HICL is fundraising – HICL Infrastructure has announced a placing of new shares today. It is looking for enough money to repay its £75m revolving credit facility. It will issue new shares at 164p. a 5.75% discount to the closing price on 15 July and a 7.7% premium to the last reported NAV, as at the end of March.
The issue is only open to qualifying investors – which disqualifies most private investors. No doubt they will be aggrieved at missing out on this opportunity, and who could blame them. The shares are being issued on a non-pre-emptive basis – so they don’t have to be offered to existing shareholders. This is common enough and generally we wouldn’t see that as a problem if shares are being issued at a premium to NAV (as there ought to be an uplift in NAV for existing shareholders). However, if the NAV is subjective or out of date, there is scope for questioning whether the issue is dilutive. We are increasingly feeling that issues such as these discriminate against private investors and the system needs to be changed. Preferably, this will mean instituting a cheap and simple way of extending the offer. That needs action from the FCA and the London Stock Exchange.
Qualifying investors should apply for shares through the company’s brokers – Investec and RBC Capital Markets – and note that the issue is scheduled to close by Tuesday 21 July but could close earlier than that. HICL may raise more than £75m.
Most assets in the portfolio are relatively unaffected by the measures taken to tackle COVID-19. However, HICL’s three demand-based assets – two toll roads and the HS1 rail link – have seen a fall in demand. Traffic on the A63 motorway in France is running at 8% below expectations, having been 36% below expectations for the three months ended 30 June. The equivalent figures for the NorthWest Parkway in Denver are worse, 44% and 59%. Activity on the Channel tunnel rail link, HS1, is 14% below normal and was 14% below normal through Q2.