JLIF backs highway services P3 in debut US deal

The firm is set to pay £72m for the operator of 23 motorway services areas from Carlyle.

John Laing Infrastructure Fund (JLIF) has agreed to buy Project Service, the operator of 23 motorway services areas in Connecticut, from The Carlyle Group.

The London-listed vehicle will pay £72 million ($105 million; €94 million) for 100 percent of the asset in what represents its first entry in the US P3 market. Other shareholders of the operator include Doctor's Associates, the parent company of Subway Restaurants, and Subcon, a major Subway franchisee and developer.

Andrew Charlesworth, investment advisor to JLIF, told Infrastructure Investor that the deal differed from recent acquisitions in the highway services sector by European infrastructure funds, which JLIF had considered but concluded were more akin to retail/real estate opportunities than infrastructure assets.

Through the Project Service deal, JLIF will enter a P3 concession agreement ending in 2044 with the Department of Transport of Connecticut, Charlesworth said, with no residual value risk attached. He added that revenues are secured through long-term leases with core tenants, which include the parent groups of Subway and McDonald’s. A profit-sharing arrangement, linked to the tenants’ volume of sales, is also in place.

The deal will be funded using JLIF’s £180 million multi-currency revolving credit facility. 

Earlier this month, JLIF agreed to acquire 13.5 percent in Barcelona Metro Stations Line 9 Section II for £50 million from Spanish developer Acsa, adding to the 40 percent of the project it already owned. Charlesworth also said the fund had signed contracts with its parent group John Laing for around £20 million.

The Project Service transaction is expected to close in the coming weeks.

Motorway service areas have figured more prominently on infrastructure investors’ radar since 2014, when Antin Infrastructure bought the UK’s Roadchef for £153 million. Germany’s Tank und Rast, previously owned by Terra Firma and Deutsche Asset & Wealth Management, was then sold to a consortium of institutional investors for €3.9 billion in 2015.