HICL lowers fees on construction assets

The London-listed infrastructure fund has done away with a higher 1.5% fee rate for assets under construction.

HICL, an infrastructure fund manager listed on the London Stock Exchange, has removed a higher management fee of 1.5 percent that was charged for assets going through the construction phase.

Instead, these assets will now be subject to HICL’s standard sliding fee scale: 1.1 percent for assets under management up to £750 million (€895 million; $1.2 billion); 1.0 percent for the £750 million to £1.5 billion bracket; and 0.9 percent for £1.5 billion to £2.25 billion.

A statement issued by HICL stressed that the fee paid to investment adviser InfraRed Capital Partners would now be “the same for all investments, regardless of whether they are operational, in ramp-up or under construction”.

Although a higher fee is arguably justified by construction-phase assets being more resource-intensive, the change will not make much of a difference to HICL since only four of its 93 assets at the end of January were in construction – accounting for 7 percent of the portfolio.

The firm has also announced that it will charge a 0.8 percent fee one incremental assets acquired once the firm has more than £2.25 billion under management. As at February 2014, the firm had around £1.6 billion under management.

“HICL has always enjoyed a transparent and competitive fee structure,” said HICL chairman Graham Picken in the statement. “The Board regularly reviews the Company’s expenses and appreciates InfraRed's willingness to lead by example in ensuring that for value and efficiency the Company remains at the forefront of the sector.”