HICL Infrastructure PLC · LSE:HICL
HICL Infrastructure — Investor Presentation (May 2022)
39 slides from HICL Infrastructure's investor presentation, May 2022
Slide 1: HICL Infrastructure PLC Introductory Presentation
HICL Infrastructure PLC Introductory Presentation May 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 9%1 $12bn+ 25+ Sustainability 20m+ people Equity under Years of investment access
Slide 4: HICL's Vision
HICL’s Vision Enriching lives through infrastructure 56% of portfolio Developing strong social foundations 32% of portfolio connecting communities 12% of portfolio supporting sustainable modern economies By value using Directors’ Valuation of £3,311.0m as at 31 March 2022 less the expected proceeds
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. 48% of the portfolio1 Accommodation Affinity Water 9% >100 Northwest Parkway Transport Education Assets in the 7% portfolio 10% A63 Motorway 32% 14% 7% 48% Top 10 assets Electricity, Gas represent less Southmead 12% & Wa
Slide 9: Illustrative investment cashflow profiles
Illustrative investment cashflow profiles Financial Close Typical PPP Cashflow Profile (3) - 3 6 9 12 15 18 21 24 27 30 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 21 23 25 27 29
Slide 10: Cash Flow Profile
Cash Flow Profile Sustainable long-term cash flows and a stable portfolio valuation in the medium term 350,000 4,000 3,500 300,000 The valuation of the current 3,000 Annual project distributions (£'000's) 250,000 portfolio (RHS) at any time is a function of the present value of the expected future c
Slide 11: Sensitivities
Sensitivities Key macroeconomic sensitivities in the valuation Discount Rate +/- 0.5% (8.1) 9.0 Inflation -/+ 0.5% (7.6) 8.5 Tax Rate +/- 5% (5.3) 5.4 2 GDP -/+ 0.5% (5.4) 5.3 Lifecycle +/- 5% (2.1) 2.1 Interest Rate -/+ 0.5% (0.8) 1.0 Foreign Exchange Rates3-/+ 5% (1.0) 1.0 -10p -8p -6p -4p -2p 0p
Slide 12: Risk and Risk Management
Risk and Risk Management1 Portfolio ▲ PPP projects may experience reduced income through revenue deductions, either as a result of poor operational performance performance or an adversarial approach to contract management from clients and advisers ▲ InfraRed’s Asset Management team proactively overs
Slide 13: Market and Outlook
Market and Outlook ▲ Healthy pipeline covering the breadth of HICL’s acquisition focus: ‒ Attractive pipeline of core infrastructure assets spanning UK, Europe, North America, Australia and New Zealand (ANZ) ‒ c. £510m1 of equity at exclusivity, preferred bidder, or shortlisted stage ‒ Two originati
Slide 14: 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 | 14
Slide 15: Appendix I: Case Studies
Appendix I Case Studies hicl.com |
Slide 16: 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 17: 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 18: PPP Case Study: Allenby & Connaught
PPP 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 maintenance co
Slide 19: 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 20: 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 21: Appendix II: Company Information
Appendix II Company Information hicl.com |
Slide 22: 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 23: 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 24: 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 25: Board of Directors I
Board of Directors I Non-executive Directors with a broad range of relevant experience and qualifications Ian Russell, CBE Frank Nelson Rita Akushie Mike Bane Chairman Senior Independent Director Director Director Ian, HICL’s Chairman, is resident in the Frank, a UK resident, is a qualified Rita Aku
Slide 26: Board of Directors II
Board of Directors II Non-executive Directors with a broad range of relevant experience and qualifications Frances Davies Susie Farnon Simon Holden Kenneth D. Reid Director Audit Committee Chair Risk Committee Chair Director Frances, a UK resident, has more than Sally-Ann (known as Susie), a Guernse
Slide 27: 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 28: Appendix II: The Investment Manager
Appendix II The Investment Manager hicl.com |
Slide 29: 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 19 infrastructure and real estate funds (including HICL and TRIG) Currently over US$12bn of equity under management1 London based, with offices in New Yor
Slide 30: 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 31: Appendix III: The Investment Portfolio
Appendix III The Investment Portfolio hicl.com |
Slide 32: HICL's Top Assets I
HICL’s Top 10 Assets1 I Sector: Electricity, Gas & Water Affinity Water Location: UK % of portfolio: 9% (March 2021: 8%) Affinity Water Limited is the largest water-only HICL holding: 33.2% 1 supplier in the UK by revenue and population served covering an area of 4,515 square kilometres. Concession
Slide 33: HICL's Top Assets II
HICL’s Top 10 Assets II Sector: Accommodation Royal School of Military Location: UK Engineering % of portfolio: 4% (March 2021: 4%) The PPP project covers 32 new and 21 existing HICL holding: 100% 6 buildings, and five training areas on behalf of the UK Ministry of Defence. Concession length: 30 yea
Slide 34: Portfolio Diversification
Portfolio Diversification HICL’s Portfolio, as at 31 March 20221 MARKET SEGMENT GEOGRAPHIC LOCATION ▲ PPP Projects 66% ▲ UK 73% ▲ Demand-based Assets 22% ▲ Europe (exc UK) 18% ▲ Regulated Assets 12% ▲ North America 9% INVESTMENT STATUS SECTOR ▲ Fully operational 97% ▲ Accommodation 10% ▲ Constructio
Slide 35: 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 FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE 2012 2013 2014 2015 2016 2017 2018 2019 2020 20
Slide 36: 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 37: 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 38: 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 39: 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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