21 investments were acquired as part of a portfolio from the BEIF (UPP) Limited Partnership and the remaining 5 from the Barclays European Infrastructure Fund II Limited Partnership.
All of the 26 projects are operational and, apart from 2 investments in The Republic of Ireland (the Cork School of Music and a grouped schools project), all are based in the U.K..
The portfolio of 26 investments comprises 10 schools projects, 8 health projects, 5 fire and police projects, 2 roads and a library project. Investment stakes in each project range from 25% to 100%. The weighted average concession length of this portfolio exceeds 23 years. Each project has its own long term debt finance. Whilst purchased as a portfolio, each investment is independent of the rest.
All of the projects have availability based income streams apart from the A249 road project which has a ‘steady flow’ payment regime and the A92 road, which is mainly paid on availability but includes a modest element of shadow toll revenue.
The consideration paid is in line with discount rates used in HICL’s September 2011 Directors’ valuation and reflects current market prices.
Graham Picken, Chairman of the Company, said:
“We intimated at the time of the Company’s interim results that the pipeline included a transaction at an advanced stage of negotiation. We are pleased to have completed this acquisition on valuation metrics which compare favourably with our latest assessment of asset values in the Company’s investment portfolio as a whole.
“This acquisition is a portfolio transaction and, as a result, the Investment Adviser intends to conduct a further review in the New Year to evaluate any possible opportunities for selective disposals or bolt-on acquisitions.
“Given the size of this acquisition and the use of the Group’s revolving debt facility, the Board of the Company will now consider the quantum and timing of the Company’s next capital raising by way of C Shares. I expect to make a further announcement on this in January 2012.”
David Foot, Investment Director, InfraRed Capital Partners Limited (HICL’s Investment Adviser) responsible for leading due diligence on the transaction, said:
“The team is pleased to have acquired this substantial portfolio of PFI/PPP investments. These new investments are an excellent complement to the existing portfolio, creating value potential and adding to the overall portfolio diversification. This portfolio has positive inflation correlation similar to the Group’s current portfolio.We look forward to working with our new partners and stakeholders to ensure that each project performs well and is successful.”