The John Laing Infrastructure Fund (JLIF) has decided to terminate its Guernsey offshore registration and become a UK investment trust. Announcing the results and annual report for 2017 on 23 March 2018, the chair, David MacLellan, cited recent problems in JLIF PFI projects such as the serious defects at Roseberry Park Hospital, fire safety enforcement notices at Peterborough Hospital and fire safety issues at Camden Social Housing following the devastating Grenfell Tower fire in London. He also referred to the liquidation of construction company Carillion plc; and the impact of tax changes under the OECD’a Base Erosion and Profit Shifting (BEPS) initiative.
The risk of nationalisation and/or a shift in public policy away from the PPP model were given a triple red risk rating by the JLIF Risk Committee.
“The Board has therefore concluded that it would be in the best interests of the Company and its shareholders to become a UK Investment Trust to mitigate the impact of both treaty changes and changes to future tax provisions. As a result, a proposal will be put to shareholders in May to amend the Articles of Incorporation such that Board and Annual General meetings can be held in the UK, with the aim, subject to regulatory approval, of implementing the tax residency change to the UK on 1 January 2019 so that the Company may be treated as a UK investment trust from that date.” (JLIF Annual Report 2017)
JLIF has 52 UK Private Finance Initiative projects with an average 67.5% equity stake including 23 projects with 100% equity ownership (February 2018).
However, a few months later a consortium of funds led by Dalmore Capital Limited funds managed by Equitix Investment Management Limited (Tetragon Financial Group Limited, Guernsey) made a £1,448m cash offer for JLIF which was accepted by shareholders. Since the Bid Company was based in Guernsey its is expected the renamed JLIF will remain offshore in Guernsey.