expansion of its share buyback programme on Monday, increasing it by £100m to run until the end of 2025. The FTSE 250 company said the move followed the completion of its initial £50m buyback, in response to its shares trading at a discount to net asset value.

It said the programme aimed to enhance shareholder returns, and would be funded through targeted asset disposals exceeding £200m.

Operationally, the company reported stable performance across its portfolio, noting that Affinity Water accepted its final regulatory determination from Ofwat, which was expected to facilitate the resumption of dividends in the financial year ending March 2026.

The determination included an increased allowed weighted average cost of capital of 4.03% and a higher permitted expenditure of £2.34bn for the 2025-2030 regulatory period.

Other key developments included a favourable regulatory decision for High Speed 1, now branded London St Pancras Highspeed, which was expected to support medium-term rail traffic growth.

Additionally, Texas Nevada Transmission submitted a draft rate case for Cross Texas Transmission, with a decision expected by mid-2025.

Financially, HICL reaffirmed its target dividend of 8.25p per share for the year ending March, with cash generation in line with expectations.

The company acknowledged the impact of rising risk-free rates, particularly in the UK and US, noting that an increase of 20 to 40 basis points in discount rates could reduce net asset value by 2p to 4p per share.

However, recent market transactions, including the cash offer for BBGI Global Infrastructure, suggested continued support for HICL's valuation approach.

To support its buyback strategy and existing commitments, HICL said it would use up to £50m from its revolving credit facility while it executed disposals.

The facility, currently undrawn, matures in mid-2026, with extension discussions underway.

Looking ahead, HICL said it expected limited new investments beyond its existing commitments of £50m to Affinity Water and £60m for infrastructure projects in Germany.

If asset sales exceeded the £200m target, the board said it would consider further buybacks or selective acquisitions.

The company also announced governance updates, including the appointment of Mark Tiner as chief financial officer and the planned appointment of Deloitte LLP as auditor from April.

"HICL's high-quality portfolio continues to demonstrate resilient performance despite broader macro and political volatility," said chair Mike Bane.

"The board is pleased to announce an immediate and significant expansion of the company's share buyback programme taking advantage of the weakness in the company's share price.

"This will be funded by further targeted asset sales and, if necessary in the short term, the company's unutilised revolving credit facility."

At 0921 GMT, shares in HICL Infrastructure were up 1.03% at 111.74p.

Reporting by Josh White for Sharecast.com.