Today, a major takeover deal for one of the largest infrastructure investors in the United Kingdom has been agreed.
John Laing Infrastructure Fund (JLIF) owns part of various landmarks including the headquarters of the Ministry of Defence. It has been acquired by a consortium of funds for a deal that amounted to £1.4bn.
Many analysts believe that the takeover deal could trigger a series of bids for the other investment trusts in the sector.
Jura Acquisition Ltd is a newly-established firm that is owned by a consortium that is led by funds that are managed by Equitix Investment Management Ltd and Dalmore Capital Ltd, both infrastructure investors. It is set to offer a total of 142.5p for each of the shares of JLIF.
The news comes following a tumultuous 12 months for JLIF, as its investors struggled amid nationalisation threats from the likelihood of a government led by the Labour party and the failure of Carillion.
Some analysts at Liberum said that the agreement was “an excellent result for shareholders following a difficult 12-month period for the shares.”
Last week, Russ Mould, the director of AJ Bell investment, said: “Management’s decision to recommend a cash offer for the John Laing Infrastructure fund from a consortium of financial buyers could well trigger more bids for the remaining London-quoted investment trusts in the infrastructure area for three reasons.”
He noted that the infrastructure projects propose highly visible cash flows which are in many cases, index-linked and are therefore protected from the effects of inflation. In a world where the interest rates continue to be still near record lows and increasing very slowly, the search for a reliable cash flow is still very much on and the infrastructure industry fits the bill.
He continued: “Consolidation across the sector would make sense, as it is not entirely clear why several management teams are required to run portfolios of these assets when one could surely do the job just as well, taking out costs in the process.”