JLIF emerges from John Laing’s shadow

About half of the listed fund’s circa £700m portfolio has been sourced from third parties, says partner Andrew Charlesworth.

The John Laing Infrastructure Fund (JLIF), which raised £270 million (€306 million; $433 million) when it floated on the London Stock Exchange in October 2010, has now sourced half of its 49-project portfolio from third parties, despite its exclusive agreement with developer parent John Laing.

 “There’s now roughly a 50/50 split in terms of our assets that have been sourced from John Laing and third parties, since the initial IPO portfolio,” JLIF partner Andrew CharlesworthInfrastructure Investor, fresh from the fund’s biggest acquisition since listing: the £123 million purchase of 11 UK social infrastructure projects from Investors in the Community (IIC), another third-party acquisition.

JLIF was initially formed to buy assets from UK developer John Laing and had a “first offer” agreement with John Laing with respect to future deal opportunities. Its first batch of assets was a collection of 19 projects across the healthcare, transport and street lighting sectors, predominantly in the UK, acquired from its developer parent.

As recently as last fall, JLIF was pointing out that it was eyeing a pipeline of more than £350 million in assets from John Laing over the next three years. As it turns out, though, 2012 ended up being a turning point for JLIF, with Charlesworth highlighting that over 70 percent of the fund’s acquisitions by value since the start of last year have been sourced outside its exclusive deal with John Laing.

 “We have no intention of dissociating ourselves from John Laing,” Charlesworth stresses, pointing out that JLIF’s “pipeline agreement with John Laing has given us an amazing backstop to measure third-party investments against [in a] market that is still very liquid”. And deep, despite the lack of a strong primary projects pipeline in JLIF’s strongest target market, the UK.

 In fact, Charlesworth says the JLIF team has coined a term – “tertiary market” – to refer to another source of deal flow beyond the well-known primary and secondary markets.

 “We are seeing a tertiary market, where funds like IIC fit into. There are a significant number of private funds out there with 10-year life-cycles and we’re well placed to capitalise on an increasing number of exits,” Charlesworth believes. The portfolio acquired from IIC, for example, has an average outstanding life of just over 20 years, still giving JLIF’s investors plenty of yield time.