Company Announcements

23 November 2020

INVESTMENT UPDATE

John Laing increases stake in I-77 Mobility Partners

John Laing Group plc ("John Laing" or "the Group"), the responsible investor and active manager of infrastructure projects internationally is pleased to announce that it has committed to invest an additional US$38.6 million (or approximately £29 million) to increase its shareholding in I-77 Mobility Partners ("I-77MP"), the company developing and operating the I-77 Express Lanes project ("the project") in Charlotte, North Carolina.  In addition, the transaction includes provision for deferred consideration which is contingent on achievement of a revenue threshold by June 2024 and which will be paid through distributions from the project.  The Group is acquiring an additional 7.45% interest from an existing partner, increasing its overall shareholding in the project to 17.45%.  The acquisition is expected to complete by the end of 2020 subject to customary conditions.

I-77 Express Lanes is a public-private partnership between North Carolina Department of Transportation ('NCDOT') and I-77MP to increase capacity and reduce congestion on the existing highway in both directions through widening 26 miles of highway and adding managed lanes. 

Since first investing in the project in 2015, John Laing has worked closely with its partners to de-risk the project through the construction phase and bring it into operation, including active support for technical enhancements to improve the user experience. 

The asset benefits from a 50 year concession and its location in a growing metropolitan area.  This investment enables John Laing to increase its stake in an existing asset with considerable opportunities for further value creation and growth, working in conjunction with our long-established and global partners. 

Following completion of the transaction, and adjusting for both stages of the IEP East divestment and the agreed sale of the Australian wind portfolio in October, the PPP portfolio will represent c.75% of total portfolio value.  Approximately 79% of this PPP portfolio value will comprise availability-based revenue projects.  

Following the opening of the I-77 Express Lanes in 2019, users were quick to adopt, and travel times showed clear improvements. The implementation of COVID-19 lockdown measures in March resulted in a sharp drop in traffic volumes.  Volumes partially recovered in the second and third quarter of the year.  From a revenue perspective, the drop in volumes has been partially offset by pricing strategy and a decrease in costs.  We expect the recovery in volumes to continue as the pandemic subsides.  The I-77 Express lanes are strategically located in the region of one of the fastest growing cities in the US, and its long-term growth prospects remain underpinned by the outlook for economic and population growth in the Charlotte catchment area.  The asset is expected to start producing cash yields in 2024, at which point traffic is expected to have ramped up.

We expect this acquisition to be modestly accretive to NAV based on the current valuation of our existing interest.  Following completion of the transaction, John Laing's interest in the project will represent approximately 7.5% of pro forma total portfolio value.

Anthony Phillips, Head of John Laing North America, said:

We are delighted to have had the opportunity to increase our stake in this highly attractive asset alongside our partners, Cintra and Aberdeen Standard Investments.  Managed lanes are an effective and innovative solution to urban congestion, reducing journey times, increasing safety and giving drivers choice.   We see significant growth opportunities for this asset class in tackling congestion and addressing the need to upgrade the nation's highways."

About John Laing

John Laing is a responsible investor and active manager of infrastructure projects internationally. John Laing creates value through investing in sustainable greenfield infrastructure projects, and by actively managing these projects through construction and into operation. We play a key role in providing solutions to complex infrastructure challenges leveraging our deep expertise, flexible business model and strong network of partners to respond to new opportunities as they emerge, helping to deliver vital infrastructure that improves the lives of the communities we serve.

About the I-77 Express Lanes

Designed to alleviate congestion and enable faster, more reliable journeys, the I-77 Express Lanes is a project which has rebuilt the existing road and increased capacity on a 26 mile stretch of highway in the northern part of the Charlotte metropolitan area.  The project included rebuilding the existing highway and creating managed lanes with variable electronic tolling to improve traffic flow and provide drivers with choice.  Charlotte is the largest city in North Carolina, and one of the fastest growing major cities in the US.  The I-77 is a key north-south corridor connecting the major employment centre of downtown Charlotte with the growing residential communities of Iredell and Mecklenburg counties.  With above average population growth expected to continue, the I-77 is strategically located in a catchment area exposed to positive economic and demographic trends and is well positioned for future growth while also promoting further economic development in the area.  The reduction in congestion, and associated 'stop-go' traffic, coupled with pricing mechanisms designed to encourage the use of carpools and more energy-efficient vehicles should also reduce emissions and pollution to create more liveable local areas.  I-77 Express Lanes is a public-private partnership between the I-77 Mobility Partners and North Carolina Department of Transportation which has enabled the project to be delivered more quickly than traditional funding methods would have allowed. 

ENDS