On the 16th of July, the Board of John Laing Infrastructure Fund Limited (JLIF) announced that following an unsolicited approach from a consortium of Dalmore Capital Limited and Equitix Investment Management Limited (the Consortium), discussions were continuing over a Possible Offer to purchase the entire shareholder capital of JLIF at a price of 142.5 pence.
On the 3rd of August, the possible offer became a recommended cash acquisition of the JLIF by Jura Acquisition Limited. At this time, the offer price of 142.5p represented a premium to the last published Net Asset Value of JLIF of 16.9 percent. However, on the 30th of August, JLIF published interim results with an updated Net Asset Value of 130p per share. On this basis, the premium being offered by Jura is 9.6%. The valuation of a portfolio of infrastructure assets requires assumptions and we note that the valuation used by the board is some 21 million pounds lower than the valuation calculated by the independent valuation team at PWC which was published in the offer document which equates to a NAV difference of 2p. If the Board had chosen to publish a NAV per share of 132p, the premium offered by Jura would have been 7.9%.
Regardless of the above valuation difference, we would argue that a single digit premium represents scant reward for shareholders giving up a scarce asset – the number of well-managed, sensibly priced vehicles offering infrastructure exposure is small. Further the there is significant value for to Jura in purchasing an established portfolio in one transaction. The Board has been conservative in valuing the portfolio which we would typically view positively, unfortunately, this has placed the board in a position of having to acknowledge that the offer price is fair because it is in excess of the conservatively calculated Net Asset Value.
We have engaged with the Board from the outset of this transaction and have expressed our support of the management team and acknowledged the invidious position in which the Board has been placed. We have communicated our opinion to co-shareholders and now must await the outcome of the shareholder vote at the Court Meeting on the 24th of September. We are voting to reject the takeover.