HICL Infrastructure Co. Ltd. shares edged higher on Tuesday morning, after the company reported increased net asset value, stronger cash generation and further progress on portfolio reshaping during the first half of its financial year.
The FTSE 250 firm also highlighted its proposed combination with the Renewables Infrastructure Group, announced last week, which would create the UK's largest listed infrastructure investment company with more than £5.3bn in net assets.
For the six months ended 30 September, NAV per share rose to 156.0p from 153.1p in March, an increase of 2.9p, reflecting an annualised underlying portfolio return of 10.3%, up from 5.5% a year earlier.
HICL said good inflation-linked cash flows from its core public-private partnership (PPP) assets helped lift dividend cash cover to 1.1 times, compared with 1.07 times in March, underpinning its target dividend of 8.35p per share for the year to March 2026 and 8.5p for March 2027.
Chair Mike Bane said the results showed the group's strategy was delivering despite a difficult backdrop.
"HICL's ability to deliver on its strategy amid a challenging macroeconomic backdrop has been ably demonstrated in the period," he said.
"With increasing dividend cash cover, NAV accretion and strong operational performance, the company is well positioned to deliver a compelling value proposition for shareholders."
The company continued to rotate capital through disposals, selling seven UK PPP assets at their March valuation.
Total announced disposals reached more than £730m over the past 24 months, with proceeds directed towards buybacks and existing commitments.
HICL said the selective reinvestment programme, including an expanded £150m buyback, supported NAV accretion of 0.9p during the half year.
Edward Hunt, head of core infrastructure funds at InfraRed Capital Partners, the group's investment manager, said the disposals reinforced the trust's valuation and strategic focus.
"Taking an active approach to portfolio rotation underlines the company's valuation and supports our ongoing objective to deliver sustainable NAV growth," he commented.
"This has been proven in the first half of the year with the disposal of seven UK PPP assets at NAV, enhancing key portfolio metrics and providing capital for accretive reinvestment."
On an investment basis, income rose to £145.8m from £71.7m a year earlier, with total return up to £119.5m from £45m.
Earnings per share increased to 6.1p from 2.2p.
The interim dividend was set at 2.09p, compared with 2.07p in March.
After deducting the interim payout, NAV per share stood at 153.9p, up from 151.0p.
At 0915 GMT, shares in HICL Infrastructure were up 0.45% at 109.7p.
Reporting by Josh White for Sharecast.com.