HICL Infrastructure said in an update on Thursday that it was on track to deliver a cash covered dividend for the year ending 31 March of 8.25p per share, in line with its previous guidance.
The FTSE 250 firm reported accretive acquisition activity in the period, with cash investments of £78m.
Its public-private partnership (PPP) and regulated portfolios performed in line with expectations during the period, with recovery continuing across its demand-based segment, which was “not materially impacted” by the emergence of the Omicron variant of Covid-19.
HICL said its investment manager InfraRed had developed a well-advanced pipeline across both traditional and evolving core infrastructure sectors, in line with its previously-stated strategy.
That was supported through the successful development of partnerships to secure preferential access to consistent deal flow, HICL’s board added.
On the investment front, the company said it made a “good start” to deployment in the second half, executing its advanced pipeline as it described in its interim report.
Since October, HICL completed its investments in RMG Roads and Bradford Schools I and II – assets the firm said it “knows well”.
Considering the current inflation environment, HICL said it was reviewing the appropriateness of its short-term inflation assumptions ahead of the end of its financial year.
The company said it was “well-placed” to deliver increased returns in a higher inflationary environment due to its strong inflation correlation, where HICL’s return would increase to 7.4% from 6.6% if inflation was 1% higher in all future periods.
Although the environment for infrastructure investment remained “extremely competitive”, the board said current evidence indicated that HICL’s weighted average discount rate remained appropriate.
Looking ahead, HICL said the outlook for infrastructure investment in 2022 remained positive, describing operating conditions across the portfolio as “stable”, despite recent restrictions in response to the Omicron Covid-19 variant and Russia’s invasion of Ukraine.
HICL said its pipeline of core infrastructure assets remained “healthy”, supported by “strong trends” driving significant infrastructure investment across communications infrastructure and the energy transition – where HICL maintained a “selective and targeted” focus – as well as attractive opportunities across traditional infrastructure sectors.
“HICL is well positioned in the current environment to deliver the key attributes of core infrastructure for shareholders,” said chairman Ian Russell.
“The company has a resilient portfolio, strong correlation of returns to inflation, a low beta, and a sector-leading dividend per share.”
At 1224 GMT, shares in HICL Infrastructure were down 1.53% at 172.33p.