John Laing Group's (LON:JLG) pre-close statement maintained guidance for FY18 investment commitments and realisations at £250m. The investment pipeline and the market for secondary assets are reported to be “strong” and the portfolio continues to become increasingly diversified geographically. With a strong market background and the financial strength to exploit market opportunities, we see scope for JLG to close the valuation gap to NAV and its peers.
Guidance maintained
JLG’s pre-close statement maintained guidance for FY18 investment commitments and realisations at £250m. Realisations are well on the way to achieving this total and have so far totalled £241.5m (including £232.0m for IEP Phase 1). Commitments have been running at a slower pace in H1, but JLG maintains a strong investment pipeline and expects a pick-up in H2. Encouragingly, the market for secondary assets also remains strong. The deficit on the pension fund (according to IAS19), which stood £35.2m at the year-end, had moved to a surplus of £19.8m by 31 May 2018, thanks to a reduction in the discount rate used (linked to yield on corporate bonds) and a contribution of £26.5m (Edison FY18e: -£7.4m). Future contributions, which are based on the actuarial deficit and are currently scheduled to run at a similar level over the next few years, will only be revisited in light of the next actuarial valuation due next March. Our forecasts remain unchanged.
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