JLIF would seek £733m in compensation over PFI nationalisation

The group is also closely monitoring events in Catalonia, where about 13% of its portfolio is held.

The John Laing Infrastructure Fund said it would seek around £733 million ($960 million; $824 million) in compensation if the UK’s opposition Labour party were to proceed with plans to nationalise all existing PFI contracts.

In the event of Labour leader Jeremy Corbyn becoming Prime Minister and following through on measures announced by the party in September to bring all PFI deals “back in-house”, JLIF said it would be entitled to compensation equating to about 86 percent of its £852 million UK portfolio value. JLIF’s total portfolio value amounts to £1.2 billion, it revealed as part of its results to the end of September.

This scenario is based on the assumption that every project in its 57-strong UK asset base would be “voluntarily terminated by each and every local public-sector counterparty”, based on existing legal contract provisions. The fund also noted that the comments made by shadow chancellor John McDonnell on nationalisation were “subsequently softened by other members of the Labour Party”.

Some 71 percent of its assets  are held in the nation – including deals yet to be completed – based on their value, and JLIF said it “monitors the UK political situation carefully”. Olivier Brousse, chief executive of JLIF’s parent John Laing, last week told the Financial Times that PFI had lost “public goodwill” and if “the current PFI framework isn’t fit for purpose then let’s completely rethink it to make it work”.

JLIF also warned that it continues to closely monitor the situation in Catalonia in the aftermath of the region’s independence referendum. The fund has a 53.5 percent interest in Barcelona’s Line 9 Section II Metro Stations project and a 13.5 percent interest in the Line 9 Section IV Metro Stations asset.

The sites receive availability-based payments from IFERCAT, a Catalonian government transport agency which benefits from access to Fondo de Liquidez Autonómico, a credit line from the central government. JLIF said that since the referendum, the Spanish government has taken back control as to how the FLA is utilised in Catalonia – previously a decision held by Catalonia’s sacked regional government. It remains to be seen whether this will impact the investments, according to JLIF.

The Catalonian furore has already impacted parts of the local infrastructure market, with Abertis and Gas Natural Fenosa both moving their legal bases from Catalonia to Madrid last month.

JLIF’s net asset value per share increased by 2.4 percent to 123.1 pence in the first nine months of 2017.