HICL ramps up syndication on large deals

The London-listed fund plans to sell down part of the UK’s HS1 rail link after completion of the £320m deal, replicating similar efforts following its investment in Affinity Water.

HICL Infrastructure Company has signalled its intent to generalise a syndication strategy recently tested out on the Affinity Water deal as it strives to access larger assets.

The London-listed fund, which is advised by InfraRed Capital Partners, said upon releasing interim results today that it would be seeking to bring in minority co-investors following completion of its acquisition of a £320 million ($417 million; €358 million) stake in the UK’s HS1 rail link – part of a £914 million deal it is undertaking along with Equitix and South Korea’s National Pension Service.

Managed by InfraRed, the co-investors could buy up to £120 million out of HICL’s commitment, reducing the fund’s 35 percent stake. “These partnerships create opportunities to work on larger investments,” said Ian Russell, HICL’s chairman.

The move replicates the fund’s sell-down in May of a £25 million portion of Affinity Water, which it had backed three weeks prior via a £230 million investment, part of a £687 million deal alongside Allianz Capital Partners and DIF Infrastructure IV. The syndication diluted HICL’s share from 36.6 percent to 33.2 percent of the UK water utility.

HICL highlighted the need to find “attractive” opportunities while “prioritising price discipline” in an environment that remains competitive. Crafting “strategic relationships with aligned long-term co-investors” was one way to advance such a strategy, the company said.

The firm declined to disclose the identity of its co-investors in Affinity Water other than stating that they comprised a group of UK local authority pension funds.

HICL observed that the inflation correlation of its portfolio had increased to a factor of 0.8. The company manages 116 investments in the UK, France, Ireland, the Netherlands, Canada, the US and Australia.