Investment trust HICL Infrastructure is set to sell its £183m stake in an American toll-road project, using the cash to begin a major share buyback programme.
The trust said today that it had entered an agreement to sell its entire stake in the US Northwest Parkway toll-road project for $232m (£183.4m), a 30 per cent premium to its carrying value on the trust’s books.
The sale, to VINCI Highways, is expected to be completed in the second quarter of this year, with HICL Infrastructure stating the high valuation reflects the “asset’s strong inflation correlation.”
The trust has now executed over £500m of disposals over the last year, it added, and said its manager would continue to “selectively consider attractive investment opportunities.”
Up to £50m of the sale proceeds will be used to fund a share buyback programme, with the remainder used to pay off the company’s debts, estimated to be at around £135m.
Currently sitting on a discount of 23.3 per cent, the trust has not been valued at a premium by the market since November 2022. Its share price has fallen 13.1 per cent over the last year.
The trust’s stock price rose 3.6 per cent this morning on the back of the news.
Mike Bane, chair of HICL Infrastructure, said: “HICL’s latest disposal yet again demonstrates the extent to which HICL’s high-quality portfolio continues to be undervalued by public markets.
“At a significant discount to NAV, HICL’s shares represent a particularly attractive investment and a highly accretive allocation of disposal proceeds.”