HSBC Infrastructure raises £41.7m through tap issues

In an interim management statement released today, HSBC Infrastructure, the listed UK infrastructure investor, said it has raised additional equity capital of £41.7m through a series of tap issues over the last few months.

In an interim management statement covering the period 1 April to 3 August 2010, HSBC Infrastructure, the UK listed infrastructure firm, said it had raised £41.7 million (€50.3 million; $66.5 million) in equity through the successful issue of new shares via tap issues in June, July and August. In total, 37 million new shares were issued.

A tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. The bonds are issued at their original face value, maturity and coupon rate, but sold at the current market price.
HSBC Infrastructure, which has a portfolio of 34 investments – including 33 PFI/PPP projects in the UK and continental Europe – said the “number of suitable opportunities in the pipeline has increased as vendors seek to make disposals before the calendar year end”.

It pointed out that it had not suffered from the axing of the £55 billion Building Schools for the Future programme by the UK’s coalition government since its acquisition strategy was focused on investments already in their operating phase or under construction rather than new builds.

However, the firm also said it was taking a “very cautious” approach in assessing renewable energy investments and that it was “unlikely to make an acquisition of this type in the coming months”. This would not change,  it said “until there was more regulatory certainty over contractual tariffs”.

Over the last weekend, the Spanish government announced that it would be reducing subsidies for solar photovoltaic power plants by up to 45 percent, part of a programme of cuts to renewable energy subsidies in the country as part of economic austerity measures. There are also fears that existing plants may be subject to retroactive subsidy cuts of up to 30 percent.

HSBC Infrastructure said that, during the reporting period, it had made one new investment. This came in June when it acquired stakes of 50 percent and 24.9 percent from two separate shareholders in the Queen Alexandra hospital PFI project in Portsmouth, England for a combined £46.4 million. The concession contract for the fully operational project runs until December 2040.

In June, it was announced that HSBC Specialist Investments was in talks with HSBC about a management buyout that would see it go independent. HSBC Specialist Fund Management, which is the investment adviser to HSBC Infrastructure, is part of HSBC Specialist Investments. The interim management statement said shareholders would be updated on the buyout in the autumn.