Interactive Investor

John Laing executive builds up stake in infrastructure firm

24th August 2020 14:31

Graeme Evans from interactive investor


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Ben Loomes snaps up £325,000 in shares, while David Daly of Frasers took just 15 minutes to buy and sell a stake after an admin error.

A testing start to life at the helm for new John Laing (LSE:JLG) boss Ben Loomes has not stopped the former 3i executive from buying £325,000 of shares in the infrastructure investor.

The first of last week's two purchases was made hours after half-year results had sent shares in the FTSE 250 stock down by 7% towards the two-year lows seen last month.

The group, which invests in and manages sustainable greenfield infrastructure projects, posted a loss of £95 million and admitted it is unlikely to meet the £1 billion investment target set by previous management for the three years to the end of 2021.

It blamed delays in procurement and bidding for public-private partnership (PPP) projects due to Covid-19 disruption, resulting in just £2 million of new commitments in the half year.

The total across the 18 months to the end of June was £186 million, with Laing further impacted by its decision not to invest in new wind and solar generation projects following previous poor performance in this area.

The company, however, is encouraged by its preferred and short-listed bidder positions on PPP projects and expects to benefit from governments focusing on new infrastructure projects as part of efforts to stimulate their economies.

Loomes, who took charge in May, said:

“The prospects for infrastructure investment are stronger than ever. At its core, John Laing has a differentiated greenfield projects platform with a strong long-term track record of creating value.”

He will report back on his business priorities in November as part of a strategic review.

To date the company has invested in more than 140 projects, including the Denver Eagle commuter rail project in Colorado and the InterCity Express programme, which has delivered state-of-the-art trains to the Great Western and East Coast main lines.

Investors with long memories will know the company for its building work on assets as diverse as the M1 motorway, Sizewell B nuclear power station and Coventry Cathedral.

It originally listed on the London Stock Exchange in 1953 but was taken private in 2007 after deciding six years earlier to focus on social infrastructure assets and PFI projects. The company re-joined the stock market in 2015 under the leadership of Olivier Brousse, who helped to double the share price in the period up to the start of the Covid-19 pandemic.

He returned to France earlier this year to rejoin utilities conglomerate Veolia, with Loomes joining John Laing with shares trading at 364p. They fell to as low as 276p in July after a trading update revealed that first-half net asset value (NAV) was likely to show a single digit decline. The NAV benchmark later came in at 309p a share, a fall of 6% in last week's results.

Renewable energy assets - accounting for a quarter of the total portfolio - were partly to blame after the pandemic caused electricity demand to fall and depressed power prices. Its PPP portfolio was more resilient, with a positive 3% contribution to NAV growth.

Shares fell to 278p after last week's results, with Loomes' own purchase of John Laing stock later that morning being made at a price of 290p for a value of £247,000. He is required to build and maintain a shareholding in the company equivalent to 200% of his £531,000 salary.

Loomes made a second purchase of company stock on Friday, with the acquisition of 26,361 shares at 283p worth almost £75,000. He was previously the managing partner and head of infrastructure at InfraRed Capital Partners, while his previous five years at 3i included a position on its executive committee.

Few director share purchases have been sold on again as quickly as the 15 minutes it took Frasers Group (LSE:FRAS) non-executive chairman David Daly last week.

He bought 3,912 shares in error during a closed period, prompting Frasers to disclose that the same shares had been sold within minutes of the original £11,000 purchase being made at a price of 284p. A small profit was made on the disposal, which Daly has donated to charity.

Frasers said:

“The company will ensure that Persons Discharging Managerial Responsibilities (PDMRs) are reminded of their obligations and the internal procedures relating to dealing in the company's shares.”

Shares closed last week at 346p after the Sports Direct, Evans Cycles and department store owner impressed investors with its forecast for an improvement of between 10% and 30% in underlying earnings in the 2021 financial year.

The figure in last week's annual results was 5% higher at £302.1 million, with optimism fuelled by stronger online sales as more people cycle and exercise in the wake of Covid-19. 

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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    UK shares
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