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Exclusive: JLIF ‘still interested’ in Balfour PPP deal

The London-listed fund manager told Infrastructure Investor it was waiting to see what announcements the developer’s new boss will make tomorrow.

London-listed John Laing Infrastructure Fund (JLIF) will be “watching with interest” when UK developer Balfour Beatty announces its full-year results tomorrow, according to JLIF investment adviser Andrew Charlesworth.

Last December, Balfour Beatty rejected JLIF’s £1 billion (€1.3 billion; $1.6 billion) offer for its public-private partnership (PPP) portfolio, saying that it fell “significantly short” of its own view of the portfolio’s value. JLIF responded by saying it was “disappointed” and found the outcome “difficult to understand”.

Since then, Balfour Beatty in January recruited turnaround specialist Leo Quinn as its new group chief executive. Tomorrow, Quinn is expected to reveal his plans for reviving the ailing business’s fortunes – giving fresh hope that the PPP portfolio may be up for grabs.

In a call with Infrastructure Investor this morning, Charlesworth said that whether the deal could be resurrected was “not in our gift”. But he added: “We were interested and we still are. We don’t think that Balfour Beatty holding the entire portfolio is the most logical thing to do. We are interested to see what Leo wants to do next.”

JLIF today announced its preliminary results for the year ending December 31 2014. The figures showed dividends of 3.375 pence per share for the six months to end-December – up 3.8 percent and ahead of UK RPI [retail price inflation] for the third year in a row.

Net asset value was up £69.2 million to £887.3 million, underlying growth was 9.2 percent and the total shareholder return was 12.6 percent during 2014 and 49.5 percent since launch in November 2010. The fund’s internal rate of return (IRR) since launch is 10.4 percent, compared with its long-term target of between 7 to 8 percent.

Charlesworth said some “less complex UK availability-based PFI” stakes are being offered in the market at a pricing level “we find eye-watering”. However, he added that other interests were for sale at a level “we feel comfortable with” and pointed out that the fund had made new investments of almost £51 million during last year.

“We remain absolutely focused on the right asset at the right price,” he added.