JLIF hedges Canadian dollar income

In an interim management statement for the period 1 January to 8 May, John Laing Infrastructure Fund revealed it had entered a derivative contract to hedge 80% of Canadian dollar income during 2012 after exchange rate volatility hit a portfolio which grew 2.1% in the first quarter.

John Laing Infrastructure Fund (JLIF), the UK-listed infrastructure fund, revealed in an interim management statement that it had entered a derivative contract to hedge 80 percent of its Canadian dollar income in 2012.

The move followed Canadian dollar/UK sterling exchange rate depreciation during the first quarter of this year – partially offset by the euro/sterling rate – which resulted in a £500,000 decrease in portfolio value. Overall, JLIF’s portfolio saw 2.1 percent growth (equivalent to 8.8 percent annualised) during the period to £413.3 million.

The statement said that “JLIF’s policy is not to hedge the balance sheet values of its portfolio. However, if it is appropriate, JLIF will hedge its portfolio income to mitigate exchange rate volatility.” It said that John Laing Capital Management would “continue to monitor foreign exchange rates and recommend risk mitigation to JLIF accordingly”.

During the 1 January to 8 May period, JLIF undertook a successful £31 million share issue to replace debt and allow flexibility for future acquisition opportunities. It also acquired: three social housing Private Finance Initiative (PFI) projects from United House for £30.5 million; a 100 percent stake in Roseberry Park Hospital from John Laing for £13.0 million; and the remaining stake in the North East Fire and Rescue Public-Private Partnership (PPP) project from Shepherd Construction, which took its holding to 100 percent.

“The fast moving secondary market continues to present many opportunities to JLIF and following the recent placing of additional shares, we are in a strong position to be able to take advantage of these opportunities as they arise,” said Paul Lester, chairman of JLIF, in a statement.