John Laing set to end year on a high

Originator, investor and manager of infrastructure, John Laing Group, issued a pre-close update for the year to 31 December on Friday, reporting total investment commitments to date of £340m - well ahead of its original guidance for 2017 of approximately £200m.

The FTSE 250 company said that demonstrated the strength of its pipeline of investment opportunities across its three regions - Asia Pacific, Europe and North America.

Investment commitments in 2017 so far included £79.3m on the New Grafton Correctional Centre in Australia, £47.6m for the Buckthorn wind farm in North America, £62.9m on the Rocksprings wind farm in North America, £118m on the managed lanes project on the I-66 high in North America, and two other renewable energy commitments in France and Australia, totalling £32m.

John Laing added that the Melbourne Metro project was anticipated to reach financial close before 31 December as well.

A consortium involving the firm was appointed the preferred bidder on the MBTA fare collection project in Massachusetts, due to reach financial close in the first quarter of 2018.

On the realisations front, John Laing said total realisations announced in 2017 to date were £256m - well ahead of the board’s original guidance for 2017 of approximately £200m.

Other realisation processes were underway, some of which reportedly had the potential to reach completion before year end.

Realisations in 2017 to date included the sale of its 30% holding in the M6 road in Hungary for £22.7m, the sale of the 29.69% holding in the A1 motorway in Poland for £120.4m, the sale of the 50% holding in the Croydon and Lewisham street lighting project for £8.2m, and the sale of five UK PPP investments to John Laing Infrastructure Fund, including further 9% interest in the Intercity Express Programme, for a total of £104.6m, of which £1.9m was deferred.

The board said aggregate prices achieved were in line with portfolio valuations.

Looking at its investment portfolio, John Laing said as a whole it was performing in line with expectations.

On the Intercity Express Programme, the first ten trains had now been accepted into passenger operations, achieving the key minimum fleet acceptance milestone for the project with all trains scheduled to be in operation in late 2018.

The board said 15 other projects had reached, or were due to reach, construction completion during 2017 and as a consequence move from the company’s primary to its secondary investment portfolio.

As at 30 November, using unaudited asset values, the board said the IAS19 pension deficit for the John Laing Pension Fund was estimated at £22m based on an IAS19 discount rate of 2.7% and long term RPI of 3.2%.

In October, the group also increased its committed corporate banking facilities from £400m to £475m.

Looking ahead, the board said net asset value as at 31 December was projected to be in the range of management expectations, assuming constant exchange rates and no change in the IAS19 pension deficit as at 30 November.

It said it expected the special dividend for 2017 to be based on realisations to date of £256m, and on any other realisations which completed before 31 December.

In arriving at the appropriate percentage within the 5%-10% payout range, the board said it planned to consider “all relevant factors”, including funding needs for new investments.

The pipeline of new investment opportunities remained strong in both PPP and renewable energy, especially in Australia, the US and Canada, the board claimed, adding that the company was currently part of nine shortlisted PPP bids due to reach financial close in 2018 or 2019, of which five were in North America and four in Europe.

The market for secondary infrastructure investments remained “active”, the board added.

“In 2017 we have continued to scale up our business: both our investment commitments and our realisations are well ahead of the guidance we gave earlier in the year, while we are managing our cost base and our risk profile,” said chief executive Olivier Brousse.

“We are confident that the quality of our local teams, together with the strength of our partnerships with global infrastructure players, will continue to feed our pipeline of opportunities in 2018.”