Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by HICL Infrastructure. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

HICL’s increased dividend target comes amidst other positive signs…

HICL Infrastructure (HICL) provides a core investment exposure to institutional-quality infrastructure assets around the world. HICL’s managers have a 25-year track record, and this expertise is coming into play given equity fundraising is not possible with the current discount to NAV. To repay short-term borrowings in full, the team have successfully disposed of nine assets over the last financial year, all at a premium to valuations.

This active portfolio management, as well as the impact of higher inflation flowing through the portfolio, has meant that the board has been able to increase their dividend target to 8.35p per share for the financial year ending March 2026, representing an increase of 1.2% over that targeted for the current year. As we discuss in the Dividend section, HICL’s shares offer an attractive prospective dividend yield of 6.6%.

The increase in the dividend target is one benefit, but there are several other positives from changes made to the portfolio. Sales proceeds represent an average 11% premium to NAV, and in the context of the discount to NAV of c. 21%, this clearly highlights a disconnect between private and public markets. Further to this, realisation activity has left the HICL board confident enough to announce a £50m buyback programme, as we discuss in the Discount section.

For the first time, the managers have split the portfolio into two categories comprising “yield” and “growth” assets. Realisations and new investments have changed the make-up of the portfolio, improving the portfolio’s yield profile, yet also boosting exposure to growth assets which should deliver higher cashflows longer into the future. Yielders (represented predominantly by PPPs) amount to c 65% of the portfolio, but the balance, the growth assets, should enable HICL to continue to grow the dividend and asset base long into the future.

Kepler View

The prospect of resuming an upward trajectory on the dividend front is to be welcomed. Yet we also believe that the sales of assets at a premium to valuations should help shareholders and prospective investors gain further confidence in the NAV. According to InfraRed statistics, the market-implied net return (i.e. the NAV discount rate, less ongoing charges and adjusted for the discount to NAV) is 9.0% per annum, which in absolute and relative terms, is attractive compared to long-term equity market returns.

As we discuss in the Portfolio section, the portfolio continues to evolve. Aside from improving the mix, gently moving towards a portfolio more exposed to inflation, there are some company-specific opportunities that give HICL potential upside. Affinity Water is potentially one of them, but so too in our opinion (albeit less immediate) is the prospect of more train companies running services along HICL’s HS1 route.

Whilst it is hard to pin down a single catalyst that will deliver a rerating, there are a number of tailwinds we see appearing which could help HICL’s shares recover their poise. These include interest rates falling, Affinity Water’s regulatory determination allowing it to resume dividends as expected, dividend cover improving and the commensurate potential for the dividend to increase at a faster rate, and finally the share buyback recently started beginning to bite on the rating.


  • Lower-risk, institutional-quality infrastructure assets within a liquid vehicle that has scale
  • Steady and resilient yield, with a dividend that is cash-covered
  • Attractive prospective returns, positively correlated to inflation


  • Evolution of the portfolio is exposing shareholders to new risks
  • Capital is at risk if the manager is unable to continue to extend the weighted average asset life
  • Dividend cover is still relatively low, at 1.05x on a cash basis
Continue to Portfolio
2024 Kepler Alternative Income Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for alternative income... Find out more

Fund History

10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
03 Jul 2024 Fund Analysis
HICL’s increased dividend target comes amidst other positive signs…
24 Jun 2024 The rate cycle must soon benefit infrastructure and renewables
Spreads remain elevated, yet we may be soon approaching a turn in the cycle…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
20 Dec 2023 Fund Analysis
Green shoots are appearing for HICL’s dividend cover…
04 Oct 2023 Get real
The prospect of attractive real returns seems to be ignored by the market…
09 Aug 2023 Should I stay, or should I go?
Re-appraising the invitation to the bond party…
07 Jul 2023 Fund Analysis
HICL’s portfolio continues to evolve, building foundations for dividend growth…
03 May 2023 Alt-right or alt-wrong?
Infrastructure and renewables have moved from alternative to mainstream assets - what could be next..?
22 Mar 2023 Good vibrations
We identify some sectors with structural discounts we think could close over time…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
16 Dec 2022 Fund Analysis
HICL’s portfolio continues to broaden but the shares have been de-rated...
16 Jun 2022 Fund Analysis
HICL is in a prime position to benefit from higher inflation….
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
09 Mar 2022 Private markets: A closer look at infrastructure and renewables
We examine the £27bn listed Infrastructure and Renewable Energy Infrastructure sectors…
21 Dec 2021 Fund Analysis
Cash covered dividend and link to inflation underlines HICL’s appeal…
01 Dec 2021 How to protect your portfolio from inflation
We highlight trusts which could appeal in an environment where 'transient' inflation is here to stay...
16 Jun 2021 Fund Analysis
Covered dividend target this year means HICL looks less expensive than peers…
12 May 2021 Riders on the storm
We look at the yields in the alternatives space and how they have been affected by the pandemic…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
09 Sep 2020 Time to switch horses?
We look at what returns are likely from equity markets in the coming decade and identify which alternatives could offer similar or greater returns for lower levels of risk…
13 Aug 2020 Fund Analysis
HICL offer institutional quality infrastructure assets, delivering an attractive income...
23 Apr 2020 Sucker punch
Two of our analysts debate the merits of equity income and alternative income trusts at this point in time...
29 Oct 2019 Fund Analysis
Institutional quality infrastructure assets, delivering an attractive income...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
06 Mar 2019 Stairway to heaven
Our research shows that reinvesting the income generated by alternative assets could add a significant boost to long-term portfolio performance…
14 Feb 2019 Fund Analysis
Predictable cashflows, uncorrelated to the economic cycle
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