HSBC Infrastructure prepares new investment push

HSBC Infrastructure Company Limited (HICL) revealed today that it is planning on issuing new shares to reduce its debt and fund new investments.

In a filing to the London Stock Exchange, HICL said its board intends to undertake an issue of C shares, the proceeds from which will go towards paying down the company’s existing debt and to help “pursue new investment opportunities.” The share issue will take the form of a placing and offer for subscription.

HICL did not disclose how much it intends to raise through the issue. However, HICL’s net debt at the end of July was around £52 million (€58 million; $85 million). Following a number of market tappings since then, analysts now put the infrastructure investor’s debt level at roughly £40 million. It is understood the share issue is likely to be in excess of this £40 million figure.

HICL said in the filing that a pipeline of potential acquisitions are being reviewed by its investment advisor. A source close to the company said this pipeline is unlikely to differ from the long-term availability payment-based investments which HICL has tended to focus on in the past. Its portfolio is dominated by social infrastructure investments across the healthcare, education and accommodation sectors, largely located in the British Isles, although it also holds a 38 percent stake in the £625 million Dutch High Speed Railway project.

Its most recent investment was in the Bradford Schools PFI in England last month. HICL holds a 34 percent in the project, which has a total capital value of £230 million.

HICL’s last share issue was carried in July, when it raised £82.4 million. In May it reported a full year loss of £22 million which it attributed to lower valuations of its holdings. At the end of March HICL’s directors valued its portfolio at £445.7 million.
                                                                                                                                                                                                                                                        
HICL said full details of the share will be published with its interim results later this month. The issue is expected to take place in mid-December.

Collins Steward and Oriel Securities are acting as joint placement agents on the issue.

This morning HICL’s shares were trading at £1.13, down 1 percent.