The John Laing Infrastructure Fund (JLIF), which raised £270 million (€311 million; $419 million) in a listing on the London Stock Exchange towards the end of last year, has just completed its first third-party acquisition for the fund.
To date, JLIF’s portfolio has been acquired from developer John Laing, which holds 20 percent of JLIF, through a first offer agreement. But the purchase of a 50 percent stake in the Forth Valley Royal Hospital – Scotland’s largest healthcare Private Finance Initiative (PFI) project – from the Commonwealth Bank of Australia marks the first time JLIF has gone outside the John Laing fold.
JLIF has paid close to £23 million for the stake and is funding it with debt and equity, the fund said. The purchase price includes an £8 million cash payment on completion of construction and a pledge to inject £14.8 million in equity in July 2012.
The hospital has just finished construction and has 31 years outstanding in its concession. JLIF said “the project is availability-based with contracted, government-backed revenues streams, linked to inflation, and provides JLIF with a low risk, stable income”. Availability payments are public contributions paid in exchange for making assets available in good condition.
The fund has also announced that it has extended a revolving credit facility set up with Royal Bank of Scotland earlier this year to fund similar acquisitions by £35 million, taking the facility to a total of £60 million.
“Today’s announcement represents JLIF’s first third party acquisition which, together with our first offer agreement with John Laing group and the increased debt facility, reinforces our confidence in the strength of our pipeline and our ability to benefit from the many opportunities we see in our markets,” David Marshall, JLIF investment adviser, commented in a statement.
JLIF has a long-term internal rate of return target of 7 to 8 percent.