HICL, Renewables Infrastructure to combine into $5.2 billion UK-listed infrastructure firm

By Nithyashree R B

(Reuters) -HICL Infrastructure and The Renewables Infrastructure Group Ltd will merge to form the UK's largest listed infrastructure investment company worth about 3.98 billion pounds ($5.2 billion), the companies said on Monday.

The deal will bring together HICL's portfolio of more than 100 core infrastructure assets spanning social projects, utilities and transport with Renewables Infrastructure's 2.3- gigawatt renewables portfolio covering solar, wind, and battery storage across Britain and Europe. They will have combined net assets exceeding 5.3 billion pounds.

Shares of TRIG rose nearly 6% while those of HICL fell nearly 7% on news of the deal.

The UK infrastructure investment sector has been struggling with low valuations and, in recent years, has seen core infrastructure and the energy transition sectors increasingly converging.

"In recent years, listed investment companies in the alternatives sector have seen evolving investor preferences and regulatory developments influencing sentiment across the sector resulting in a more challenging market backdrop," the companies said in a statement. Both companies have taken steps to boost performance but have yet to see their shares close the valuation gap, they said.

The deal involves a voluntary winding up of Renewables Infrastructure, with its assets transferred to HICL for new HICL shares and a 350 million pound liquidity package, which includes a partial cash option and a commitment from Sun Life, the parent firm of HICL's investment manager, to buy shares after the deal.

HICL shareholders will hold about 56% and TRIG shareholders about 44% of the combined firm.

Analysts at RBC Capital Markets said the merger was a "positive move," citing increased scale and the combined fund's ability to pursue higher overall returns.

The combined company will deliver an annual dividend target of 9 pence per share with a projected net asset value total return of over 10% per annum.

The deal is expected to close in the first quarter of 2026.

Goldman Sachs International and Investec Bank PLC were the financial advisers to HICL, and BNP Paribas was the financial adviser to TRIG. 

($1 = 0.7596 pounds)

(Reporting by Nithyashree R B in Bengaluru; Writing by Yadarisa Shabong; Editing by Mrigank Dhaniwala and Susan Fenton)