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In a move that shakes the infrastructure world like a tectonic shift beneath London’s financial district, HICL Infrastructure PLC and The Renewables Infrastructure Group Ltd. (TRIG) unveiled plans Monday to merge and form a £5.3 billion ($7 billion) investment titan. The newly combined entity would become the largest infrastructure investment company in the U.K., with its shares traded on the London Stock Exchange.

The deal, a mix of cash and newly issued stock, stands to redraw the lines between traditional infrastructure investing and the soaring energy-transition sector.

A Mega-Merger Built on Convergence

The boards of both companies—longtime constituents of the FTSE 250 index—said the merger will produce an investment vehicle with far greater scale, liquidity and strategic punch. Together, they plan to capture the accelerating overlap between core public infrastructure and renewable-energy generation.

But despite the fanfare, the market offered mixed signals. HICL shares slid 8.5% Monday morning, while TRIG shares climbed more than 4.5%, suggesting investors are wrestling with the combined company’s new direction.

Russ Mould, investment director at AJ Bell, called the shareholder reaction a flashing caution sign: “The big unknown is whether HICL investors want exposure to a renewable-energy specialist—and the price movement suggests hesitation.”

How the Deal Will Work

The transaction will unfold through a reconstruction and voluntary winding-up of TRIG under Guernsey law. TRIG will transfer all of its assets into HICL in exchange for newly minted HICL shares.

TRIG investors will be offered:

• New HICL shares, and

• An optional partial cash exit of up to £250 million, which TRIG’s own directors say they will not pursue.

Once completed, HICL shareholders will hold 56% of the combined company, while TRIG shareholders will own 44%.

The merger also pulls in heavyweight support: Sun Life Financial Inc., parent company of InfraRed Capital Partners, plans to purchase £100 million of HICL shares post-transaction to enhance liquidity.

Behind the Scenes: Law Firms and Advisers

This transatlantic-scale merger is being shepherded by major legal and financial players:

• HICL is advised by Hogan Lovells International LLP.

• TRIG is advised by Norton Rose Fulbright on English law, with Carey Olsen (Guernsey) LLP handling Guernsey matters.

• Financial advisers include Goldman Sachs International and Investec Bank PLC for HICL, while BNP Paribas advises TRIG.

Both companies are managed by InfraRed Capital Partners Ltd., which will continue to run the combined group.