Deals

JLIF wants to broaden target assets

The UK listed infrastructure fund is hoping to give itself the ability to invest more in construction-phase projects and non-government-backed PPPs.

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In an announcement today, John Laing Infrastructure Fund (JLIF) said it was seeking to amend its investment policy “to provide greater optionality and flexibility in investment decisions”.

The fund, which has raised £525 million (€638 million; $862 million) of primary equity capital since launch in November 2010, wants to double the amount it can invest in projects under construction from 15 percent of total fund assets to 30 percent.

In addition, it wants to be able to invest up to 10 percent of total assets in infrastructure assets that are not government-backed public-private partnerships (PPPs) but have “substantially the same risk profile and characteristics as PPP projects”.

In a third significant aspect of the announcement, JLIF said it had signed a new First Offer Agreement (FOA) with its parent developer John Laing in order to include rail assets such as the UK’s InterCity Express Project. At the same time, the existing FOA is being amended to exclude waste assets.

JLIF estimates the upshot of this will be a net increase in the pipeline coming from John Laing of approximately £115 million over the next six years. In total, JLIF expects the pipeline of John Laing-owned assets to be worth approximately £400 million over that six-year period.

The announcement revealed that John Laing wanted to exclude waste assets from the FOA as it is “seeking to sell waste assets to a new fund to be managed by John Laing Capital Management through a separate and independent team”.

JLIF said it is holding an extraordinary general meeting on 7 February 2014 in order to seek shareholder approval of its proposals. Under the Listing Rules, both the “material change” to investment policy and the change to the FOA (which constitutes a “related party transaction”) require shareholder approval.

JLIF said it had been considering its longer-term strategy as a “significant portfolio of high-quality, low-risk assets” had become available recently that it was prevented from bidding for because the proportion of late-stage construction assets in its portfolio exceeded its policy limit.

As at 17 January 2014, JLIF had a market capitalisation of £891 million and had delivered a total shareholder return since launch of 34 percent.