HICL Infrastructure Company Limited (HICL) has announced that it has entered into an agreement to sell its 9.7% interest in the AquaSure Desalination PPP Project. The buyer has not been disclosed.
The value of HICL's investment in AquaSure was increased by approximately 10% in September 2017, in line with a market transaction earlier that year. The disposal price agreed will generate a premium for the company, of approximately 7% over the AUD150 million (US$110.12 million) valuation of the investment at 31 March 2018. The transaction is expected to complete during Q4 2018, subject to third-party consents.
The disposal was initiated by InfraRed Capital Partners, advisor to HICL, as part of the company's ongoing strategy of portfolio optimisation; delivering incremental value to HICL's shareholders through strategic disposals, where pricing is attractive. The forecast future returns from AquaSure were appreciably lower than the overall weighted average total return from the HICL portfolio and the disposal is therefore expected to be accretive in terms of the total return. It will also improve the correlation of portfolio returns to inflation; and increase the weighted average asset life of the company's portfolio.
HICL intends to use the proceeds to reduce the balance on its revolving credit facility (RCF). Following completion of the disposal, drawings on the RCF are expected to be in the region of GBP70 million (US$90.5 million).