HICL Infrastructure Regulatory News (HICL)

2 May 2017

HICL Infrastructure Company Limited

Acquisition of a new investment

HICL Infrastructure Company Limited ("HICL" or the "Company"), the listed infrastructure investment company advised by InfraRed Capital Partners Limited, is pleased to announce that it has reached agreement to acquire a 36.6% equity interest in the various entities that comprise the Affinity Water Group ("Affinity Water") (including the regulated entity, Affinity Water Limited). HICL is part of a consortium, alongside DIF Infrastructure and Allianz Capital Partners on behalf of Allianz Group, which has agreed to acquire 100% of the equity interest in Affinity Water Acquisitions (Investments) Limited ("Topco") from Morgan Stanley Infrastructure and Infracapital. The investment is consistent with HICL's strategy of investing in assets that are positioned at the lower end of the risk spectrum in three target market segments: PPPs; regulated assets; and demand-based assets.

Affinity Water is the largest water-only company in England and Wales by revenue and population served, with a regulatory capital value of £1.156 billion as at 31 March 20171. It is licenced under the Water Industry Act 1991 and regulated by Ofwat, and its principal activities are water supply and distribution and the construction and maintenance of water supply infrastructure. Affinity Water serves 1.5 million customers across an area of approximately 4,515 square km in the south east of England.

HICL's share of the consideration for the acquisition amounts to approximately GBP269 million. This includes HICL's share of Topco's commitment to acquire a minority interest in Affinity Water. The investment will be funded using HICL's cash resources and drawings from its revolving credit facility and completion is scheduled for later this month. HICL will have a net funding requirement of around £230m following completion of the acquisition.

If calculated using an asset life of 100 years, the investment extends the weighted average asset life of HICL's portfolio to 32.2 years2. In addition, the portfolio's inflation correlation will be increased such that a 1% increase in inflation p.a. versus the base case valuation assumption would result in the total return to HICL's shareholders increasing by 0.8%2 p.a.

Tony Roper, Director at InfraRed Capital Partners Limited, said:

"InfraRed is delighted to have secured this £269m investment in Affinity Water, the largest water-only service company in England and Wales, for HICL. The investment is in line with HICL's stated acquisition strategy and supports the delivery of the Company's investment proposition to produce long-term income for shareholders from a portfolio of infrastructure investments positioned at the lower end of the risk spectrum.

The investment in Affinity Water will be accretive to the existing HICL portfolio in terms of total return, weighted average asset life and inflation correlation. We look forward to working with the management team and supporting them to continue to deliver a high quality service for Affinity Water's customers."

An analyst briefing will be held today and the presentation will be made available on the Company's website (www.hicl.com) shortly.

1Source: Ofwat published Regulatory Capital Value at 31 March 2017 (March 2016 real prices) indexed in line with RPI between March 2016 and March 2017, as published by the Office for National Statistics

2 Asset life from 31 March 2017, assuming portfolio data at 31 December 2016 (as published in the Company's recent Prospectus dated 23 February 2017) with the addition of the investment in Affinity Water. Updated information will be provided on 24 May 2017 when HICL publishes its Annual Results for the year to 31 March 2017.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

-ends-

Enquiries

InfraRed Capital Partners Limited +44 (0) 20 7484 1800

Tony RoperKeith PickardHarry Seekings

Tulchan Communications +44 (0) 20 7353 4200

David AllchurchLatika Shah

Canaccord Genuity Limited +44 (0) 20 7523 8000

David Yovichic

HICL Infrastructure Company Limited

HICL Infrastructure Company Limited ("HICL" or the "Company", and together with its subsidiaries the "HICL Group") is a long term investor in infrastructure assets which are predominantly operational and yielding steady returns. It was the first infrastructure investment company to be listed on the London Stock Exchange. With a current portfolio of 115 infrastructure investments, HICL is seeking further suitable opportunities, which are positioned at the lower end of the risk spectrum, in three target markets segments: PPPs; regulated assets; and demand-based assets.

Further details can be found on the HICL website, www.hicl.com.

Investment Adviser (InfraRed Capital Partners)

The Investment Adviser to HICL is InfraRed Capital Partners Limited ("InfraRed") which has successfully invested in over 200 infrastructure projects since 1997. InfraRed is a leading international investment manager focused on infrastructure and real estate. It operates worldwide from offices in London, Hong Kong, New York, Seoul and Sydney. With over 120 professionals it manages in excess of USD 9bn of equity capital in multiple private and listed funds, primarily for institutional investors across the globe. InfraRed is authorised and regulated by the Financial Conduct Authority.

The infrastructure investment team at InfraRed consists of 60 investment professionals, all with an infrastructure investment background and a broad range of relevant skills, including private equity, structured finance, construction, renewable energy and facilities management.

InfraRed implements best-in-class practices to underpin asset management and investment decisions, promotes ethical behaviour and has established community engagement initiatives to support good causes in the wider community. InfraRed is a signatory of the Principles of Responsible Investment.

Further details can be found on InfraRed's website, www.ircp.com.

Affinity Water

Affinity Water is the United Kingdom's largest water-only supply company by revenue and population served.

Affinity Water owns and manages the water assets and network in an area of approximately 4,515km2, split over three regions, comprising eight separate water resource zones, in the southeast of England. The company is the sole supplier of drinking water in these areas.

Affinity Water supplies, on average, 900 million litres of water a day to over 3.6 million people, serving 1.5 million homes and businesses, together with operating 98 water treatment works.

Affinity Water has invested significantly to protect the environment by getting their customers to use less water, reduce abstraction and renew the network. Affinity Water has dedicated £77 million for the metering programme, £22 million to achieve sustainable abstraction reductions and £63 million for mains renewals and replacements.