By Heather Rydings
London-listed investment giant HICL Infrastructure’s chair has said its shares have been “materially oversold” by public markets as it reported it had swung to a negative total return in the six months ended September 30.
The FTSE 250 firm posted a negative total shareholder return of 1.7 per cent in the half-year, compared to a positive return of 6.7 per cent the year prior.
On an underlying basis, HICL reported a return of 8.2 per cent in the half-year. This was worse than the 13 per cent return achieved a year prior but better than the 7.2 per cent return expected by the firm back in March.
Mike Bane, chair of HICL, said the “solid operating result” reinforced his belief that the company’s shares have been oversold by public markets. In the year-to-date, the stock has lost 19 per cent of its value.
“In a period dominated by significant structural shifts in the macroeconomic environment, HICL’s core infrastructure assets continued to perform in line with expectations,” Bane said.
“The higher interest rate environment has severely impacted the company’s share price in the period, with HICL trading at a significant discount to [net asset value]. The board believes that there is a significant disconnect between the value ascribed to the company’s portfolio by public markets, compared to the valuations consistently demonstrated in private markets through the company’s asset sales.”
HICL made divestments totalling £324mn in the period. It noted all the sales were made at or above their respective valuations as at March 31.
The company said the bar for new investments remains “very high” due to the cost of debt and the “relative attractiveness” of buying back shares.
