The European Services Strategy Unit reports the following:
“The John Laing Infrastructure Fund (JLIF) has decided to terminate its Guernsey offshore registration and become a UK investment trust. Announcing the results and annual report for 2017 on 23 March 2018, the chair, David MacLellan, cited recent problems in JLIF PFI projects such as the serious defects at Roseberry Park Hospital, fire safety enforcement notices at Peterborough Hospital and fire safety issues at Camden Social Housing following the devastating Grenfell Tower fire in London. He also referred to the liquidation of construction company Carillion plc; and the impact of tax changes under the OECD’a Base Erosion and Profit Shifting (BEPS) initiative.
“The Board has therefore concluded that it would be in the best interests of the Company and its shareholders to become a UK Investment Trust to mitigate the impact of both treaty changes and changes to future tax provisions. As a result, a proposal will be put to shareholders in May to amend the Articles of Incorporation such that Board and Annual General meetings can be held in the UK, with the aim, subject to regulatory approval, of implementing the tax residency change to the UK on 1 January 2019 so that the Company may be treated as a UK investment trust from that date.” (JLIF Annual Report 2017)
The John Laing Infrastructure Fund (JLIF) has decided to terminate its Guernsey offshore registration and become a UK investment trust. Announcing the results and annual report for 2017 on 23 March 2018, the chair, David MacLellan, cited recent problems in JLIF PFI projects such as the serious defects at Roseberry Park Hospital, fire safety enforcement notices at Peterborough Hospital and fire safety issues at Camden Social Housing following the devastating Grenfell Tower fire in London. He also referred to the liquidation of construction company Carillion plc; and the impact of tax changes under the OECD’a Base Erosion and Profit Shifting (BEPS) initiative.
The risk of nationalisation and/or a shift in public policy away from the PPP model were given a triple red risk rating by the JLIF Risk Committee.”
JLIF Risk Committee notes: “Concession based PPP projects form the core of JLIF’s investment focus. A shift in political policy away from the PPP model could compromise JLIF’s ability to access new projects and impact the way it engages with public-sector clients. It could also adversely affect the Company’s share price and affect the ability to raise new equity funds”.
Post-mitigation risk remains red and the Risk Committee notes a potential shift away from UK projects: “JLIF closely monitors the political environment in which it invests (or is considering investing) to gauge political support for PPP. While in the UK political support for the PPP model is currently particularly low, the model remains popular and continues to have strong political support in many other markets around the world. JLIF’s investment policy allows it to invest globally giving it the flexibility to target markets where there is a pipeline of opportunities”.
JLIF has 52 UK Private Finance Initiative projects with an average 67.5% equity stake including 23 projects with 100% equity ownership.
|Table 1: PFI projects in which John Laing Infrastructure Fund and other John Laing investment arms own all the shares : Source: HM Treasury ‘Current Projects as at 31 March 2017’ https://www.gov.uk/government/publications/private-finance-initiative-and-private-finance-2-projects-2017-summary-data|
|Name of project||Authority||Sector||John Laing equity holder 100%|
|North Swindon Schools PFI||Swindon||Schools (Non-BSF)||JLIF (GP) Limited|
|Peterborough SecOndary Schools PFI||Peterborough||Schools (Non-BSF)||JLIF Investments Limited|
|North West Regional College – Northland Building||Department for Employment and Learning||Other||John Graham (Dromore) Limited|
|Lewisham Brockley||Lewisham||Housing (HRA)||John Laing|
|Reprovision of mental health services – Erdington||Birmingham and Solihull Mental Health NHS Foundati||Hospitals and Acute Health||John Laing|
|Roseberry Park||Tees, Esk and Wear Valleys NHS Foundation Trust||Hospitals and Acute Health||John Laing|
|NewhamCanning Town||Newham||Housing (HRA)||John Laing Infrastructure Fund|
|NEFRA1 North East Fire & Rescue||Northumberland Fire and Rescue Service||Emergency Services||John Laing Infrastructure Fund|
|Redcar & Cleveland Street Lighting||Redcar and Cleveland||Street Lighting||John Laing Infrastructure Fund (JLIF)|
|Barnet Street Lighting||Barnet||Street Lighting||John Laing Infrastructure Fund (JLIF)|
|Enfield Street Lighting||Enfield||Street Lighting||John Laing Infrastructure Fund (JLIF)|
|British Transport Police||Transport for London||Offices||John Laing Infrastructure Fund Holdings (Justice & Emergency Services) Limited|
|Leeds City Council – Combined Secondary Schools Project||Leeds||Schools (Non-BSF)||John Laing Investment Fund Limited|
|Bentilee Joint Service Centre||Stoke-on-Trent||Offices||John Laing Investments Ltd|
|A130||Essex||Roads and Highway Maintenance||John Laing PLC|
|Walsall Street Lighting||Walsall||Street Lighting||John Laing PLC|
|Property Review – Divisional/Sub Divisional HQ & Police Stations||Greater Manchester Police Authority||Emergency Services||John Laing plc|
|Kirklees Excellent Homes for Life||Kirklees||Housing (HRA)||John Laing Wates Excellent Homes for Life Holding Company Ltd|