HICL increases share issue as infrastructure demand heightens

HICL Infrastructure Company has increased the overall size of its recent share placement after the issue was met with strong demand.

The board of the investment trust has decided to place a total of £250m in C shares, up from the £180m originally intended, after the offer target was comfortably exceeded.

The news comes as figures published by the Association of Investment Companies (AIC) show the infrastructure trust sector is outperforming the wider investment company universe.

Graham Picken, chairman of HICL Infrastructure Company, says: “We are delighted with the success of the offer, which was significantly oversubscribed.

“The strong demand also reflects the growing importance of infrastructure as an asset class.”

At a press briefing today, the AIC highlighted the strong demand for infrastructure and demonstrated its relative outperformance.

Figures prepared by the trade body show the weighted average dividend yield for the infrastructure sector is 5.2%, compared with the 2.7% seen in the overall investment trust space. Meanwhile, the sector was trading at a premium of 4.1% to net asset value, as of March 26.

Tony Roper, director of InfraRed Capital Partners and investment adviser to HICL Infrastructure, says: “Infrastructure has become increasingly popular as an asset class.

“Both retail and institutional investors have been drawn by its potential for generating attractive and predictable returns even in volatile equity markets.”

Giles Frost, director of International Public Partnerships and Amber Infrastructure, adds that the attractions of infrastructure investment include low cyclicality, capital growth, low correlation to equities and other investment strategies, strong government commitment and income streams that are long-term and inflation-linked.

“Overall, the outlook for the UK and wider infrastructure market continues to be positive and investment across the sector remains a key driver of economic growth,” Frost says.