Shares digital

Construction firm Kier (KIE) has sold its 50% stake in a Scottish PFI project, to the other stake holder, Innisfree, for £13.8 million in cash.

The hospital, near Glasgow, was was Kier's first PFI investment and reached financial close in 1998, returning around five times the original investment.

The disposal will result in an exceptional profit of around £16 million in the second half to June 2008, following a refinancing made in 2004.

Terry Murray, an analyst at Landsbanki, says: 'It is Kier’s stated strategy to recycle its PFI equity interests when the values are deemed to have reached their full risk-weighted potential.' He says the valuation of the disposed stake was based on a conservative assumption in terms of property yields, and that Kier's £39 million portfolio of equity stakes after the sale is 'conservatively valued' too, against the £22.8 million original cost of the investments.

Shares says: The shares collapsed last year to the current £12.20 due to sector-related fears, but Kier is in a strong position, with a 2008 PE of 7.4 and a 4.7% forecast yield.

by: Carlo Svaluto