John Laing Infrastructure Fund’s shares soar on takeover approach
The fund’s share price came under pressure last year after Labour launched an attack on PFI contractors.
Shares in the John Laing Infrastructure Fund have soared after the firm said it was likely to accept a £1.45 billion takeover offer from a consortium of investors.
JLIF, which invests in public infrastructure projects across Europe, has been approached by Dalmore Capital and Equitix Investment Management.
The consortium would pay 142.5p per share for JLIF, and has offered to pay out a dividend of up to 3.57p to the firm’s shareholders.
The offer represents a 20.6% premium to the company’s closing price last Friday.
In a statement, the JLIF board said it was minded to recommend that the consortium make a firm offer for the business.
The news sent JLIF’s shares up 18.4% or 21.8p to 140p.
JLIF’s shares came under pressure last year when shadow chancellor John McDonnell said a Labour government would look to nationalise PFI contracts.
Russ Mould, investment director at AJ Bell, said: “The infrastructure space has been popular with investors as an alternative asset class offering a long-term and, in theory, predictable source of income.
“Political threats, failed IPOs and an increasingly competitive market have recently taken the sheen off infrastructure funds and seen them fall out of favour.
“The risk that a potential Labour government might crack down on private involvement in big public projects, particularly after the failure of outsourcer Carillion earlier this year, is perhaps the biggest negative factor.”
Matthew Hose, equity analyst at Jefferies, said the success of the bid from Dalmore and Equitix will depend on whether counter-bidders emerge.
However, he said both Dalmore and Equitix were in a strong position due to their knowledge of the sector.
Dalmore has a range of public sector investments including the Thames Tideway Tunnel project, while Equitix has over a hundred investments in the sector, including a 35% stake in High Speed Rail 1.