Merger to create Britain’s largest listed infrastructure fund with greater than £5.3bn in belongings

The merger of two investment trusts is set to create the UK’s largest listed infrastructure investment fund with net assets in excess of £5.3billion.

HICL Infrastructure and The Renewables Infrastructure Group (TRIG) on Monday announced a merger agreement to create an investment trust worth around £4billion.

The investment companies told shareholders in a joint statement the deal will create a ‘more compelling proposition’ for shareholders by offering ‘greater scale, liquidity and relevance to a broader investor base’.

Mike Bane, chair of HICL, said the tie-up ‘represents a unique opportunity to capture the key megatrends shaping the infrastructure market today, which increasingly straddle both core infrastructure and the energy transition’.

He added: ‘By combining two complementary portfolios and teams, the combined company will have the profile, expertise and access to capital to seek enhanced returns from a reinvigorated investment strategy.’

HICL has £3billion in assets across the UK, Europe, North America, and New Zealand

The merger, which is already backed by the pair’s largest shareholders and is set to complete early next year, will create a fund comprised of lower risk ‘core infrastructure’ and assets associated with the energy transition.

Core infrastructure includes assets related to utilities, transport and communication, while TRIG’s portfolio’s holdings include onshore and offshore wind, and solar facilities.

HICL debuted on the London Stock Exchange in 2006 with an initial focus on social infrastructure projects developed under the UK’s private finance initiative (PFI) and public private partnership (PPP) model.

It now invests more broadly with £3billion in assets across the UK, Europe, North America, and New Zealand.

The deal will see TRIG wound up and its assets transferred to HICL in exchange for new shares in the trust and a £350million liquidity package.

HICL shares fell 7.8 per cent to 108.6p in early trading. 

The combined company will target an annual dividend of 9p per share with a projected net asset value total return of over 10 per cent per annum.

Richard Morse, chair of TRIG, said: ‘This is a combination that we believe offers a transformational opportunity to drive growth and deliver a resilient, forward-looking investment proposition.

‘Together, HICL and TRIG will form the UK’s largest listed infrastructure and renewables investment company, with the scale, liquidity, and balance sheet strength to better access a broader range of global opportunities and deliver sustainable long-term value for shareholders.’

Analyst at RBC Europe Alexander Wheeler said: ‘We see the combination as a positive move resulting in significantly more scale and an ability to target further value accretive investments, with the fund aiming to pursue a higher overall return in combination.’