HICL Infrastructure remains confident as demand outstrips supply

HICL Infrastructure Company confirmed its dividend targets for the current and next financial years as it noted the continuing imbalance between weak supply and high demand for new infrastructure investments.

Since the start of October, the FTSE 250 investment company and its subsidiaries, making up the HICL Group, invested £29.4m in the acquisition of two further stakes in the Sheffield Schools PFI project and the Southmead Hospital PFI project.

HICL Group, which is mainly focused on the UK, Europe, North America and Australia, agreed to acquire a 13.8% interest in the A63 toll-road autoroute in France, which is connecting Bordeaux to the Spanish border by San Sebastian.

"This road project offers a number of attractive features including good traffic history, a long concession duration and good inflation-linkage," said chairman Graham Picken, who retires on 30 June but will hand the baton to Ian Russell from 1 March.

The group, which will publish the valuation of its portfolio as at 31 March as part of final results in May, also noted that market appetite for the type of secondary infrastructure projects in which it invests "remains very strong", with demand in the UK and many other markets continuing to outstrip supply, resulting in a continuation of the increase in asset prices seen over the last 18 months.

"Despite a market imbalance between weak supply and high demand for new investments, we retain a positive outlook," Picken said, noting that investment adviser InfraRed Capital Partners continued to unlock new and incremental acquisition opportunities in the UK and beyond.

"As ever, the key to translating this pipeline into value accretive investments is risk-adjusted pricing coupled with disciplined due diligence. Our reputation for efficiency in deal execution continues to serve us well."

For the current financial year, directors retained their guidance for a dividend per share of 7.45p, rising to 7.60p for the year ending in 2017.

Shares in the trust fell by 2p, or 1.2%, to 155.80p by early afternoon on Thursday.