HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — Investor Presentation (November 2022)
40 slides from HICL Infrastructure's investor presentation, November 2022
Slide 1: HICL Infrastructure PLC Introductory Presentation
HICL Infrastructure PLC Introductory Presentation November 2022 hicl.com |
Slide 2: Important Information
Important Information For Investment Professionals (as defined under FSMA 2000). Individuals without professional experience in matters relating to investments should not rely on this information By attending the meeting where this presentation is made, or by reading the presentation slides, you agr
Slide 3: Compelling Investment Proposition
Compelling Investment Proposition Long-term, sustainable income from a diversified portfolio of investments in core infrastructure >100 assets Specialist infrastructure investment manager Diversification Largest asset 7%1 $12bn+ 25+ 20m+ people Sustainability Equity under Years of investment access
Slide 4: HICL's Vision
HICL’s Vision Enriching lives through infrastructure 46% of portfolio Developing strong social foundations 39% of portfolio connecting communities 15% of portfolio supporting sustainable modern economies By value using Directors’ Valuation of £3,865.6m as at 30 September 2022 hicl.com | 4
Slide 5: Total Shareholder Return
HICL’s track record of consistent delivery over 15 years1 Dividend increased by 35% over 15 years Total Return (NAV growth and dividends) of 9.0% p.a. since IPO 9.0p 300p 8.0p 250p 7.0p 6.0p 200p 5.0p 150p 4.0p 3.0p 100p 2.0p 50p 1.0p 0.0p 0p IPO FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE F
Slide 6: Sustainable Thinking
Sustainable Thinking HICL has a role in society that extends beyond its shareholders InfraRed commits to Intention to report Enhanced Net Zero Asset in line with investment process Managers Initiative Article 8 of SFDR1 and exclusions list InfraRed maintains Updated sustainability Focus on driving s
Slide 7: HICL's Core Infrastructure Focus
HICL’s Core Infrastructure Focus ▲ Core infrastructure is a distinct market segment at the lower end of the risk spectrum. By its nature it is located in the heart of communities, underpins economic activity and/or important social function, and comprises long-life, capital intensive assets Cash Flo
Slide 8: Diversified Portfolio
Diversified Portfolio Mix of sector exposure, ten largest assets account for c. 49% of the portfolio1 Communications Affinity Water 7% Water and Electricity Health >100 Northwest Parkway 7% Assets in the portfolio A63 Motorway 8% 6% 22% 15% 49% Texas Nevada Fire, Law & Top 10 assets Transmission Ord
Slide 9: Illustrative Investment Cashflow Profiles
Illustrative Investment Cashflow Profiles Financial Close Typical Contracted Asset Cashflow (3) - 3 6 9 12 15 18 21 24 27 30 Profile Financial Close Typical Toll Road Cashflow Profile (3) - 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 Value Typical Regulated Asset Cashflow 1 3 5 7 9 11 13 15 17 19 2
Slide 10: Cash Flow Profile
Cash Flow Profile Sustainable long-term cash flows and a stable portfolio valuation in the medium term 500,000 4,500 450,000 4,000 The valuation of the current 400,000 portfolio (RHS) at any time is a 3,500 function of the present value of the Annual project distributions (£'000's) expected future c
Slide 11: Sensitivities
Sensitivities Well diversified portfolio reflected in impact of macro-economic sensitivities Discount Rate +/- 0.5% (9.5) 10.6 Inflation -/+ 0.5% (9.1) 10.4 2 GDP -/+ 0.5% (5.8) 5.9 Tax Rate +/- 5% (5.2) 5.3 3 Foreign Exchange Rates -/+ 5% (1.0) 1.0 Deposit Rates -/+ 0.5% (0.7) 1.0 -12p -10p -8p -6p
Slide 12: Market and Outlook
Market and Outlook Significant market opportunity; investment discipline remains paramount ▲ InfraRed continues to curate an attractive pipeline for HICL: ‒ Spanning modern economy and traditional infrastructure sectors and HICL’s core geographies ‒ c. £300m1 of equity at exclusivity, preferred bidd
Slide 13: Key Takeaways
Key Takeaways 1 HICL has a well-diversified portfolio 2 The portfolio offers sustainable, long-term yield HICL acts as a trusted steward to run essential 3 infrastructure at the heart of communities HICL is well positioned for an evolving 4 core infrastructure pipeline hicl.com | 13
Slide 14: Appendix I: Case Studies
Appendix I Case Studies hicl.com |
Slide 15: Regulated Case Study: Offshore Transmission Assets
Regulated Case Study: Offshore Transmission Assets Regulated Assets - Investment rationale ▲ Essential assets that are regulated due to monopoly market positions ▲ Regulated assets have a complementary risk profile to PPP projects and demand-based assets ▲ Assets are subject to licence periods, wher
Slide 16: Demand-Based Case Study: A63 Motorway
Demand-Based Case Study: A63 Motorway Demand-Based Assets - Investment rationale ▲ Operational assets are at the lower end of the risk spectrum when featuring strong usage history or limited uncertainty in forecast demand (absent widespread movement restrictions) ▲ Long-dated, good inflation correla
Slide 17: Contracted Case Study: Allenby & Connaught
Contracted Case Study: Allenby & Connaught PPP Assets - Investment rationale ▲ Long-term contracts with strong public sector clients in developed economies ▲ Availability-based payment mechanisms produce revenues that are uncorrelated to the wider economy ▲ Long-term funding arrangements and mainten
Slide 18: Sustainability Case Study: Climate Change Impact Assessment
Sustainability Case Study: Climate Change Impact Assessment ▲ The Investment Manager has undertaken a detailed climate change impact assessment, supported by Willis Towers Watson, which enables reporting against all 11 recommended disclosures of the Taskforce on Climate-related Financial Disclosure
Slide 19: Case Study - ADTIM
Case Study - ADTIM High quality fibre broadband asset in attractive market framework ▲ Controlling interest acquired1, representing c. 2% of portfolio ADTIM: Key Facts value at 31 March 2022 ▲ Leverages InfraRed’s experience in digital infrastructure and 2 concession contracts in Auvergne-Rhône-Alpe
Slide 20: New Acquisition – Texas Nevada Transmission
New Acquisition – Texas Nevada Transmission (“TNT”) New investment commitment1 representing 6% of portfolio as at 30 September 2022 ▲ Meaningful stake acquired in two transmission line systems, delivering regulated and contracted revenues respectively ▲ Located in areas of high renewable energy reso
Slide 21: New Acquisition – Aotearoa Towers
New Acquisition – Aotearoa Towers1 New investment commitment2 representing 5% of portfolio as at 30 September 2022 ▲ Outright ownership of the largest portfolio of passive mobile tower infrastructure in NZ, covering 98% of the population ▲ VFNZ3 act as anchor tenant and provide 96% of current revenu
Slide 22: Appendix II: Company Information
Appendix II Company Information hicl.com |
Slide 23: HICL Infrastructure PLC Group Structure Diagram
HICL Infrastructure PLC Group Structure Diagram Equity Independent Directors1 HICL’s Shareholders Dividends ▪ Governance (predominantly UK) Interest and ▪ Oversight principal ▪ Strategy Investment Manager HICL Infrastructure PLC ▪ HICL's AIFM AIF2 subject to the full scope of the AIFMD3 ▪ Fund Manag
Slide 24: Governance
Governance Independent board of non-executive Directors ▲ Approves and monitors adherence to strategy ▲ Monitors risk through Risk Committee ▲ Additional committees in respect of Audit, Remuneration, Management Engagement, Nomination and Market Disclosure ▲ Monitors compliance with, and implementati
Slide 25: Sustainable Thinking
Sustainable Thinking A long-term approach to investing and managing core infrastructure The Board has overall responsibility InfraRed applies for HICL’s Sustainability Policy HICL’s Sustainability Policy including the potential impact applies to making new investments and of climate change the manag
Slide 26: Board of Directors I
Board of Directors I Non-executive Directors with a broad range of relevant experience and qualifications Mike Bane Frank Nelson Rita Akushie Liz Barber Chairman Senior Independent Director Audit Committee Chair Director Mike, a Guernsey resident, is a chartered Frank, a UK resident, is a qualified
Slide 27: Board of Directors II
Board of Directors II Non-executive Directors with a broad range of relevant experience and qualifications Frances Davies Martin Pugh Simon Holden Kenneth D. Reid Remuneration Committee Chair Director Risk Committee Chair Director Frances, a UK resident, has more than Martin Pugh has over 35 years i
Slide 28: Investment Manager
Investment Manager Senior InfraRed team, experienced in making and managing infrastructure investments Edward Hunt Helen Price Head of Core Income Funds, InfraRed CFO, Core Income Funds, InfraRed Edward leads the InfraRed team that Helen is responsible for managing the financial manages HICL activit
Slide 29: Appendix II: The Investment Manager
Appendix II The Investment Manager hicl.com |
Slide 30: Overview of InfraRed Capital Partners Ltd
Overview of InfraRed Capital Partners Ltd (“InfraRed”) InfraRed is the Investment Manager and Operator Strong, 25+ year track record of launching 11 infrastructure funds (including HICL and TRIG) Currently over US$14bn of equity under management1 London based, with offices in New York, Seoul and Syd
Slide 31: InfraRed – Infrastructure Team Skills and Experience
InfraRed – Infrastructure Team Skills and Experience ▲ Proven track record in target markets of UK, Europe, North America, Latin America and Australia / New Zealand ▲ Focused teams including: − Origination and Execution Team responsible for sourcing, diligencing and acquiring new investment opportun
Slide 32: Appendix III: The Investment Portfolio
Appendix III The Investment Portfolio hicl.com |
Slide 33: HICL's Top 10 Assets I
HICL’s Top 10 Assets I Sector: Electricity & Water Affinity Water Location: UK % of portfolio: 7% (March 2022: 9%) Affinity Water Limited is the largest water-only supplier in the UK HICL holding: 33.2% 1 by revenue and population served covering an area of 4,515 square kilometres. Concession length
Slide 34: HICL's Top 10 Assets II
HICL’s Top 10 Assets II Sector: Transport High Speed 1 Location: UK % of portfolio: 4% (March 2022: 5%) HS1 is the rail link between London St Pancras station and the HICL holding: 21.8% Channel Tunnel. It is currently the UK’s only high-speed rail line in 6 operation. Concession length: 30 years St
Slide 35: Portfolio Diversification
Portfolio Diversification HICL’s Portfolio, as at 30 September 20221 MARKET SEGMENT GEOGRAPHIC LOCATION ▲ Contracted Projects 64% ▲ UK 62% ▲ Demand-based Assets 19% ▲ Europe (exc UK) 18% ▲ Regulated Assets 17% ▲ North America 15% ▲ Australia / New Zealand 5% INVESTMENT STATUS SECTOR ▲ Fully operatio
Slide 36: Portfolio – Key Attributes
Portfolio – Key Attributes Evolution of the Group’s portfolio Geographically Diverse Portfolio Diverse Sector Spread 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE HY FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE HY 2012 2013 2014 2015 2016 2017 2018 2019 2
Slide 37: Facilities Management and Operations Counterparty Exposure
Facilities Management and Operations Counterparty Exposure ▲ Exposure is reviewed quarterly and reported to the 10 Largest Facilities Management Risk Committee by InfraRed and Operations Counterparty Exposures1 ▲ Contingency plans are in place to address scenarios where material issues lead to a fai
Slide 38: Typical PPP Project Structure
Typical PPP Project Structure Client Project agreement HICL Infrastructure PLC Construction Shareholder Project Financing Bonds/Loans Partner agreement Company agreement Operational Partner Construction Operating MSA contract sub-contract sub-contract Maintenance Project Company Construction and FM
Slide 39: Valuation – Methodology
Valuation – Methodology Determining the net asset value of the portfolio and the Group (PPP project example) £100m Concession Contract Revenue + Deposit Interest Key Variables / Assumptions £80m Forecast £60m Long-term Inflation Rate Project £40m Interest Rate Inflows £20m • Whole-of-life concession
Slide 40: Valuation Methodology
Valuation Methodology HICL’s valuation methodology is rigorous and closely scrutinised Semi-annual valuation and NAV reporting: ▲ Carried out by Investment Manager ▲ Independent opinion for Directors sourced from third-party valuation expert ▲ Audited annually by the Company’s auditor ▲ Final valuat
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