HICL Infrastructure Regulatory News (HICL)

18 July 2022

HICL Infrastructure PLC

"HICL" or the "Company" and, together with its subsidiaries, the "Group", the London-listed infrastructure investment company managed by InfraRed Capital Partners Limited ("InfraRed" or the "Investment Manager").

New Acquisition - Mobile Towers Investment

The Board is pleased to announce that HICL has exchanged contracts to acquire a 40% equity interest in Aotearoa Towers Limited ("TowerCo"), a passive mobile tower infrastructure owner, from Vodafone New Zealand Limited ("Vodafone NZ") (the "Transaction"). Following completion of the transaction, TowerCo will represent approximately 7% of HICL's portfolio, by value[1] and is expected to take HICL's portfolio weighting in digital communications infrastructure to c. 9%[2].

The Transaction, a carve-out of Vodafone NZ's passive mobile tower infrastructure, will create New Zealand's largest independent tower company, with 1,484 wholly owned towers[3] covering 98% of New Zealand's population. TowerCo will own and operate the passive tower infrastructure (e.g. towers, masts, poles), with Vodafone NZ retaining responsibility for the 'active' telecommunications equipment mounted on the towers. Mobile towers are critical infrastructure that underpin mobile connectivity and wireless broadband across New Zealand.

TowerCo will benefit from a long-term, availability-based revenue contract with Vodafone NZ, that is indexed to inflation. The initial term of the agreement is 20 years with the option of two 10-year extensions. The agreement will grant Vodafone NZ access to the passive tower infrastructure in exchange for contractual, inflation-linked access charge payments that are unrelated to usage, and will account for 96% of TowerCo's day-1 revenues. Vodafone NZ has contractually committed to additional sites over the next ten years which will increase TowerCo's asset base and revenues over this period.

This is a strategic and highly attractive digital infrastructure acquisition for HICL. TowerCo's cashflows are underpinned by a long-term contract with a strong corporate counterparty and TowerCo benefits from an entrenched market position with high barriers to entry. The Transaction is expected to be accretive to several of HICL's key portfolio metrics, particularly asset life due to the perpetual nature of the asset, and inflation correlation, which is materially in excess of HICL's portfolio average.

InfraRed has been investing in, and managing, assets in Australia and New Zealand since 2009 and has operated a regional office in Sydney since 2013. This investment is the third investment in New Zealand from InfraRed-managed funds. The Investment Manager was supported on the acquisition of TowerCo by Russell Stanners, as a senior adviser. Russell was previously the CEO of Vodafone NZ for 12 years to 2018.

HICL's investment is being made alongside Northleaf Capital Partners, which is also indirectly acquiring a 40% equity interest in TowerCo. Infratil Limited, an existing shareholder of Vodafone NZ, will retain an indirect equity interest of 20% in TowerCo. Northleaf Capital Partners, through its funds, is also a long-term shareholder in the Northwest Parkway toll road (USA) alongside HICL.

Completion of the Transaction is subject to Overseas Investment Office approval and is anticipated to occur in the second half of 2022. The investment will be funded from the proceeds of HICL's recently completed capital raise and existing credit facilities.

Edward Hunt, Head of Core Income Funds at InfraRed said:

"InfraRed is delighted to be investing on behalf of HICL in the largest independent tower company in New Zealand and commencing this long-term relationship with Vodafone NZ. This acquisition further executes on HICL's vision to connect communities by providing essential communications infrastructure. The entrenched market positioning of the asset, combined with the long-term, contracted revenues generated under a CPI-linked contract, are a key attraction of this core infrastructure asset of the modern economy."

Vodafone New Zealand is one of New Zealand's leading connectivity companies offering a range of broadband, mobile and technology products across almost three million connections to consumer, business and public sector customers. Vodafone New Zealand is owned by Infratil and Brookfield Asset Management and is a strategic partner to the Vodafone Group, one of the world's largest telecommunications companies.

Webcast

The Company will be hosting a short webcast to discuss this announcement at 3:00pm UK time today.

To register for the call and to submit questions, please email HICL@teneo.com.

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Enquiries

InfraRed Capital Partners Limited +44 (0) 20 7484 1800 / info@hicl.com

Edward Hunt

Helen Price

Kirsty MacCallum

Teneo      +44 (0) 20 7420 3169/ HICL@teneo.com

Haya Herbert-Burns

Matthew Thomlinson

Jesse Mathews

Investec Bank plc  +44(0) 20 7597 4952

David Yovichic

RBC Capital Markets   +44 (0) 20 7653 4000

Matthew Coakes

Aztec Financial Services (UK) Limited +44(0) 203 818 0246

Chris Copperwaite

Sarah Felmingham

HICL Infrastructure PLC

HICL Infrastructure PLC ("HICL") 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 over 100 infrastructure investments, HICL is seeking further suitable opportunities in core infrastructure, which are inherently positioned at the lower end of the risk spectrum.

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

Investment Manager (InfraRed Capital Partners)

The Investment Manager to HICL is InfraRed Capital Partners Limited ("InfraRed") which has successfully invested in infrastructure projects since 1997. InfraRed is a leading international investment manager, operating worldwide from offices in London, New York, Seoul and Sydney and managing 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 over 100 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.