John Laing wins bid for Queensland rolling stock project

The Australian deal provides another fillip to the UK developer's recovery strategy, as its owner Henderson gears up for a possible sale of the company next year.

John Laing, the UK infrastructure developer, has been selected preferred bidder to deliver the New Generation Rollingstock (NGR) project in Queensland, Australia.

NGR, for which John Laing had been bidding as part of a consortium led by Canadian train maker Bombardier Transportation, involves the provision and maintenance of 75 six-coach trains for the South East Queensland suburban passenger rail network. With a concession period of 30 years, it also includes the construction and maintenance of a depot facility.

The Department of Transport and Main Roads is delivering the project alongside Projects Queensland. Financial close on the contract is expected in the next few weeks, with testing of the first completed trains due to start in approximately two years.

The news comes as John Laing works hard to shore up its fortune in anticipation of a possible sale next year. Last April, it emerged that the developer’s current owner – the London-based asset manager Henderson Equity Partners – was looking to monetise the unique asset held in its £573 million PFI Fund II, bought in 2006 for £1 billion.

The investment took a battering during the crisis years, when John Laing was hit hard by troubles facing the construction industry worldwide and Henderson found itself saddled with its significant pension deficit. Fund II had lost 60 percent of its value by the end of 2009.

This led 22 of Henderson’s limited partners (LPs) to take the firm to court over alleged breach of mandate last year, unhappy as they were that Fund II had spent all its dry powder on a single asset rather than provide them with diversified exposure. The matter was settled last January, with Henderson accepting to foot the LPs’ legal bills but refusing to admit any liability.

John Laing has since recovered some of its vigour. The company saw its profits before tax rise to £64.3 million (€78 million; $106.7 million) in the six months to end June 2013 from a loss of £5.4 million during the same period last year. It also made a spat of fresh investments, with £45 million deployed in the first half of 2013.

The firm has recently been looking to expand its portfolio in Australia, where it was shortlisted to build a sports stadium in the Western city of Perth last April. Its latest deal in the country was New Royal Adelaide Hospital in June 2011.