HICL Infrastructure sells interest in Bradford schools PFI
HICL Infrastructure announced the sale of its equity interests in the ‘Bradford Building Schools for the Future’ (BSF) first and second phase public finance initiative projects on Monday, for an estimated £37m.
The FTSE 250 company said the sale price was an 8% premium over the company's valuation as at 31 March.
It said the strategic move was in alignment with its ongoing efforts to deliver capital growth through the active recycling of assets.
The transaction would boost key portfolio metrics, and refine the overall composition of the portfolio, the board explained.
Both the Bradford 1 and Bradford 2 projects were initially invested in by HICL in June 2014 and June 2009, respectively.
With additional stakes acquired in 2021, the sale made for an annualised holding period return of 11.5% for Bradford 1 and 14.1% for Bradford 2.
HICL said its management of the projects had led to enhanced community benefits, such as the annual addition of 50 special educational needs and disabilities places for the local community.
InfraRed's active management, particularly during Bradford 2's construction phase, and the refinancing executed in April this year, further solidified the partnership with the local authority to ensure project success.
The proceeds from the disposal will would be channelled towards reducing the outstanding amount on HICL's revolving credit facility (RCF).
Post-sale, it was expected that the facility’s drawn balance would stand at about £330m.
The sale’s completion was slated for the fourth quarter of 2023, contingent on standard closing conditions.
“Selective divestments enhance portfolio composition, provide a valuable source of funding beyond capital markets, and reinforce the value of HICL's high quality portfolio,” said Edward Hunt, head of core income funds at HICL’s investment manager InfraRed.
“This transaction builds on HICL's long track record of delivering value enhancement through active asset recycling, and we continue to progress disposal opportunities where these deliver shareholder value.”
Reporting by Josh White for Sharecast.com.