Mixed shareholder reaction after huge £5.3bn FTSE 250 infrastructure merger
Shareholders of two of the UK’s biggest infrastructure funds have had mixed reactions after the firms reached an agreement to merge in a blockbuster £5.3bn deal.
FTSE 250-listed HICL Infrastructure and The Renewables Infrastructure Group (TRIG) said they had signed heads of terms on the business combination, in a move that will see voluntary winding up of TRIG, with TRIG’s assets transferred to HICL in exchange for the issue of new HICL shares and cash.
The merger proposal, if signed off by shareholders and regulators, will see the formation of the UK’s largest listed infrastructure investment firm.
TRIG shares rose by more than 5 per cent to 76p on the back of the news, but HICL shares sunk by nearly 5 per cent to 112p.
“We see multiple reasons for TRIG shareholders to be excited by the proposal, but fewer for HICL shareholders, where a liquidity opportunity is lacking despite a material shift in strategy and portfolio,” analysts at Peel Hunt said.
“Whilst we applaud the boards of both companies for working on a transformative transaction, we are concerned by the balance of incentives for each set of shareholders.”
Major portfolio
As part of the terms of the deal, TRIG shareholders will have the option of a partial cash exit of up to £250m in aggregate, representing approximately 11 per cent of TRIG’s share capital.
Assuming full take-up of the partial cash option, HICL shareholders are expected to hold 56 per cent, and TRIG shareholders 44 per cent, of the combined company.
Shareholder meetings to approve the deal are set to be held in December, with the merger expected to be completed by the end of the first quarter of 2026.
HICL was listed on the main market of the London Stock Exchange in 2006 and was originally set up to invest in infrastructure projects developed under the UK’s private finance initiative (PFI).
HICL’s portfolio includes a host of UK infrastructure assets such as the High Speed 1 rail link, the Westminster headquarters of the Home Office, The Northwood headquarters of the Ministry of Defence and Lewisham hospital.
TRIG, which was formed in 2013 to specialise in renewable infrastructure, operates a portfolio comprising stakes in several dozen wind and solar projects across Britain as well as further afield in Germany, France and Spain.
Mike Bane, Chair of HICL, said: “The combination of HICL and TRIG represents a unique opportunity to capture the key megatrends shaping the infrastructure market today, which increasingly straddle both core infrastructure and the energy transition.
“By combining two complementary portfolios and teams, the combined company will have the profile, expertise and access to capital to seek enhanced returns from a reinvigorated investment strategy.”