Capital Markets Event

Research evidence excerpt

Capital Markets Event

g/cooling network, an

operational data centre with an anchor tenant and expansion opportunity, a ferry business with

existing contracts and assumed fleet growth, and leisure facility concessions with expansion

potential. Except for the latter, all are existing InfraRed investments, held by other mandates.

Furthermore, in defining the scope of the investments, long-term cash flow quality is a key

driver, largely comprising contracted revenue, but some commercial revenue, albeit from

various (strong) corporate counterparties. The main question at this stage is the manager's

track record for such assets, which is particularly pertinent given the enhancers are naturally

higher risk than the incumbent assets. Here the presentation pointed to HICL's existing growth

asset portfolio delivering a c.140bps-150bps increase in the expected holding period IRR and

a 1.7x Multiple On Invested Capital (MOIC). We are also cognisant the HICL/TRIG proposals,

which included a similar allocation to enhancers, referred to 75+ exits across 'value-add' funds,

with a realised net IRR of 18.7% and net MOIC of 2x. Additional performance data, especially

relative to private fund peers, would understandably be useful though.

Existing growth opportunities: Looking beyond the evolution of the strategy, the opportunities

within the existing growth assets were also well-evidenced. This comprised the growing

investment programme at Affinity Water, the increase in Fortysouth's tower tenancy ratio from

1.26x to 1.4x based on contracted sales to date, but against 1.8x for European towercos,

and the stated ambitions of Virgin Trains and Trentitalia to act as additional operators of

international services, alongside Eurostar, at London St. Pancras Highspeed (formerly HS1).