HICL Infrastructure’s proposed merger with The Renewables Infrastructure Group (TRIG) has been called off following significant shareholder pressure.
In a stock exchange announcement, HICL said both boards “remain convinced” of the strategic rationale for the deal. However, the HICL board said the deal cannot be progressed without a substantial majority of support from its own investors.
In its own announcement, TRIG’s board expressed its disappointment with the abandonment of the deal, and said it would turn its attention to running the standalone strategy.
The merger was met with criticism from shareholders including CG Asset Management when the deal was first announced on 18 November. In an open letter, CGAM claimed there was no strategic rationale for the deal, with TRIG and HICL’s portfolios invested in “entirely different asset classes”.
Other institutional investors including Hawksmoor, Achilles Investment Company and TrinityBridge also opposed the deal.
See also: HICL and TRIG propose £5.3bn trust merger
Reacting to the collapse of the deal, Winterflood analyst Ashley Thomas said he would expect both boards to continue to consider consolidation opportunities, given the main benefits of the HICL-TRIG deal were attributed to increased scale.
“Albeit, HICL investor preference may well be within the core/core plus infrastructure segment, while TRIG may seek to consolidate the more fragmented renewable sector, where as well as scale the diversification of technology and geographic risk could reduce volatility/risk.
“Given TRIG’s dividend per share was expected to be reduced by c.15% under the combination proposal, there may also be increased focus on this fund’s future dividend policy.”
AJ Bell investment director Russ Mould said the merger was “doomed from the start”, given the objections from major shareholders.
“It’s no wonder the investment trusts have walked away from a corporate tie-up as it would have been a struggle to get the deal over the line,” he said.
“The investors flexed their muscles and made the boards of HICL and TRIG rethink their plan.”
