John Laing confident of more PPP investments in second half

John Laing Group has invested £40m so far in 2018 but still expects to invest around £250m this year, with bidding activity picking up from a slow start and now "very active" in its core markets.

The FTSE 250 group, which in March carried out a heavily discounted rights issue as it spied a strong pipeline of future opportunities, said it was part of several bid situations in Europe and North America and in the renewable energy sector.

In Europe, John Laing is a preferred bidder in one public-private partnership position with a potential investment opportunity of about £7m, with 10 shortlisted PPP bids due in North America and two in Europe that are due to reach financial close in the next two years, representing an opportunity of roughly £360m. It is also part of seven exclusive renewable energy positions, representing a potential £240m.

Laing has also made two realisations and has several further sale processes underway, with full year guidance for approximately £250m. A final 15% stake in the first phase of the Intercity Express Programme was sold for £228.4m after costs, which was in excess of its December valuation, and a 50% shareholding in Lambeth Social Housing project was sold for proceeds of £9.5m.

Chief executive Olivier Brousse said that following the rights issue and the sale of the IEP stake, "we have the financial flexibility to take advantage of our strong pipeline of opportunities".

"Our focus is to continue to grow in a managed way by ensuring we select the projects with the best risk-adjusted returns and that we work with the best partners. John Laing is steadily becoming renowned internationally for active independent greenfield infrastructure investment, and is well positioned for further growth."

Of the £40m of total investment commitments made so far in 2018, one of £18m was made in a PPP in the US with the Massachusetts Bay Transport Authority for an automated fare collection system, and the other a £22m injection into a Dutch PPP motorway investment.

The pension deficit was estimated to have moved to a surplus of £19.8m at 31 May 2018 from £35.2m in December due principally to a scheduled cash contribution of £26.5m in March 2018 together with a small increase in the discount rate used to value the liabilities.