Following the publication of an ‘interim update statement’ this morning (covered in our morning briefing), HICL Infrastructure has announced that it is expanding its share buyback programme by a further £100m (its initial £50m share buyback programme completed last week). HICL says that the programme will commence today and end no later than 31 December 2025, subject to market conditions.
HICL says that the programme is being extended in light of the significant discount to NAV at which its shares have continued to trade, noting that the return currently implied on the repurchase of the company’s shares is 11.0%. It worked that out based on its weighted average discount rate used to value its cash flows to calculate its NAV, adjusted to reflect the share price discount to the NAV.
To fund this and to meet its upcoming investment commitments, the manager is targeting over £200m of disposals during the year.
HICL adds that, recognising the value of share buybacks at the current share price, and given the confidence of the investment manager in delivering the targeted disposals, the board plans to use HICL’s revolving credit facility (RCF) as a bridge between share buybacks and future disposal proceeds up to £50m, but only while the discount remains wider than 15%. HICL’s £400m RCF is currently undrawn and matures on 30 June 2026. It says that discussions to extend the term of the facility have commenced and are expected to be concluded by May 2025.
No new investments for a while
Investments in the financial year ending March 2026 are expected to be limited to existing commitments of about £50m to support Affinity Water’s investment programme. Beyond this, in the financial year ending March 2027, HICL has long-standing commitments of about £60m relating to the funding of Blankenberg Tunnel and the B247 road following the completion of their construction phases.
However, HICL says that, should its manager materially exceed the £200m target for disposals, the board will consider whether to make new investments alongside further share buybacks.
HICL : HICL Infrastructure increases share buyback programme by £100m
