HICL ups NAV but warns political uncertainty is key risk

Investment fund HICL Infrastructure hailed a ‘strong’ first half on Tuesday but warned that political uncertainty in the UK remained a significant risk.

The infrastructure specialist, which was hit earlier this year by the collapse of construction firm Carillion, said net asset value per share was 156.4p as of 30 September, against 149.6p in March.

Income for the six months to September was £211m, against £108.1m a year earlier, while earnings per share more than doubled to 10.8p from 5.1p in 2017.

Chairman Ian Russell called it a “strong performance”, with HICL’s total return since its 2006 flotation now at 9.5% per annum.

But he added: “Political uncertainty is currently heightened in the UK and remains a key risk faced by the company.”

HICL had invested in 15 projects that Carillion was involved in, and it reported a £59.3m impact on net asset value earlier this year when the construction firm’s collapse sent them into default.

The high-profile failure of Carillion has also underpinned growing political distaste for private companies funding public infrastructure projects.

The Treasury has called it “inflexible and overly complex”, and in October, Chancellor of the Exchequer Philip Hammond called time on the model, saying he would not sign any new contracts.

Harry Seekings, co-head of infrastructure at InfraRed, HICL’s investment advisor, said: “With few public private partnership (PPP) projects procured in the UK since 2013, HICL’s pipeline has been for some time predominantly drawn from outside the UK PPPs. Following the recent UK Budget announcement, this trend looks set to continue.

“However, we passionately believe that responsible private investment plays a vital role in the delivery of critical infrastructure in the UK. We look forward to engaging with HM Treasury on the future role for long-term private capital in financing the UK’s infrastructure needs.”

HICL, which has voted to move its investment business from Guernsey to the UK mainland, said the quarterly dividend was 2.01p per share and reiterated its full-year target of 8.05p per share.