PFI asset sales demonstrate value of investment business
01 May 2013
Balfour Beatty operates in international infrastructure markets and creates value from a combination of its strong local businesses, end-to-end capabilities and asset knowledge in infrastructure, and its skills as an investor and developer of infrastructure assets.
Since the mid-1990’s the Group has built a substantial investments business through financing and developing greenfield infrastructure assets. This business has become a core value generator and has made significant progress recently in diversifying its activities into new sectors and new geographies, thus reducing the business’s reliance on PFI in the UK and military housing in the US.
Taking into account the maturity and the scale of the portfolio (Directors’ valuation £734 million at December 2012) as well as the significant opportunities presented by the diversification mentioned above, the business has been managing the portfolio more actively since 2010 – generating additional cash from disposals and reinvesting in areas that align with the Group’s target geographies and market sectors.
As part of this strategy, Balfour Beatty announces today the completion of two PFI disposal transactions:
- The Group has sold its 50% interests in four PFI schools projects in Birmingham, Bassetlaw, Stoke and Rotherham to its co-shareholder, Innisfree, for combined proceeds of £42.5 million, generating a gain on disposal of £24.4 million.
- Balfour Beatty has also completed the sale of its 50% interest in the Tameside Hospital PFI to a subsidiary of HICL Infrastructure Company Limited, its co-shareholder, for a consideration of £16.0 million, generating a gain on disposal of £9.0 million.
The aggregate proceeds of £58.5 million exceed the Directors’ valuation by £21.9 million.
Commenting today, Balfour Beatty Chief Executive, Andrew McNaughton, said: "Balfour Beatty's ability to deliver long-term projects has enabled us to deliver superior returns from our equity investments while delivering a first class service to the public sector.
“The transactions we have completed demonstrate the quality and liquidity of our portfolio and are in line with our strategy to generate income from our Infrastructure Investments business through disposals, thereby releasing cash for future investments and delivering value for our shareholders.“
Balfour Beatty plc
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Notes to editors:
1. Balfour Beatty is an international infrastructure group that delivers world class services essential to the development, creation and care of infrastructure assets; from finance and development, through design and project management to construction and maintenance.
Our businesses draw on more than 100 years of experience to deliver the highest levels of quality, safety and technical expertise to our clients principally in the UK,the US, Southeast Asia and the Middle East. We continue to develop our business in key growth markets in South Africa, Australia, Canada, Brazil and India.
With proven expertise in delivering infrastructure critical to support communities and society today and in the future, our key market sectors include transportation (roads, rail and aviation), power and energy, mining, water and social infrastructure such as hospitals and schools.
Balfour Beatty employs 50,000 people around the world.