HICL Business Model
HICL’s strategy to deliver the Investment Proposition is through successful execution of its Business Model, which is founded on three pillars: value preservation, value enhancement and accretive investment. HICL delegates the majority of day-to-day activities required to deliver the business model to InfraRed.
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April 2006 to March 2020
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Since IPO in 2006, InfraRed (which acts as Investment Manager to HICL and Operator of the portfolio) has consistently outperformed HICL’s base case by delivering additional value enhancements for shareholders. The chart to the left shows the main contributors to portfolio outperformance since IPO1 and March 2020. These include initiatives at both the portfolio company level (such as lifecycle cost improvements) and the fund level (such as accretive share issuances and benefits of scale). Over this period, portfolio outperformance has contributed 42.3p per share to the Company’s Net Asset Value (NAV), which represents over 25% of the total NAV as at March 2020.
Many of the value enhancement initiatives undertaken by InfraRed for HICL also produce significant benefits for public sector stakeholders, such as when insurance cost savings are shared with PPP projects’ public sector clients or when regulated asset outperformance is shared with customers. For further detail on value enhancement activities, please refer to HICL’s latest Annual and Interim Reports.
1 Refers to HICL Infrastructure Company Limited prior to 31 March 2019, HICL Infrastructure PLC from 1 April 2019 onwards