HICL Infrastructure : Publication of a Prospectus and Circular

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL OR TO U.S. PERSONS. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE INCLUDING IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR TO U.S. PERSONS.

HICL INFRASTRUCTURE COMPANY LIMITED

Placing, Open Offer, Offer for Subscription and Intermediaries Offer of New Ordinary Shares

and

Publication of a Prospectus and Circular

23 February 2017

Further to the announcement made by HICL Infrastructure Company Limited (the 'Company') on 12 January 2017, the Board of Directors is pleased to announce a Placing, Open Offer, Offer for Subscription and Intermediaries Offer with a target size of £205 million, involving the issue of up to 128,930,818 New Ordinary Shares at an issue price of 159.0p per New Ordinary Share (the 'Issue'). The Company has published a prospectus relating to the Issue (the 'Prospectus') and a circular to shareholders (the 'Circular'), both of which will be posted to shareholders shortly, as well as being made available on the Company's website (www.hicl.com).

Unless otherwise defined, capitalised words and phrases in this Announcement shall have the meaning given to them in the Prospectus.

Commenting on today's announcement, Ian Russell, Chairman of the Company, said:

'We are very pleased to be undertaking HICL's first formal fundraising for four years. The provision of a sizeable Open Offer ensures that a significant proportion of the new equity is reserved in the first instance for our existing shareholders, while the inclusion of Placing, Offer for Subscription and Intermediaries Offer elements means that the Company is able to address the requirements of new investors from the institutional and retail sides of the market alike. The 7.85 pence per share dividend target for the current financial year equates to an attractive cash yield of approximately 4.9 per cent. based on the issue price of the New Ordinary Shares, with the dividend target for the next financial year increasing to 8.05 pence per share.

We believe that the pipeline of potential new business remains healthy and that further attractive investment opportunities will arise in the coming months. The Issue will leave the Company best placed to take advantage of those opportunities, and thereby further to develop the portfolio.'

Key Highlights of the Issue

· Target size of 128,930,818 New Ordinary Shares (to raise £205 million before expenses), with the ability to increase the size of the Issue to 163,522,013 New Ordinary Shares (to raise £260 million before expenses). Net proceeds will not in any event exceed the aggregate of: (i) the Group's total funding requirement of £203 million and (ii) the aggregate consideration expected to be payable for any Additional Investments

· Issue Price of 159.0p per New Ordinary Share. This represents a 4.3 per cent. discount to the middle market closing price of 166.2p as at close of business on 22 February 2017, and a 7.9 per cent. premium to the Company's NAV per Share of 147.4p as at 31 December 2016. (For the avoidance of doubt, investors in the New Ordinary Shares will not be entitled to receive the third interim dividend for the financial year ending 31 March 2017 of 1.91 pence per Ordinary Share which was announced on 22 February 2017, and in respect of which the Company's Shares are due to go ex-dividend on 2 March 2017)

· Under the Open Offer, existing Shareholders are entitled to subscribe for New Ordinary Shares pro ratato their holdings of Ordinary Shares on the basis of 1 New Ordinary Share for every 22 Ordinary Shares held as at close of business on Monday 20 February 2017. 66,315,621 New Ordinary Shares are thus reserved in the first instance exclusively for Existing Shareholders.Subject to availability, Existing Shareholders who take up all of their Open Offer Entitlements may also apply under the Excess Application Facility for additional New Ordinary Shares in excess of their Open Offer Entitlement

· The balance of New Ordinary Shares available under the Issue, together with any New Ordinary Shares not taken up pursuant to the Open Offer or the Excess Application Facility, will be made available for subscription under the Placing, the Offer for Subscription and the Intermediaries Offer

· The Company will apply the net proceeds of the Issue in the following order of priority: (i) to repay outstanding borrowings under the Facility; (ii) to make the investment in the Northwest Parkway toll road in Colorado, USA which the Group has contracted to acquire, and (iii) to make any Additional Investments.

General Meeting

The Company is today posting to shareholders a circular to convene a general meeting to be held at 9.30 a.m. on 20 March 2017 (the 'General Meeting') in order to seek shareholder approval in connection with the Issue. The resolutions to be proposed at the General Meeting (the 'Resolutions') are as follows:

- To approve the Issue and the allotment of up to 163,522,013New Ordinary Shares in connection with the Issue; and

- To waive pre-emption rights in connection with the allotment of up to 10 per cent. of the Ordinary Shares in issue immediately following completion of the Issue until the sooner of the Company's next AGM or 15 months from the passing of the resolution.

Forms of Proxy in respect of the Resolutions should be returned by no later than 9.30 a.m. on 16 March 2017.

Publication of the Prospectus and Circular

A copy of each of the Prospectus and Circular will shortly be submitted to the National Storage Mechanism and be available for inspection atwww.Hemscott.com/nsm.do.

Expected timetable

Each of the times and dates set out below and mentioned elsewhere in this announcement may be adjusted by the Company, in which event details of the new times and dates will be notified to the FCA and the London Stock Exchange. References to a time of day are to London time.

A. The Issue

Introduction

The Company is a limited liability, Guernsey-incorporated, closed-ended investment company whose Ordinary Shares have a premium listing on the Official List and are traded on the Main Market of the London Stock Exchange. It is also a component of the FTSE250 Index. An investment in the Company enables investors to access the income stream from a diversified and established portfolio of quality infrastructure investments.

The Current Portfolio consists of Infrastructure Equity in 114 Project Companies, principally in PPP projects (such as hospitals, schools and government accommodation) and also demand-based assets (such as toll roads and student accommodation). While the majority of the Current Portfolio comprises investments in the UK, the Group has also made investments in the Republic of Ireland, France, the Netherlands, Canada, USA and Australia.

Background to the Issue

Since the Company's most recent tap issue in September 2016, the Group has completed a number of further investments which have been financed either by the proceeds of the tap issue or from Group Debt, and has contracted to make an investment in the Infrastructure Equity of the Northwest Parkway toll road in Colorado, USA (the 'Committed Investment'), which is due to complete during March 2017. With the Committed Investment, the Company has a current funding requirement of approximately £203 million. In addition, the pipeline of potential new acquisitions remains healthy and, as at the date of the Prospectus, the Investment Adviser has identified a number of Additional Investments with an aggregate value of approximately £50 million. It is intended that the net proceeds of the Issue will be used to meet the Group's current funding requirement (including the Committed Investment) and to make any Additional Investments.

The Issue

The Company is seeking to raise £205 million (before expenses) through the Placing, Open Offer, Offer for Subscription and Intermediaries Offer of New Ordinary Shares. The Directors have also reserved the right, in consultation with Canaccord Genuity, to increase the size of the Issue up to a maximum of £260 million to the extent that Additional Investments are made or identified and overall demand for New Ordinary Shares exceeds the target amount.

The net proceeds of the Issue will not in any event exceed the aggregate of: (i) the Group's total funding requirement of £203 million and (ii) the aggregate consideration expected to be payable for any Additional Investments.

The Company intends to use the net proceeds of the Issue in the following order of priority (in each case, where sufficient and assuming completion is reached): (i) to repay outstanding borrowings under the Facility; (ii) to make the Committed Investment; and (iii) to make any Additional Investments. If the net proceeds are not sufficient to fund the Committed Investment, the Group intends to make up any shortfall by borrowing under the Facility. If the net proceeds are not sufficient to fund any of the Additional Investments, the Group will fund the Additional Investments in full or in part by borrowing under the Facility where the Group Debt outstanding after such acquisition or acquisitions would be at a level that the Board considers prudent having regard to the terms of the Facility.

The Issue is being implemented by way of a Placing, Open Offer, Offer for Subscription and Intermediaries Offer. The inclusion of an Open Offer ensures that a portion of the new share capital being made available pursuant to the Issue is reserved in the first instance exclusively for Existing Shareholders.

Under the Open Offer, Existing Shareholders are entitled to apply to subscribe for up to an aggregate of 66,315,621 New Ordinary Shares pro ratato their holdings of Ordinary Shares on the following basis:

1 New Ordinary Share for every 22 Ordinary Shares held at the Record Date (being the close of business on 20 February 2017)

The balance of New Ordinary Shares to be made available under the Issue, together with any New Ordinary Shares not taken up pursuant to the Open Offer, will be made available for subscription under the Excess Application Facility, the Placing, the Offer for Subscription and the Intermediaries Offer.

Subject to availability, Existing Shareholders who take up all of their Open Offer Entitlements may also apply under the Excess Application Facility for additional New Ordinary Shares in excess of their Open Offer Entitlement. The Excess Application Facility will comprise whole numbers of New Ordinary Shares under the Open Offer which are not taken up by Existing Shareholders pursuant to their Open Offer Entitlements, and any New Ordinary Shares that the Directors determine, in their absolute discretion, should be reallocated from the Placing, the Offer for Subscription and/or the Intermediaries Offer to satisfy demand from Existing Shareholders in preference to prospective new investors under the Placing, the Offer for Subscription or the Intermediaries Offer.

The New Ordinary Shares will only be issued at a price which (net of the costs of the Issue) is in excess of the prevailing Net Asset Value per Ordinary Share. In determining the Issue Price of 159.0pence per New Ordinary Share, the Directors have added an appropriate premium to the prevailing Net Asset Value per Ordinary Share, taking into account the anticipated costs of the Issue and potential movements in the Net Asset Value per Ordinary Share between the date of this Prospectus and Admission. For these purposes, the Net Asset Value per Ordinary Share means the Net Asset Value per Ordinary Share excluding the aggregate amount of the third interim dividend for the financial year ending 31 March 2017 to which Existing Ordinary Shareholders are entitled but to which New Ordinary Shares issued under the Issue are not.

Benefits of the Issue

The Directors believe that the Issue will have the following benefits:

- The Company will be able to repay existing borrowings, acquire the Committed Investment and acquire any Additional Investments using net proceeds rather than its Facility, thereby freeing up the Facility to make further investments in the infrastructure market as these opportunities arise

- The size of the Issue may be increased, affording the Company the flexibility to take advantage of opportunities to invest in any further Additional Investments that may arise on or prior to Admission. The Directors will consider whether the investment opportunities identified by the Investment Adviser constitute Additional Investments shortly prior to Admission and may increase the size of the Issue at their discretion, up to a maximum of £260 million,in consultation with Canaccord Genuity

- The inclusion of an Open Offer ensures that a portion of the new share capital is reserved in the first instance for Existing Shareholders. Furthermore, the Directors recognise the importance of pre-emption rights to Shareholders; and consequently as the Issue is not fully pre-emptive are seeking the approval of Existing Shareholders for the Issue and for the disapplication of pre-emption rights in connection with the Issue by way of a special resolution at the Extraordinary General Meeting to be held on 20 March 2017

- The market capitalisation of the Company will increase, and the secondary market liquidity in the Ordinary Shares is expected to be enhanced as a result of a larger and more diversified Shareholder base

- The Company's fixed running costs will be spread across a larger asset base, thereby reducing the ongoing charges ratio

Directors' intention to subscribe

As at the date of the Prospectus, the Directors intend to subscribe for, in aggregate, 115,000 New Ordinary Shares pursuant to the Issue.

Issue expenses

The Issue expenses (including VAT where relevant and assuming the Issue is fully subscribed and the Directors proceed at the target Issue size of £205million) are expected to be approximately £2.65million. The Issue expenses (including VAT where relevant and assuming the Issue is fully subscribed and the Directors proceed at the maximum Issue size of £260million) are expected to be approximately £3.29million.

ISIN Numbers

The International Security Identification Number for New Ordinary Shares under the Open Offer is GG00BYXR0H29.

The International Security Identification Number for Excess Shares under the Excess Application Facility is GG00BYXR0J43.

B. The Company

The Current Portfolio

The Current Portfolio consists of Infrastructure Equity in 114 Project Companies in the PPP and demand-based market segments. It includes investments in PPP projects in sectors including accommodation, education, health, fire, law and order and transportation. The Current Portfolio contains four demand-based assets, including the Committed Investment.

97 investments are in Portfolio Companies located in the UK, four are located in Ireland, four are located in the Netherlands, four are located in France, one is located in Australia, three are located in Canada, and one is located in the USA.

As at 31 December 2016, the weighted average project concession length remaining in the Current Portfolio was 24.8 years.

The majority of projects in the Current Portfolio have completed their main construction phases and are fully operational. As at the date of the Prospectus, there were five projects with construction ongoing (representing 2 per cent. of the Current Portfolio by value).

Investment Objectives

The Company seeks to provide investors with long-term, stable income from a portfolio of infrastructure investments that is positioned at the lower end of the risk spectrum. In addition to generating sustainable dividends, the Company aims to preserve the capital value of its investment portfolio over the long term, with potential for capital growth, and provide a degree of correlation between the return to shareholders and changes in inflation rates.

The Company is targeting an IRR of 7 to 8 per cent. on the original issue price of its Ordinary Shares in March 2006, to be achieved over the long term via active management, including the acquisition by the Group of further investments to complement the Current Portfolio, and by the prudent use of gearing.

Investment Opportunity

The Company offers investors access to income streams from a Current Portfolio of 114 investments with a total value of £2.36 billion (being the Directors' valuation as at 31 December 2016). The Group intends to make further infrastructure investments in the future as suitable opportunities arise.

The Directors, in consultation with the Investment Adviser, believe that investments in infrastructure assets have attractive features when compared to investments in other asset classes (suchas non-infrastructure equities and real estate) and, in particular, offer the following features:

· monopolistic assets providing essential services to society, with limited or no competition from other asset owners, that typically generate long-term cash flows;

· low correlation and limited exposure of PPP projects and regulated assets to economic and business cycles;

· assets that generally have central or local government counterparties (providing strong credit quality) or operate within a regulatory framework that is defined by law;

· inflation-linked revenue streams supported by indexation mechanisms set out in either contracts or regulatory frameworks;

· underlying market demand for infrastructure remaining strong globally, given political and economic imperatives worldwide and public budget constraints;

· relative stability of infrastructure projects which contrasts with the volatility in financial markets over the past five years; and

· valuation of infrastructure investments remaining relatively stable, reflecting the inherent value of the underlying income streams of the assets.

The Directors, in consultation with the Investment Adviser, also believe that an investment in the Company offers investors seeking an investment in infrastructure assets the following benefits:

· a stable level of dividend, with the potential for further growth;

· preservation of the capital value of the investment portfolio with the potential for capital growth;

· a diversified portfolio primarily focused on Infrastructure Equity investments in operational yielding assets with a proven track record;

· a portfolio of assets that combine size and type to maintain balance and diversification across the portfolio;

· the Group has the opportunity to purchase further stakes in Current Portfolio projects, giving an opportunity to enhance returns through benefits of scale;

· the Infrastructure Investment Team has strength and depth in key skills - deal sourcing, deal structuring and portfolio management - enhancing returns on a low risk basis;

· the Group's underlying projects typically have long-term amortising debt and do not require refinancing;

· the Company provides investors with a range of timely and relevant information assisting them to understand how the Current Portfolio is performing;

· the Infrastructure Investment Team has a network of contacts and relationships globally from which it will continue to source investment opportunities; and

· the Infrastructure Investment Team has experience of working internationally in countries where there are strong opportunities for further investments.

Summary of Investment Policy

The Group's investment policy is to ensure a diversified portfolio which has a number of similarly sized investments and is not dominated by any single investment. The Group will seek to acquire Infrastructure Equity investments with similar risk/reward characteristics to the Current Portfolio, which may include (but is not limited to):

- public sector, government-backed or regulated revenues;

- concessions which are predominantly 'availability' based (i.e. the payments from the concession do not generally depend on the level of use of the project asset); and/or

- companies in the regulated utilities sector.

The Group will also seek to enhance returns for Shareholders by acquiring more diverse infrastructure investments. The Directors currently intend that the Group may invest in aggregate up to 35 per cent. of its total assets (at the time the relevant investment is made) in:

- Project Companies which have not yet completed the construction phases of their concessions, but where prospective yield characteristics and associated risks are deemed appropriate to the investment objectives of the Company. This may include investment in companies which are in the process of bidding for concessions, to the extent that such companies form part of a more mature portfolio of investments which the Group considers it appropriate to acquire;

- Project Companies with 'demand' based concessions where the Investment Adviser considers that demand and stability of revenues are not yet established, and/or Project Companies which do not have public sector sponsored/awarded or government-backed concessions;and

- to a lesser extent (but counting towards the same aggregate 35 per cent., and again at the time the relevant investment is made), limited partnerships, other funds that make infrastructure investments and/or financial instruments and securities issued by companies that make infrastructure investments, or whose activities are similar or comparable to infrastructure investments.

The Investment Adviser and the Operator

InfraRed Capital Partners Limited (the 'Investment Adviser') is both the investment adviser to the Company, and the manager and operator of the partnership which holds and manages the Company's investments (the 'Partnership'). It is authorised and regulated in the UK by the FCA. Members of the Infrastructure Investment Team are responsible for carrying out the Investment Adviser's functions as investment adviser and operator. The Infrastructure Investment Team is comprised of experienced infrastructure professionals with a strong track record in managing infrastructure investments.

Distribution policy

Distributions on the Ordinary Shares are paid four times a year, in respect of the three-month periods to 30 June, 30 September, 31 December and 31 March. Distributions have been made by way of dividend and, subject to market conditions, this is expected to continue. The Company may also make distributions by way of capital distributions (or otherwise in accordance with the Law and the Articles) as well as, or in lieu of, by way of dividend if and to the extent that the Directors consider this to be appropriate.

The New Ordinary Shares will, when issued and fully paid, rank equally in all respects with the Existing Ordinary Shares currently in issue, including the right to receive all dividends or other distributions made, paid or declared, if any, by reference to a record date after the date of their issue. For the avoidance of doubt, investors in the New Ordinary Shares will not be entitled to receive the third interim dividend for the financial year ending 31 March 2017 of 1.91 pence per Ordinary Share which was announced on 22 February 2017.

The Directors intend that the Company will generally restrict distributions (by way of dividend or otherwise) to the level of Distributable Cash Flows. The Directors may, where they consider this to be appropriate in respect of acquisitions where such assets are not fully cash generative, distribute as dividend an amount up to the level of the Group's gross income, i.e. in excess of Distributable Cash Flows. Project Companies which are operational usually make distributions to the Group twice a year, and occasionally these payments may be received shortly after a period end due to timing of payment process. The Directors intend to include such amounts in Distributable Cash Flows where it is clear these payments relate to the period concerned.

A proportion of Distributable Cash Flows includes cash receipts from the repayment of the subordinated debt element of the Infrastructure Equity in Project Companies in which the Group invests. This is because the Directors believe that the value of the future cash distributions expected to be made by such Project Companies in the final years of their concessions should be sufficient to preserve the capital value of the investments until those cash distributions commence.

Borrowing policy

The Group intends to make prudent use of leverage to finance the acquisition of investments, to enhance returns to investors and to finance outstanding investment obligations. Under the Articles, the Group's outstanding borrowings, including any financial guarantees to support outstanding investment obligations but excluding internal Group borrowings, or borrowing of the Group's underlying investments, are limited to 50 per cent. of the Adjusted Gross Asset Value of its investments and cash balances at any time.

The Partnership has a £300 million Facility provided by the Royal Bank of Scotland plc, National Australia Bank Limited, Lloyds Bank plc, Sumitomo Mitsui Banking Corporation, HSBC Bank plc and ING Bank N.V. London Branch. The Facility is split into three tranches: a €200 million Euro tranche, an AUD 130 million Australian dollar tranche and a US$125 million US dollar tranche. Each tranche is repayable by 31 May 2019 and can be drawn in cash in the respective currencies of the tranches or optional currencies (subject to certain limits). Drawings can be by the issue of letters of credit under the Euro and Australian dollar tranches.

Currency and hedging policy

A portion of the Group's underlying investments may be denominated in currencies other than GBP. For example, a portion of the Current Portfolio is denominated in Euros, US dollars, Australian dollars and Canadian dollars. Any dividends or distributions in respect of the Ordinary Shares however are made in GBP, and the market prices and Net Asset Value of the Ordinary Shares are reported in GBP.

Foreign exchange risk from non-Sterling assets is managed by hedging investment income from overseas assets through the forward sale of the respective foreign currency (for up to 24 months) combined with balance sheet hedging through the forward sale of Euros, US dollars, Australian dollars and Canadian Dollars and by debt drawings under the Facility. This reduces the volatility in the Group's NAV from foreign exchange movements. The current hedging policy is designed to provide confidence in the near term yield and to limit NAV per share sensitivity to no more than 1% for a 10% forex movement. The Directors review this policy with the Investment Adviser on a regular basis and the policy may be varied in future depending on the cost of the policy when compared with its potential benefits.

Interest rate hedging may be carried out to seek to provide protection against increasing costs of servicing Group Debt drawn down to finance investments. This may involve the use of interest rate derivatives. Currency and interest rate hedging transactions will only be undertaken for the purpose of efficient portfolio management and will not be carried out for speculative purposes.

Important Information

This Announcement contains Inside Information as defined under the Market Abuse Regulation (EU) No. 596/2014.

This Announcement has been issued by and is the sole responsibility of the Company.

This Announcement is for information purposes only and does not constitute an invitation to subscribe for or otherwise acquire or dispose of securities in the Company in any jurisdiction. The information contained in this Announcement is for background purposes only and does not purport to be full or complete. This announcement does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase any investments nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor.

No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Canaccord Genuity Limited or by any of its respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

This Announcement and the information contained herein is not for publication, release or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which the same would be unlawful. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire shares in the capital of the Company in the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which such an offer or solicitation is unlawful.

Shares in the Company have not been, nor will be, registered under the U.S. Securities Act of 1933, as amended (the 'Securities Act') or with any securities regulatory authority of any State or other jurisdiction of the United States, and accordingly may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act. The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the 'Investment Company Act') and investors will not be entitled to the benefits of that Act. In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan or South Africa and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Ordinary Shares or the New Ordinary Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan or South Africa.

Canaccord Genuity Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and is acting for no-one else in connection with the Issue.

InfraRed Capital Partners Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, acts as Investment Adviser to the Company and is acting for no-one else in connection with the Issue.