John Laing eyes PFI opportunities abroad

Despite a 'buoyant' UK market, the complexity of modern PFIs makes John Laing focus on overseas growth.

John Laing is looking overseas for PFI opportunities, frustrated at the sluggishness of the UK's PFI market.

In an interview with AFX News last week, John Laing's chief executive Adrian Ewer criticised the complexity of the government's Building Schools for the Future programme (BSF). He also said PFI was slowing down, despite Treasury efforts to speed the process up.

"It used to be quicker; I'd say it's slowed down. This is partly due to the complexity of PFI - the schools programme, with BSF, is more complicated than it used to be."

He said BSF involved too many stakeholders. "The projects now involve local education authorities in partnerships with the private sector, it's just very complicated," he said.

He called for a return to a more traditional form of PFI. "It's interesting that with the hospitals and schools we're dealing with in Scotland, where they have not added the same complexity, we have got through the projects so much quicker."

A John Laing spokesman was quick to point out that despite Ewer's comments, the UK PFI sector was not all doom and gloom. "John Laing is still a major player in the UK PFI market and still sees it as a buoyant market," he said.

Ewer also criticised the Department of Health's controversial review of its PFI hospital programme, which saw three of Equion's schemes - the £1bn Barts PFI scheme, the North Staffordshire Hospitals redevelopment and the Leicester University Hospitals PFI scheme - delayed and rescoped.

He said: "It's frustrating in terms of the amount of time and the cost of advisers: as long as these things take longer, they cost more."

The sluggish PFI market has prompted John Laing to look at growing its business internationally. Ewer said that in only three years' time, overseas investment could grow from its current level of 15% of the business to as much as 50%.

"Our growth aspirations for the company are bigger than the UK market can provide for us," he told AFX News.

"The US market is in its inf-ancy. What you've got there is a lot of municipalities waking up to the fact that they have valuable assets where they can unlock investment by allowing the private sector to upgrade or run existing assets. It's potentially a massive market."

[Contract Journal, 30 August 2006, p 4]