John Laing shares surge as KKR talks are confirmed

Shares of John Laing Group, one of Britain’s best-known infrastructure companies, surged on Thursday after it confirmed it was in talks with US buyout firm KKR over a possible takeover.

The group’s shares jumped 14 per cent to 362.70p, valuing it at about £1.8bn, as it gave the private equity company until June 3 to make an offer.

John Laing, which invests in transport, social and environmental public-private partnership programmes worldwide, added that there was no certainty that an offer would be made.

Infrastructure investors expect to benefit from a government shift towards net zero carbon emissions and spending on road, energy and housing projects as countries recover from the Covid-19 pandemic.

Last month, John Laing and Macquarie Capital said they would invest £200m in retirement homes developed by McCarthy & Stone to help address a shortage of elderly accommodation in Britain.

John Laing has also invested in the rollout of high-speed fibres in Germany with two small takeovers of regional telecoms businesses.

KKR has been one of the most active private equity firms since the start of the coronavirus pandemic, seizing an opportunity amid the turmoil to take over companies that in some cases have been on its radar for years. 

Joe Bae, KKR’s co-president, said in June that its “active investment pace since the beginning of Covid has been quite intentional”, as it sought to “buy high-quality businesses at attractive prices”.

It bought Coty’s professional beauty division in a cut-price deal early in the crisis, and has purchased assets in holiday park operator Roompot as well as taking an €1.8bn stake in Telecom Italia’s last-mile network.

Its activity contrasts with some European private equity groups that have taken a more cautious stance.

The US firm is also braced for megadeals, having approached the Dutch telecoms operator KPN in what could be an €18bn deal and considered a buyout offer in excess of $20bn for Japan’s Toshiba. 

John Laing reported a £65m pre-tax loss in 2020 compared with a loss of £95m a year earlier, while net asset value per share slipped to 310p from 337p.

Joe Brent, analyst at Liberum, called the approach “opportunistic” and pointed to the company’s transformation under new management.

“The shares have underperformed and are cheap relative to similar companies,” he said.

KKR declined to comment.