HICL and TRIG Combine to Create UK's Largest Listed Infrastructure Investment Company

HICL and TRIG agree all-share combination: why this matters for income-focused investors

HICL Infrastructure PLC and The Renewables Infrastructure Group Limited have agreed detailed heads of terms to combine into the UK’s largest listed infrastructure investment company, with net assets in excess of £5.3 billion. The deal will be executed via a reconstruction and voluntary winding up of TRIG under Guernsey law, with TRIG’s assets moving into HICL in exchange for new HICL shares and, for those who choose it, a partial cash exit.

The pitch is clear: more scale, broader mandate, stronger cash flows, and a higher dividend. The target annual dividend is 9.0 pence per share, supporting a target NAV total return of over 10 per cent. per annum over the medium term.

What’s being created: scale, scope and a bigger dividend

The combined platform will span the full spectrum of infrastructure – core assets such as social infrastructure, regulated utilities, transport and digital – plus renewables across wind, solar, offshore and storage. Management argues this reflects how core infrastructure and energy transition now overlap and says the larger balance sheet should unlock more opportunities and better capital flexibility.

Crucially for income investors, the Combined Company targets a 9.0 pence per share annual dividend and a progressive policy thereafter. Management is also targeting a NAV total return of over 10 per cent. per annum over the medium term. Neither is guaranteed, but it sets expectations higher than recently seen across the listed alternatives sector.

Headline figure	Detail
Combined net assets	In excess of £5.3 billion
Dividend target	9.0 pence per share (quarterly payments post-completion)
Target NAV total return	Over 10 per cent. per annum (medium term)
Illustrative exchange ratio	0.714173 of a HICL Share for each TRIG Share
Ownership split (assumes full cash take-up)	HICL c.56 per cent., TRIG c.44 per cent.
Partial cash option	Up to £250 million, priced at 90 per cent. of TRIG’s Cash Adjusted NAV per share
Sun Life secondary support	£100 million of ordinary share purchases post-completion
Ongoing fee signal	Operating Expense Ratio expected in the range of 92-96bps

How the structure works: FAV-for-FAV, a cash option, and timing

FAV-for-FAV explained in plain English

TRIG holders will exchange their TRIG shares for new HICL shares on a formula asset value-for-formula asset value basis. In short, the exchange ratio is calculated using the companies’ adjusted NAVs – “FAVs” – as at 30 September 2025 on a consistent valuation basis. Using the latest published NAVs as an illustration, the ratio is approximately 0.714173 of a HICL Share per TRIG Share.

NAV is net asset value. FAV adjusts NAVs for dividends, buybacks, transaction costs, a liquidation pool for TRIG, and the mechanics of the cash option. It is designed to keep things fair between those rolling into shares and those taking cash.

Cash option for TRIG shareholders

TRIG shareholders can elect for up to £250 million in aggregate to be paid in cash at 90 per cent. of TRIG’s Cash Adjusted NAV per share (reflecting a 10 per cent. discount). Elections may be scaled back pro rata if oversubscribed. The default is to roll into HICL shares unless you are an excluded overseas holder.

That discount creates a “Cash Option Discount” benefit that is split 50/50 between both sides within the FAV calculations. Funding for the cash option will come from the Combined Company’s revolving credit facility.

Dividends before and after completion

• Before completion, both companies keep their existing quarterly schedules. TRIG’s third interim dividend of 1.8875 pence per share for the quarter ended 30 September 2025 will be paid as declared.
• After completion, the Combined Company intends to pay quarterly at the higher 9.0 pence per share annualised rate. Dividends for the quarters ending 31 December 2025 and 31 March 2026 (depending on timing) and the full year to 31 March 2027 are expected to reflect this level.

Timetable and approvals

Shareholder documents are expected later this week. General meetings are targeted for December 2025, with completion in Q1 2026, subject to shareholder, regulatory, lender and project-level consents, and admission of new HICL shares. The City Code on Takeovers and Mergers is not expected to apply because this is a Guernsey law reconstruction, not a UK takeover.

Management, fees and operating muscle

InfraRed Capital Partners, the Investment Manager to both HICL and TRIG, continues as Investment Manager to the Combined Company. Renewable Energy Systems (RES) will continue to provide operational services for the renewables portfolio. This continuity should help with integration and delivery of the broader mandate.

Fee updates worth noting

• InfraRed fees: 0.85 per cent. per annum of the average of NAV and market capitalisation up to £2 billion, 0.80 per cent. from £2 billion to £4 billion, and 0.75 per cent. above £4 billion, plus £100,000 per annum. Fees are capped at the maximum that would be payable if based on NAV only.
• InfraRed termination: notice period reduces to 24 months from 1 April 2030, after a tapering transition from 1 April 2029.
• RES fees: reduced tiers starting at 0.34 per cent. per annum of the average of NAV and market capitalisation attributable to the renewables investments, with caps if based on NAV only. Notice period aligned with InfraRed’s.
• Operating Expense Ratio expected to settle in the 92-96bps range, helped by larger scale and lower fee rates.

Why this could be good for shareholders

• Scale and liquidity: Net assets in excess of £5.3 billion should improve secondary market liquidity and broaden the investor base. Management even points to a pathway to potential FTSE 100 inclusion.
• Diversified income: Blending availability-based and regulated cash flows with renewables exposure aims to support resilient distributions and a progressive dividend.
• Clearer growth story: The mandate explicitly targets higher-returning strategies alongside core income assets, aiming for NAV per share growth above dividend growth.
• Capital support: Sun Life has agreed terms to buy £100 million of ordinary shares after completion, indicating alignment with the strategy and providing near-term secondary market support.
• Optionality for TRIG holders: A partial cash exit at 90 per cent. of Cash Adjusted NAV per share caters to investors seeking liquidity.

Where to be cautious

• Completion risk: The deal needs multiple approvals, consents and documentation. The final terms may differ from today’s outline.
• Execution risk: A broader, higher-return strategy can lift long-term returns, but it increases the importance of disciplined capital allocation and portfolio rotation.
• Leverage and cash outflow: Funding the £250 million cash option via the revolving credit facility increases drawings and needs managing against cash inflows.
• Cash option discount: The 10 per cent. discount for cash electors is value-accretive for continuing holders in the FAV maths, but it is still a transfer that depends on take-up and scaling.
• Market sentiment: Listed alternatives have faced discounts to NAV. Bigger and better does not automatically mean a re-rating, even with Sun Life support.

What this means for you

HICL shareholders

• You are set to own approximately 56 per cent. of the Combined Company, assuming full cash take-up by TRIG holders.
• You retain the same Investment Manager and gain exposure to a larger renewables portfolio, with a higher dividend target of 9.0 pence per share.
• Your company’s mandate broadens, which could enhance return potential if executed well.

TRIG shareholders

• Default is to roll into HICL shares at the FAV-for-FAV exchange ratio (illustratively 0.714173 HICL per TRIG share). You can instead elect for partial cash up to an aggregate £250 million at 90 per cent. of Cash Adjusted NAV per share, subject to scaling.
• You get continuity of management with InfraRed and RES, and access to a larger, more diversified platform with a higher dividend target.
• Note that the City Code is not expected to apply to this reconstruction, and the scheme relies on a set of adjustments to NAVs – read the circular carefully when it lands.

Governance and naming

The combined board will include all current HICL and TRIG directors initially, led by Mike Bane as Chair and Richard Morse as Deputy Chair and Chair of the Capital Allocation Committee. All directors will stand for re-election at the 2026 AGM, and the board intends to reduce in size over time. The name and brand of HICL are expected to change post-completion, subject to shareholder approval at the 2026 AGM.

Bottom line

This is a bold move to reset scale, cost efficiency and growth potential in UK-listed infrastructure. The 9.0 pence dividend target and over 10 per cent. target NAV total return will grab attention, while Sun Life’s £100 million support is a helpful vote of confidence. The prize is clear – better access to deals across energy transition and core infrastructure – but delivery will depend on disciplined deployment and maintaining resilient cash flows through the cycle.

Next steps: watch for the shareholder documents later this week, general meetings in December 2025, and an expected completion in Q1 2026.