Balfour Beatty (BBY) delivers good tidings to investors as it expects pre-tax profit to exceed market expectations.
The upgrade comes after the sale of a 12.5% stake in M25 orbital motorway operator Connect Plus to funds managed by Dalmore Capital for £103m. The move left Balfour Beatty with a 27.5% of the project.
Other shareholders in Connect Plus are EDGE Orbital Holdings, and Egis Investment Partners.
Net cash is anticipated to be £103m higher than the £40m pencilled in after the company’s trading update earlier this month.
Balfour Beatty expects the sale to be completed by the end of the year and will use the money to pay down borrowings in 2018.
The company has the option to sell an additional 12.5% stake in Connect Plus at an equivalent price to funds managed by Dalmore and Equitix Investment Management.
Numis analyst Howard Seymour is impressed the company sold its stake for 25% more than construction group Skanska, when it sold its own 40% stake in October.
He says the sale demonstrates the success of selling mature assets Seymour believes reducing debt will provide the group with ‘the best balance sheet in the sector’ and that Balfour Beatty is in a strong position in the UK and US to continue growing.
