John Laing fund delivers strong portfolio growth

John Laing Infrastructure Fund (JLIF) has delivered half-yearly interim results described as “very encouraging” by investment bank JPMorgan Cazenove. The fund, which raised £270m towards the end of last year, saw portfolio value increase by 7.1% over the reporting period.

The John Laing Infrastructure Fund (JLIF), which raised £270 million (€305 milion; $435 million) in a listing on the London Stock Exchange towards the end of last year, has delivered a strong set of interim six-month results to 30 June 2011.

The fund, which buys mature, yielding PPP/PFI assets from UK developer John Laing, saw its portfolio value increase by 7.1 percent to £286.5 million during the six months, while net asset value (NAV) per share increased 5.1 percent to 105.9 pence. At the end of the first quarter, its portfolio value had increased by 2.9 percent and its NAV risen from 100.8p to 102.8p. 

A report from investment bank JPMorgan Cazenove said the results were “better than expected” and “very encouraging”, with an NAV per share of around 105.0p having been anticipated. The bank’s report noted: “We have now seen the NAV in capital terms increase by 4.8% from 98.2p at inception last year to 102.9p without any change in the discount rate, which in part reflects a better than expected performance by the underlying portfolio”.

The report identified two portfolio assets – the Ministry of Defence main building and Brockley Housing (social housing) – as having performed “over and above expectations”. The former had seen “improved treasury management and efficiencies in the delivery of lifecycle replacement” and the the latter “steady progress through the ramp-up stage and the recognition of cost savings during construction”.

On the downside, however, value growth at South Lanarkshire Schools (school new builds and refurbishments) was “less than expected as the full extent of the modelled insurance savings did not materialise”.

JPMorgan Cazenove noted that JLIF’s share price of 107.25p on Friday represented a premium to the 30 June NAV of 1.3 percent and a yield of 5.6 percent.

The results statement said JLIF had completed the acquisition of three assets it agreed to acquire in April – Bentilee Community Centre, Cleveland Police Headquarters and an additional stake in Queen Elizabeth Hospital – with a fourth awaiting “final minor construction works”. It said the firm will look to grow the portfolio over the next 12 to 18 months.

When the fund was raised, John Laing said the fund was in line with its strategy of selling interests in mature infrastructure projects and reinvesting the proceeds into its pipeline of new primary development opportunities. It said it would hold an equity stake in the fund of no more than 20 percent. The fund has a long-term IRR target of 7 to 8 percent.