HICL pays £34.6m for UK hospital stake

The London-listed infrastructure fund has begun drawing on the £250m it raised in March with the acquisition of a 30% equity and loan note interest in the Birmingham New Hospitals PFI project. Royal Bank Project Investments is the seller.

HICL Infrastructure Company (HICL), the London-listed infrastructure fund, has acquired a 30 percent equity and loan note interest in the Birmingham New Hospitals PFI project from Royal Bank Project Investments Limited. HICL paid out £34.6 million (€42.8 million; $54.7 million) for the stake. 

The project is a 40-year concession to design, construct, finance and maintain a new acute hospital and six new mental health facilities in Birmingham for the Birmingham Hospitals NHS Foundation Trust and the Birmingham and Solihull Mental Health NHS Trust.

The new hospital and facilities were built by a joint venture between Balfour Beatty Construction and Hayden Young under a £553 million fixed price construction contract, with the buildings being built in five-year phases.

The mental health facilities were completed in 2008, providing 235 beds across six psychiatric facilities. The acute hospital was “substantially completed” and handed over in September 2011, with the remaining work to be finished by the end of August this year. The hospital provides 1,213 beds and 30 operating theatres.

“We are delighted to acquire this investment in this project in which we have been involved since contract signing in 2006,” said James O’Halloran, infrastructure investment director at InfraRed Capital Partners, the investment adviser to HICL. 

He added: “The acute hospital delivered by the project is one of the largest single hospitals in Europe and we look forward to working with all stakeholders to ensure that the final phase of construction is completed successfully and the project continues to perform well.”

HICL collected £250 million from an equity capital raising towards the end of March this year, having increased the amount from an initial target of £180 million. It said it would use the proceeds to pay down debt and fund future acquisition opportunities.

A note issued by investment bank Liberum Capital said: “It is encouraging to see some of the £250m of cash raised that was raised through the C Share issue at the end of March already being put to work, which will consequently reduce cash drag on the portfolio and, given HICL’s remaining dry powder, we would expect further acquisitions to be announced over coming weeks/months.”