HICL Infrastructure (LSE: HICL) to sell A63 Motorway stake for £311m at 21% premium to book value

HICL Infrastructure PLC (LSE: HICL), the London-listed infrastructure investment company managed by InfraRed Capital Partners Limited, has agreed to dispose of its 24.0% shareholding in Atlandes S.A., the concession vehicle that owns and operates the A63 Motorway in southwest France, for gross proceeds of approximately £311 million. The transaction, struck at a 21% premium to the asset’s most recent carrying value as at 30 September 2025, closes HICL’s nine-year involvement with one of its most strategically significant portfolio positions. The deal adds 2.2 pence of net asset value per share after tax and transaction costs, and delivers an annualised holding period return in excess of HICL’s weighted average discount rate, making this one of the most financially successful exits in the company’s history. Completion, which requires no third-party consents, was expected to occur on 25 March 2026.

Why did HICL Infrastructure sell the A63 Motorway stake in France right now and at what price?

The A63 Motorway, a 104-kilometre toll road concession connecting the towns of Salles and Saint-Geours-de-Maremne in southwest France, represented 8.4% of HICL’s portfolio as at 30 September 2025, making it the company’s second-largest individual asset. HICL’s involvement with the asset dates to 2017 when it first acquired a stake, with InfraRed’s stewardship of the underlying project stretching back even further through its infrastructure private funds, which developed the asset from greenfield stage through construction and initial ramp-up. HICL subsequently added to the position in 2018 and most recently in early 2024, each time on what the company described as attractive terms.

The buyer is Atlandes’ majority shareholder, whose identity has not been publicly disclosed. HICL coordinated with other minority shareholders so the majority owner could acquire 100% of Atlandes in a single transaction. The gross proceeds of approximately £311 million were converted from euros at the rate prevailing on 24 March 2026, meaning minor currency movement could affect the sterling equivalent at completion. The 21% premium to book value is notable in the current environment for listed infrastructure investment companies, many of which are trading at significant discounts to net asset value. For a sector where valuations have been compressed by higher interest rates and investor caution, realising assets above carrying value is a meaningful proof point rather than a routine outcome.

How does the A63 disposal fit into HICL Infrastructure’s broader capital rotation strategy since 2023?

HICL’s board has been running an active programme of portfolio pruning for three years. The A63 sale takes the company’s total disposals since 1 April 2023 to over £1 billion, achieved at a weighted average premium to book value of 11% across the full programme. The A63 transaction, at a 21% premium, lifts the average and reinforces the narrative that HICL’s asset valuations are defensible in third-party transactions rather than paper exercises susceptible to management optimism.

The capital rotation thesis is straightforward: identify assets where market valuations exceed HICL’s carrying value, sell at a premium, and redeploy into assets with better forward return prospects. In practice, this requires a buyer willing to pay a premium at a moment when infrastructure assets are broadly out of favour with listed equity investors. The fact that Atlandes’ majority shareholder was prepared to pay a 21% premium suggests that private market buyers, freed from the liquidity discount and sentiment volatility that affect listed investment trusts, continue to assign full private-market values to operational core infrastructure. This is a structural advantage HICL can exploit as long as it identifies willing counterparties and its asset quality justifies private-market pricing.

What are the portfolio quality and risk implications of removing the A63 from HICL’s asset base?

HICL’s announcement characterises the A63 disposal as accretive to four key portfolio metrics: expected return, yield, inflation correlation, and asset life. That framing deserves unpacking. A concession-based motorway in France generates revenue that is closely tied to traffic volumes, meaning income is subject to economic cycles. Over the ownership period HICL navigated the Covid-19 pandemic, during which traffic on European toll roads fell sharply before recovering. The exit reduces HICL’s exposure to lifecycle risk, a category that encompasses the capital expenditure uncertainty inherent in ageing infrastructure assets, and to political uncertainty in France. The latter is not a trivial consideration; France has experienced sustained fiscal and political pressure in recent years, with debate over concession contract terms and motorway profitability a recurring feature of the political landscape.

Removing an 8.4% portfolio concentration from a single country and concession type also improves diversification. Whether the remaining portfolio has a higher expected return than the A63 depends entirely on what HICL purchases with the proceeds. The board has signalled confidence that available opportunities exceed the hurdle set by share buybacks, which is a more meaningful claim than it might appear: HICL’s shares were trading at approximately 115 pence against a mid-March 2026 share price of around 121 pence, implying a discount to net asset value of roughly 20% to 25%. Buying back shares at that discount is not a trivial return benchmark. For organic reinvestment to beat buybacks, new assets must deliver meaningfully higher risk-adjusted returns than the effective discount embedded in the current share price.

Where will HICL redeploy the £311m A63 proceeds and what investment opportunities is InfraRed pursuing?

HICL’s announcement states that InfraRed is actively pursuing an exclusive investment position as well as several live opportunities. Specific targets have not been disclosed. The company expects to hold approximately £90 million in cash at the group level as at 31 March 2026, with around £336 million of proceeds from recent disposals sitting within the underlying HICL group structure. Of that total, approximately £66 million is earmarked for funded equity commitments to two previously announced infrastructure investments: the Blankenburg tunnel project, due for capital deployment in September 2026, and the B247 project, scheduled for December 2026. The net free capital available for new investment or buybacks is therefore somewhat below the headline £336 million figure.

The board has been careful not to commit the proceeds entirely to reinvestment, preserving flexibility to increase buyback pace if the share price discount widens materially. This optionality is credible given the scale of cash on hand but creates ambiguity for investors trying to model forward earnings. If HICL reinvests at higher yields than the A63 was generating, income cover improves and dividend growth becomes more sustainable. If reinvestment is delayed or new assets are acquired at compressed returns, the capital rotation argument weakens and the buyback alternative becomes more compelling.

How does the A63 sale affect HICL’s credibility after the failed TRIG merger attempt in late 2025?

Context matters here. HICL’s board announced a proposed merger with The Renewables Infrastructure Group Limited (LSE: TRIG) in November 2025 that collapsed within weeks under pressure from institutional shareholders who rejected the strategic logic of combining core social infrastructure assets with renewable energy exposure. The failure was a governance reputational setback, with major investors including M&G and CG Asset Management publicly criticising the proposal’s structure and rationale. HICL shares were already trading at a substantial discount to net asset value, and the failed deal did little to rebuild confidence in InfraRed’s capital allocation judgement.

The A63 disposal, achieved at a 21% premium to book within four months of that episode, serves as a partial reset. It is tangible evidence that HICL’s private-market valuations are not inflated: a sophisticated, well-capitalised majority shareholder was prepared to pay above carrying value for the asset. For institutional investors who questioned whether HICL’s NAV was reliable, the transaction provides a data point. It does not resolve the deeper strategic question of what HICL’s reinvestment pipeline looks like or whether the current management framework is well-calibrated for a market that has decisively rejected the TRIG combination. But it repositions the conversation from governance controversy to operational execution, which is a more favourable ground for HICL to defend.

What does HICL Infrastructure’s share price discount signal about listed infrastructure investment trust valuations in 2026?

HICL Infrastructure shares traded at approximately 117.83 pence on the morning of 25 March 2026, up around 3% on the day, reflecting immediate market approval of the disposal terms. The 52-week range of roughly 103.80 pence to 126.80 pence illustrates that the stock has been rangebound, and the analyst consensus target price of 145 pence as at mid-March suggests the market continues to price in a substantial and persistent discount to intrinsic value. The price-to-book ratio of approximately 0.75 quantifies this: investors are paying 75 pence for every pound of net assets on HICL’s balance sheet.

The discount reflects a broader structural challenge for listed infrastructure investment trusts. Higher interest rates since 2022 raised the discount rate applied to long-duration assets, compressing valuations. Sentiment has been further affected by governance concerns, dividend sustainability questions, and in some funds, asset quality uncertainty. The A63 premium exit demonstrates that private buyers have not applied the same discount, a divergence that creates acquisition opportunity for listed vehicles that can identify motivated sellers willing to transact below private-market value. HICL’s dividend yield of approximately 6.8% based on the previous dividend cycle remains attractive relative to gilt yields, which provides income-oriented investors a floor, but yield compression will require sustained NAV growth rather than just asset sales at premiums.

Key takeaways: What the HICL Infrastructure A63 Motorway sale means for shareholders, peers, and the listed infrastructure sector

• HICL Infrastructure realised its 24% stake in the A63 Motorway in France for approximately £311 million, representing a 21% premium to the September 2025 book value and 2.2 pence of NAV outperformance after tax and transaction costs.
• The disposal takes HICL’s total divestments since April 2023 to over £1 billion at a weighted average premium of 11% across the full programme, establishing a consistent track record of realising assets above carrying value.
• The transaction was completed at a meaningful private-market premium while HICL shares trade at approximately a 20-25% discount to net asset value, underscoring the persistent gap between listed and unlisted pricing for core infrastructure.
• HICL exits the A63 with reduced exposure to French political risk, lifecycle capital expenditure uncertainty, and traffic-volume sensitivity, with the board characterising the post-disposal portfolio as improved on expected return, yield, inflation correlation, and asset life.
• Approximately £336 million of disposal proceeds sits within the HICL group structure, with £66 million committed to the Blankenburg tunnel and B247 projects; the remaining capital will be deployed into new investments or directed to buybacks depending on share price movements.
• InfraRed Capital Partners is pursuing an exclusive investment position and multiple live opportunities; the quality and pricing of these transactions will determine whether the capital rotation thesis holds or whether share buybacks would have delivered superior returns.
• The A63 premium realisation provides partial rehabilitation for HICL following the embarrassing collapse of the proposed TRIG merger in December 2025, offering institutional shareholders a concrete demonstration of portfolio quality that the failed deal had called into question.
• The transaction reinforces the structural discount between listed infrastructure investment trusts and private-market valuations, a dynamic that favours well-capitalised private buyers and creates pressure on listed funds to either close the discount or generate returns that justify patience.
• Peers including International Public Partnerships Limited (LSE: INPP) and Sequoia Economic Infrastructure Income Fund face similar discount-to-NAV dynamics; HICL’s active capital rotation provides a model for value crystallisation, though it reduces portfolio size and potential dividend coverage if reinvestment is delayed.
• HICL’s 6.8% dividend yield and confirmed next dividend payment on 31 March 2026 provide near-term income certainty, but sustainable dividend growth beyond the current cycle depends on the return profile of reinvested capital from the A63 and other recent disposals.