HICL Infrastructure lowers and simplifies management fees
Listed infrastructure fund, HICL Infrastructure Company, has announced a further reduction and simplification of its management fee structure with effect from 1 April 2014.
As a result of proposals submitted to the board of HICL by the company's investment adviser, InfraRed Capital Partners Limited, the directors have agreed to implement the following amendments to the contracts between the group and InfraRed:
- Removal of the differentiated and higher annual management fee for assets in construction (currently 1.5% p.a.), so that the fee payable to the Investment Adviser will be the same for all investments, regardless of whether they are operational, in ramp-up or under construction; and
- Extension of the taper in the annual management fee, with incremental investments under management in excess of £2.25 billion attracting a lower charge of 0.8% p.a.
The press release said that other components of the fee structure with InfraRed remain unchanged. The fund currently charges investors a management fee of 1.1% of assets a year on the first £750 million it has under management. For assets above this value, up to £1.5 billion, it currently charges 1% a year, and for any money over £1.5 billion up to £2.25 billion, it will charge 0.9% a year.
In aggregate such fees are equivalent to an annual fee of c. 0.3% of the group's assets under management, are credited to the group, thus adding value for HICL's shareholders.
Graham Picken, Chairman, HICL said:
"HICL has always enjoyed a transparent and competitive fee structure. The Board regularly reviews the Company's expenses and appreciates InfraRed's willingness to lead by example in ensuring that for value and efficiency the Company remains at the forefront of the sector."
HICL's fee-cuts come after the UK Pensions Infrastructure Platform is attracting investments from national pension funds. The mandate is being run by Dalmore Capital, which specialises in PFI and PPP type investments, and is charging 0.5% of assets a year