John Laing Expands Presence in Australia With $1.7B Rail Deal
Global infrastructure owner-developer John Laing plc., London, recently stepped up its Australian operations by closing a $1.7-billion deal to design, build, finance, operate and maintain (DBFOM) a light rail project in Sydney.
Laing is “hopeful” about its Australian prospects, noted chief executive Olivier Brousse, following the February 12 partial initial public offering of the company in London.
For its latest Australian venture, Laing took up just under a third of the shares in ALTRAC Light Rail Partnership, which reached financial close on February 25 on Sydney’s Central Business District and South East Light Rail project. ALTRAC will operate the line for 15 years.
This April ALTRAC plans to start nearly four years of construction on the line, which will run south from the harbor, splitting to Randwick and Kingsford in the south. The consortium also acquires control of the already operational Inner West Light Rail line, which will join the new route in the central area.
Construction will be handled by the contracting unit of Madrid-based ACCIONA Concesiones, which joined Laing as an equity investor. The Wollongong-based not-for-profit pension fund First State Super is ALTRAC’s third investor.
Along with investing roughly $195 million equity, ALTRAC raised loans from Banco Santander, Commonwealth Bank of Australia, Credit Agricole CIB Australia, The Bank of Nova Scotia Asia and Singapore-based United Overseas Bank.
Other members of the delivery and operational team include the operator Transdev, which already has the contract to run the Inner West Light Rail line. Alstom Transport Australia is also in the team, along with Capella Capital. Construction will be performed in phases to minimize disruption in the busy business district, says an Altract spokesman.
On the closing of the deal—Laing’s fifth in Australia—CEO Brousse said the country was "a key market." A Laing consortium started work in late 2014 on the 25-year DBFO for a new 60,000-seat stadium in Perth.
That contract win was followed by last October’s financial close on the 25-year DBFO covering Melbourne’s East West Link Stage 1 freeway. The project—valued by the consortium at $4.2 billion—covers roughly a third of the 18-km highway, including twin 4.4-km three-lane tunnels.
Laing's other Australian interests include the privately financed contract with the Government of South Australia for the 700-bed Royal Adelaide Hospital. And the company has a stake in a 30-year deal to provide rolling stock for South East Queensland’s suburban railroads.
Formerly a construction company, Laing pulled out of contracting 14 years ago in order to focus on project development and operations. The company built up a $1.2-billion portfolio of over 40 projects by late 2014. Laing also manages $1.5 billion of projects for other owners.
While the U.K. is home to 70% of its current projects, 70% of future projects in the pipeline is international, says Brousse. He cites Australia as a prime target along with the U.S., where the firm has secured contracts in Florida and Colorado and set up a New York City office last year.
To help expansion, Laing’s owner—the Henderson private equity fund based in the British Channel Islands—floated 34.8% of the company’s shares on the London stock exchange this month, raising $200 million.
