22nd Dec 2006 09:10
Land Securities Group Plc22 December 2006 22 December 2006 Land Securities Group PLC ('Land Securities') Land Securities Trillium secures leading position in the public privatepartnership market through acquisition of Secondary Market Infrastructure Fund. Land Securities Group PLC announces that its property partnership business, LandSecurities Trillium ('LST'), has exchanged contracts to acquire Secondary MarketInfrastructure Fund ('SMIF'), a specialist public private partnership ('PPP')business, from its existing shareholders STAR Capital Partners ('STAR'), HalifaxBank of Scotland ('HBoS') and AMP Capital Investors ('AMP'). The totalconsideration payable for the equity is £527m in addition to which LST will alsoassume SMIF's net debt on completion. As at 30 September SMIF's net debtamounted to £184m. By completion net debt is expected to have risen toapproximately £400m as a result of continuing acquisitions. It is expected thatSMIF will be earnings neutral in its first full year, with profits before taxrising to around £40m by year five as a result of contract income, refinancing,management fees, aggregation benefits and profits from the future sale of matureprojects to co-investors. Commenting on the acquisition Francis Salway, Chief Executive of Land Securitiessaid, "This is an exciting step forward for the Land Securities Trilliumbusiness which has now established itself as a market leader in public privatepartnerships as well as property outsourcing. Adding SMIF to our Investors inthe Community venture gives us an interest in around 100 PPP projects and anunrivalled capability to grow our presence in this expanding market. It playsto Land Securities Trillium's strengths of partnering with the public sector andadding value through managing service delivery and driving innovation." Secondary Market Infrastructure Fund SMIF was set up in 2001 and acquired by STAR in December 2003 with HBoS and AMPsubsequently providing further capital to fund growth. SMIF is now the leadingplayer in the secondary public private partnership market with a portfolio ofequity holdings in 79 PPP projects totalling 2.34 million square metres ofaccommodation. SMIF has an estimated market share in excess of 30% of the dealstransacted in the secondary PPP market. The accommodation portfolio (over 80%by value of the business) comprises public service buildings including schools,hospitals and prisons while the balance includes infrastructure assets such ashighway maintenance and a stake in a water company. SMIF comprises 89 people, of which 16 form the management team with the balanceresponsible for providing asset management on many of the contracts. SMIFcurrently offers asset management activities including the management of day today services, finance, insurance and life-cycle capital maintenance. Theexisting management team will have a stake in the business' future returns andgrowth. Future potential Going forward it is anticipated that LST and the management team will seek torecycle capital invested through the introduction of third party investorsalongside LST while retaining ongoing asset management responsibility. SMIFwill continue to build on its excellent track record of acquiring PPP interests. Land Securities Trillium Chief Executive, Ian Ellis added: "A year ago we setout a strategy to access the multi-billion pound government Public PrivatePartnership market. In January, we implemented the first step with ourinvestment in Investors in the Community, targeting the primary PPP market. Theacquisition of SMIF secures our position in both the primary and secondarymarkets where we expect to see increasing convergence. In less than 12 monthswe have accessed a portfolio of opportunities which would have taken many yearsto assemble through organic growth. We can now deploy our traditionalstrengths in customer service, asset management and financing through long termpartnerships." Bill Doughty, Chief Executive of SMIF added, "STAR, HBOS and AMP have beencommitted investors during SMIF's development and growth over the last threeyears. Their support and advice has added significant value to the business andcontributed greatly to the positioning of SMIF at the frontier of the PPPmarket. Along with the rest of the SMIF management team, I am delighted at theprospect of working with LST in the future and making a significant contributionto its exciting and broader PPP strategy". It is expected that the transaction will be completed in the first quarter of2007 following receipt of third party consents from certain public authorities. -Ends- For further information please contact: Francis Salway / Emma DenneLand SecuritiesTel: +44 7799 133387 +44 (0)20 7024 5460 Stephanie Highett / Dido LaurimoreFinancial DynamicsTel: +44 (0)20 7831 3113 For more information on Land Securities visit www.landsecurities.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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