John Laing Infrastructure Fund Regulatory News (JLIF)

JOHN LAING INFRASTRUCTURE FUND

INTERIM MANAGEMENT STATEMENT

John Laing Infrastructure Fund (JLIF), the international PPP infrastructure investment company, today announces its Interim Management Statement (IMS) for the period 1 July 2012 to 12 November 2012[1].

Highlights

·; The Portfolio showed strong underlying growth of 6.8% to £450.8 million in the nine months to the 30 September 2012, equivalent to 9.1% on an annualised basis

·; Actual Portfolio Value increased by £70.3 million over the same period 

·; The Net Asset Value (NAV) was £483.0 million at 30 September 2012, excluding the dividend of £11.0 million paid on 19 October 2012

·; NAV per share is 104.0 pence as at 30 September 2012, allowing for the dividend of 3.0 pence per share compared to 104.8 pence as at 30 June 2012

·; Successful share issue of £60.4 million (gross) in October, at an issue price that made it accretive to existing investors, and successful placing of £30 million of shares for John Laing. The new issue was used to acquire a portfolio of three projects from John Laing, all of which were completed within one week of the listing of the new shares

·; Four acquisitions for £88.6 million completed in the period, bringing the total number of projects in the portfolio to 37

·; The dividend of 3.0 pence per share was paid to shareholders on 19 October 2012. The Scrip Dividend Alternative was taken up by 19.4% of shareholders and therefore 2,456,499 shares were issued on that date

Paul Lester, Chairman of the John Laing Infrastructure Fund, said:

"JLIF has continued its strong performance. Since the announcement of our interim results shareholders have subscribed over £90 million of equity, including the placing of £30 million from John Laing, and acquired £88.6 million of assets. This takes total funds raised in 2012 to £126.4 million. JLIF's most recent capital raise was significantly oversubscribed representing demand for the low-risk return provided by an investment in JLIF shares. JLIF is actively bidding for new, attractive opportunities in the market and remains optimistic for the foreseeable future."

Andrew Charlesworth, Director of John Laing Capital Management Limited (JLCM), Investment Adviser to JLIF, said:

"Over the last three months we have acquired and completed four new stakes in assets. Three of these, Pembury Hospital, Forth Valley Royal Hospital and Kromhout Barracks, were acquired from John Laing while the fourth represented an additional shareholding in the LUL Connect project from Fluor. These are strong additions to our portfolio and are in line with our strategy of buying low risk, high quality operational assets.

JLIF continues to build in strength as evidenced by the recent successful acquisitions. JLIF has a significant pipeline over the next three years presenting further attractive investment opportunities from both John Laing and the wider market."

Capital Raising

In October 2012, JLIF successfully issued 56.7 million new shares raising gross proceeds of £60.4 million for the Company. The entire proceeds of the capital raise were used to acquire a portfolio of two UK health assets (one in which JLIF was already an existing shareholder) and a Dutch defence accommodation asset from John Laing for £71.3 million. The issue was well received by the market and significantly oversubscribed.

Acquisitions

Since the release of the Interim Report in August 2012, JLIF has completed four acquisitions as follows:

From John Laing:

·; Forth Valley Royal Hospital (increase in shareholding from 50% to 100%);

·; Kromhout Barracks (40% shareholding); and

·; Pembury Hospital (37.5% shareholding).

From Fluor International Limited:

·; LUL Connect (increase in shareholding from 19.5% to 28.5%).

Cash flows from the portfolio continue in line with the projections made by the Investment Adviser based on the underlying project models.

Investment Performance

The Portfolio increased in value by £70.3 million to £450.8 million during the period 31 December 2011 to 30 September 2012. Against a rebased 31 December 2011 Portfolio Value, after taking account of distributions received from projects in the period and acquisitions, the Portfolio Value increased by £28.8 million or 6.8%, net of a decrease in value of £1.5 million due to exchange rate depreciation. The exchange rate depreciation occurred approximately equally on both the Canadian dollar/£ rate and the Euro/£ rate. Given the Canadian dollar has been weakening and continues to do so, JLIF entered in to a one year derivative contract at the start of 2012 to hedge 80% of its Canadian dollar income to protect cash flows and dividends. 

The NAV per share has increased from 104.6 pence at 31 December 2011 to 106.4 pence (cum-div) at 30 September 2012 primarily due to underlying growth over the period. A dividend of 3.0 pence per share was approved in August 2012 and was paid on 19 October 2012.

Dividends

JLIF paid a dividend of 3.0 pence per share on 19 October 2012 in respect of the six month period to 30 June 2012. The Scrip Dividend Alternative was taken up by 19.4% of shareholders and 2,456,499 shares were issued on that date at a price of 107.6 pence taking the total number of shares in issue to 513,109,848. JLIF remains confident that its dividend projections are adequately cash covered in the short term.

Hedging

JLIF's policy is not to hedge the Balance Sheet values of its Portfolio. However, if it is appropriate JLIF will hedge its Portfolio income to mitigate exchange rate volatility. JLIF has entered into a derivative contract to hedge 80% of the Canadian dollar income during 2012. JLCM will continue to monitor foreign exchange rates and recommend risk mitigation to JLIF accordingly.

Gearing

The JLIF bank facility with Royal Bank of Scotland has been increased from £40 million to £75 million, of which £10 million is drawn as at the date of this IMS. This drawing was made to part fund the acquisition of an additional stake in the LUL Connect project. The facility has two tranches which mature in May 2013 (£35 million) and March 2014 (£40 million).

As stated in JLIF's Investment Policy, JLIF has the ability to raise debt of up to 25% of the Fund's Total Assets. The existing Revolving Credit Facility available to JLIF represents 8.2% of the Fund's Total Assets at 30 September 2012. JLIF continues to monitor its required debt capacity and is currently seeking to increase the size of its facility within the allowable threshold.

Pipeline

JLIF anticipates making further acquisitions from John Laing over the next three years whilst also continuing to actively pursue third party acquisitions.

John Laing has identified a pipeline of 12 projects with a combined value (as at 31 December 2011) of approximately £312 million due for disposal during the next three years that it considers to meet both JLIF's investment criteria and the terms of the First Offer Agreement. In addition to this assets continue to be provided to the market by other sellers and the secondary market supply remains strong.

Looking further into the future, with a number of primary deals reaching financial close, JLCM believes there will be a robust pipeline of acquisition opportunities for JLIF over the coming years while JLIF also continues to consider acquisitions of co-shareholder stakes in existing JLIF projects. JLIF is a credible market participant and is selective in the opportunities it tenders for.

Outlook

After a year-long public consultation process on PFI, the UK government announced in October 2012 its plans to introduce a new delivery model by which to procure public infrastructure projects. The new delivery model is expected to include some changes, like removing from the contracts services such as cleaning, catering and security. It is also anticipated that the government will seek to invest a small amount of equity into PFI projects, ensuring it occupies a seat on the board of any project company. Further details of the new procurement model are expected to be announced in early December alongside the Chancellor's Autumn Statement.

While the UK government has been reviewing the model of procurement for infrastructure projects, it has continued to approve approximately £6 billion of new PFI projects. The government had hoped that pension funds would contribute to a wider source of private capital for investment in infrastructure projects but their direct investment has not been as quick as the government had hoped.

In July 2012, the UK government announced a guarantee scheme designed to help raise the necessary private funding required in delivery of PFI projects. The scheme is specifically aimed at major infrastructure projects described as being 'of national significance' and is intended to reduce the cost of borrowing on the private finance element of the project funding thereby increasing UK deal flow.

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.

Note:

This IMS aims to give an update of material events and transactions that have taken place during the period from 1 July 2012 to 12 November 2012 and their impact on the financial position of the Investment group. This update reflects JLCM's and the Board's current views. They are subject to a number of risks and uncertainties and could change. Factors which could cause or contribute to such differences include, inter alia, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within the portfolio of JLIF.

This IMS contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and JLIF's actions to differ materially from those expressed or implied in the forward-looking statements.

This IMS has been prepared solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules and this IMS should not be relied on by any other party or for any other purpose.

David Marshall Tel: + 44 (0) 20 7901 3326

Email: david.marshall@jlcm.co.uk

Andrew Charlesworth

Email: andrew.charlesworth@jlcm.co.uk

RLM Finsbury Tel: + 44 (0) 20 7251 3801

Faeth Birch

Philip Walters

Nidaa Lone