Infrastructure investment trust's shares soar by 17%

The trust has confirmed it is in talks with a consortium of investors about a possible cash offer for the company.

Funds and Investment Trusts July 17, 2018 by Holly Black

Shares in the closed-ended John Laing Infrastructure Fund have rocketed after a potential takeover bid.

The trust has confirmed it is in talks with a consortium of investors about a possible cash offer for the company.

The consortium is made up of Dalmore Capital Limited and Equitix Investment Management, both of which are working of behalf of various funds. The two are proposing to buy John Laing Infrastructure and make a new company.

Dalmore, which has offices in London and Edinburgh, has more than £4 billion of assets under management, largely from UK pension funds. Equitix has around £3 billion of assets under management and a portfolio of more than 170 infrastructure assets.

The consortium has made a ‘possible offer’ of 142.5p for John Laing shares, more than 20 per cent higher than the 118p the shares were priced at on Monday before the offer. This values the trust at £1.4 billion. The offer also includes a dividend payment of 3.72p a share to investors upon completion.

Shares in the infrastructure trust have struggled in recent months, as investors have become nervous about the outlook for the sector after the high-profile collapse of Carillion and a potential Corbyn-led government, which could renationalise its current private finance initiative (PFI) contracts.

Last year the trust had traded on a premium of almost 15 per cent, but today it sits on a discount of almost 4 per cent.

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It has some 65 assets across the UK including education, health and transport projects, many of which are backed by government, giving surety to the 5 per cent dividend yield.

Shares soared 17 per cent this morning after the announcement.

Ben Yearsley, director at Shore Financial Planning, says: ‘It was inevitable that when infrastructure trust premiums dropped it would eventually create interest in the sector and lead to possible takeovers. The question for shareholders is: is the price high enough to sell?

‘If there were no political risk, the answer would be no in my view as JLIF owns key long-term assets. However, the door is currently ajar for Labour to come in and wreak havoc in the sector so investors may be tempted to sell. I still don’t think a 20 per cent premium is enough though.’

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