HICL, an infrastructure investment company managed by InfraRed Capital Partners, has agreed to sell a portfolio of seven UK public private partnership assets, including Bristol’s Southmead Hospital, to APG, the largest Dutch pension services provider.
The sale is for a total consideration of around £225m. The portfolio comprises half of HICL’s PPP (public private partnership) investment in 800-bed Southmead, which opened in 2014. HICL will retain 31.25% in the project.
The hospital was built by construction group Carillion at a cost of £430m under a Private Finance Initiative (PFI) contract in agreed in 2010.
InfraRed said it had significantly ‘de-risked’ the project following the liquidation of Carillion in 2018.
The deal also includes half of HICL’s investment in Pinderfields and Pontefract Hospitals in West Yorkshire, and the entire equity interest in four UK NHS Local Improvement Finance Trust projects and Edinburgh Schools.Most of the consideration will be received on completion, HICL said, with a small non-contingent deferred element of £14m due by 30 June next year, with the potential to bring this forward.
Following completion, HICL says its exposure to healthcare assets will reduce from 22% to 16% of gross portfolio value.
Completion of the portfolio sale is expected before 31 December 2025 and is subject to customary third-party consents.
Proceeds from the transaction will be used to fund the company’s £150m share buyback programme, including full repayment of the revolving credit facility, and to meet existing investment commitments of about £110m.
Following completion of the disposal, InfraRed will manage the assets on behalf of APG under a separately managed account agreement.
Mike Bane, HICL chair, said: “We are pleased to announce another material disposal for the company, which again highlights both the quality of HICL’s underlying portfolio and a consistent ability to execute divestments at attractive valuations.
“In the last two years, the company has raised over £725m through disposals, enabling the Board to deliver on its capital allocation priorities for the benefit of shareholders.”
Edward Hunt, head of core income funds at InfraRed, added: “This is another important transaction delivered by InfraRed in support of the Board’s objectives.
“The sale improves key portfolio metrics for HICL and reflects InfraRed’s ability to execute highly targeted divestments.
“It also reinforces the through-cycle attractiveness of high-quality infrastructure assets, with pricing that underscores the Company’s robust net asset value and highlights the continued dislocation between public and private markets.”