HICL swoops for £143m Barclays portfolio

The UK-listed infrastructure investment company, advised by InfraRed Capital Partners, has acquired a collection of 26 PFI and PPP project stakes from two funds managed by Barclays Infrastructure Funds Management.

HICL Infrastructure Company Limited (HICL), the listed UK infrastructure investment firm, has emerged as the victor in a competitive auction process which sees the firm pay £143.4 million (€171.6 million; $225.0 million) for 26 stakes in Private Finance Initiative (PFI) and Public-Private Partnership (PPP) projects owned by Barclays Infrastructure Funds Management.

In a statement, HICL said 21 of the assets came from the BEIF (UPP) Limited Partnership and the remaining five from the Barclays European Infrastructure Fund II.

All of the assets are operational, with 24 based in the UK and two in the Republic of Ireland. The portfolio comprises 10 school projects, eight health projects, five fire and police projects, two roads and a library project. Stakes in each project range from 25 percent to 100 percent and the weighted average concession length of the portfolio is more than 23 years. Significantly, each of the assets has its own long-term debt finance in place, meaning refinancing risk is minimised.  

All the projects are based on availability-based income streams, with the exception of two “quasi-availability” projects – the A249 Sheppey Route road in Kent, which has a “steady flow” payment regime based on measures to keep traffic flowing smoothly; and the A92 road in Scotland, which is mainly paid on availability but has some shadow toll revenue.

Barclays was understood to be determined to sell the portfolio as a whole, without any carve-outs of assets. Hence, in its statement, HICL said in the new year it would “conduct a further review…to evaluate any possible opportunities for selective disposals or bolt-on acquisitions”.

HICL said that “given the size of the acquisition” it would “now consider” the size and timing of its next capital raising by way of C shares. It said it would expect to make a further announcement on this in January.

HICL now has 70 PFI and PPP investments in its portfolio in total. It is advised by InfraRed Capital Partners, which spun out from HSBC in April this year and closed an oversubscribed $1.2 billion fund focusing on greenfield infrastructure in October.