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Foreign investors set to cash in on slump in sterling, says firm

Published 12/09/2016

John Laing Infrastructure Fund said it expects a slowdown in activity in the wake of the Brexit vote
John Laing Infrastructure Fund said it expects a slowdown in activity in the wake of the Brexit vote

John Laing Infrastructure Fund has said it expects to see foreign investors cash in on the collapse in sterling following the EU referendum by ramping up their activity.

The infrastructure investment firm said that while it expects a slowdown in activity in the wake of the Brexit vote, an "oversupply of capital seeking investment in UK infrastructure" will mean the lull will not last long.

The firm said: "In the aftermath of the EU referendum vote, we expect to see a slowdown in market activity while investors take stock of the political and economic situation. However, given that there remains an oversupply of capital seeking investment in UK infrastructure and limited supply of projects, we do not expect this to last long.

"We also expect to see dual pressure on asset pricing, with non-sterling denominated investors seeking to take advantage of a weakened sterling, offset by the 'wait and see' attitude likely to be adopted by some investors in the short term."

However, it added that the weaker pound represents a challenge to its competitiveness when bidding for new overseas contracts, which have become more expensive.

John Laing made the comments alongside its half-year results, which saw pre-tax profits jump from £14.5 million to £72.3 million.

The company said that the rise was driven by "underlying portfolio growth, positive unrealised exchange rate movements, a reduction in discount rates and profits from disposals".

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