The deal is worth 142.5 pence per share, a 20.6 percent premium to JLIF’s closing share price of 118.2 pence on 13 July – the last trading day before the announcement was made. JLIF’s board has indicated to shareholders it is inclined to accept the offer from the two fund managers.
The offer price is slightly above the fund’s 12-month-high share price of 140.80 pence per share, while the estimated net asset value of £122.7 million is trading at a 3.69 percent discount.
While JLIF has built up a PPP portfolio of 65 assets since it listed in late 2010, it has been subject to significant volatility over the past 12 months after John McDonnell, the UK’s shadow chancellor, vowed in September to bring all existing PFI contracts “back in-house” should his Labour Party gain power.
JLIF told the market in November it estimates it would be due about £733 million in compensation should that happen, although methods of how Labour might undertake such a policy are disputed.
About 68 percent of the fund’s portfolio is based in the UK, although JLIF stated in March it sees greater opportunities in the short-to-medium term in Continental Europe and North America. JLIF revealed in September last year it was in advanced discussions for its first Latin American acquisition for an operational toll road in Chile, although this was subsequently sold as part of a wider portfolio transaction.
Should the deal complete, Dalmore and Equitix would be gaining a portfolio that has generated an 8.3 percent annual return, according to JLIF’s latest accounts in March.
Dalmore is currently fundraising for its Dalmore Capital 3 vehicle, which is approaching its £750 million hard-cap and was more than 50 percent committed after a recent UK wind transaction with EDF. Equitix recently launched its fifth fund, targeting £750 million with a £1 billion hard-cap. Dalmore is targeting returns between 8 and 10 percent while Equitix is aiming for between 7 and 10 percent.