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JLIF seals first rolling stock deal, backs £5.2bn project

The fund has exercised an option to purchase part of the InterCity Express Project from parent developer John Laing.

John Laing Infrastructure Fund has bought a 6 percent stake in the UK’s Intercity Express Programme Phase 1 in a deal worth £42.4 million ($52.3 million; €50.3 million).

JLIF’s agreement to buy the holding from its parent John Laing represents its first investment in rolling stock. The London-listed fund joins John Laing, Hitachi Rail and MetLife as equity investors in the project that reached a £5.2 billion financial close in April 2014.

A few months earlier, JLIF had signed a First Offer Agreement with John Laing for the latter’s 30 percent stake in IEP. While the fund has chosen to only take a portion of that so far, it retains first offer rights on the remainder.

The 27.5-year concession will formally begin next year upon delivery of the first of the 57 high speed intercity trains to be deployed on the Great Western Mainline.

“Although JLIF had anticipated acquiring the project in full operation, John Laing offered 20 percent of their 30 percent share of the project, at a stage of around two-thirds of the way through its construction phase,” said Andrew Charlesworth, investment adviser to JLIF. “This will allow JLIF to not only secure this project early but also to benefit from the potential capital uplift generated by the project moving from construction into operations. Rail rolling stock is a sector of significant interest and targeted by many infrastructure investors.”

JLIF said the acquisition will be funded via its revolving credit facility. It expects the deal to close early next year.