HSBC Infrastructure unveils bumper half-year results

The UK-listed infrastructure fund’s portfolio generated £19.5 million of net cash after costs, turning in a pre-tax profit of £8.5m, up 89% on the previous year. Infrastructure director Tony Roper also said the fund plans to diversify its portfolio over the next six months.

HSBC Infrastructure Company Limited’s (HICL) half-year profit jumped 89 percent over the prior corresponding period, the company said today.

For the six months ended September 30 2009, the listed infrastructure fund earned a pre-tax profit of £8.5 million (€9.4 million; $14 million), up from £4.5 million in the same period of 2008, according to the firm’s interim results. HICL’s earnings per share on an investment basis were 2.3 pence.

HICL’s portfolio generated £25 million of cash, through distributions, capital repayments and fees during the six-month period. After costs, net cash proceeds for the period were £19.5 million.

During the half-year period HICL’s share price traded consistently at a premium to the fund’s net asset value, which chairman Graham Picken attributed to the firm’s “yield prospects and balance sheet stability”. On September 30 HICL’s directors valued its portfolio at £464.5 million, up from £450.5 million the previous year.

Tony Roper

HICL completed three investments during the six months to September 30, all in the social infrastructure space. It acquired a 30 percent interest in the Renfrewshire schools project for £6.8 million, a 50 percent interest in the Highland schools PPP for £16.8 million and a 34 percent interest in the Bradford BSF Phase II scheme for £7.4 million.

HICL’s portfolio currently comprises 31 investments, 30 of which are PPP/ PFI schemes. Speaking to InfrastructureInvestor, HICL’s director of infrastructure investment Tony Roper said over the next six months the fund could diversify slightly, including the pursuit of operational renewable investments in Europe.

Earlier this month the fund unveiled plans to carry out a share issue, proceeds from which would go towards paying down the company’s existing debt and to help “pursue new investment opportunities”, but did not disclose the amount it was planning on raising. Today HICL said it would be raising £80 million through the issue of C-shares, convertible to ordinary shares in January 2010.

Picken said more acquisitions are likely over the next six months, adding that the fund is currently in exclusive negotiations to make further investments with a combined value of over £70 million. Picken said that despite the tough economic climate, the fund continues to offer a growing yield and has a good outlook. He added the next stage of development for the fund will entail the growth of its portfolio beyond the £500 million mark.

As a result of the jump in profit, HICL has hiked its interim dividend to be paid in March next year to 3.2 pence, up 2.4 percent from the previous year.  The fund said it aims to achieve a dividend of 7 pence by March 2013.