Pipeline bulging at John Laing Infrastructure

Privately-owned infrastructure firm John Laing has plenty of projects in the pipeline for the John Laing Infrastructure Fund (JLIF) to invest in, while the group also sees lots of investment opportunities in the Private Finance Initiative (PFI) market coming down the turnpike.

The investment company's net asset value (NAV) per share at the end of September rose to 107.0p from 104.8p at the end of June, but 3p of that NAV per share value disappeared once the interim dividend was paid out to shareholders on October 19th.

In total, the company paid out £11m in dividends, with 19.4% of shareholders taking their divis in the form of shares. JLIF remains confident that its dividend projections are adequately cash covered in the short term.

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NAV, excluding the dividend payment, at the end of September was £483.0m, up from £475.7m at the end of June.

The fund, which invests in infrastructure projects, saw the value of its portfolio grow by an underlying 6.8% to £450.9m in the first nine months of the year, which is equivalent to 9.1% on an annualised basis.

Although JLIF does not hedge the balance sheet values of its portfolio it believes hedging against exchange rate effects on portfolio income is appropriate, and so has taken out futures contracts which will hedge 80% of its Canadian dollar income during 2012.

JLIF. which is advised by John Laing Capital Management (JLCM), a wholly owned subsidiary of John Laing, anticipates making further acquisitions from John Laing over the next three years while also continuing to actively pursue third party acquisitions.

In all, 12 John Laing projects are in the pipeline to be sold, with an aggregate value of around £312m. Beyond the three-year time horizon, JLCM reckons there will be a "robust pipeline" of investment opportunities, including the chance to buy out co-investors in existing JLIF investment positions.

The UK government announced in July 2012 a guarantee scheme which it hopes will boost privately sourced funding for PFI projects classified as "of national significance". JLIF believes that this scheme is likely to result in a stronger pipeline of new PFI projects reaching financial close and remains optimistic for the performance and popularity of the infrastructure market.

JH