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John Laing promises rail investment splash

CONTRACTOR JOHN LAING this week signalled its intent to move further into train operating by vowing to bid for the Thames Trains and Wessex franchises when they are announced early next year.

Bids are expected to include substantial infrastructure investments as well as running trains.

The commitment follows the successful renewal last week by subsidiary M40 Trains of the 20 year Chiltern franchise, for which it has already committed to a £370M investment programme. This will include substantial upgrading and extension of the services.

Andrew Friend, managing director of Laing Investments, said the company was 'committed to a programme of investment, and was now looking at other franchise opportunities'.

He added: 'Clearly the nature of infrastructure investment is that the returns tend to be long term with robust cash flows over the period.' This, he said, contrasted with the cyclical nature of construction projects providing a 'good counterbalance within the group'.

Friend said that the group strategy was to continue to invest in infrastructure across a number of sectors, transport being of major importance.

'Given the Government commitment to very substantial investment, it is naturally a good area to invest in, ' he said.

The Chiltern franchise was the first of the replacement franchises announced by Deputy Prime Minister John Prescott last week. M40, of which Laing is an 84 per cent shareholder, beat off competition from Go-Ahead.

It covers the M40 corridor on the London Marylebone to Birmingham and Aylesbury routes.

M40 has held the franchise since 1996 and operated, according to Sir Martin Laing, 'a very successful operation'.

Laing has significantly increased its involvement and investment in privately financed infrastructure over the last few years. It now holds stakes in the Second Severn Crossing, Manchester Light Rail, and the M40 DBFO motorway concession as part of UK Highways.

M40 Trains this week outlined its investment programme to upgrade the existing Chiltern Line track and infrastructure, known as Project Evergreen. It will be implemented in four stages (see diagram).

But the full investment planned over the 20 year franchise comprises £150M investment by, or in association with, Railtrack and £153M for the purchase of new rolling stock to be leased to M40 trains. A further £40M will be raised from other investors, including the John Laing Group.

Upgrades to all stations are also planned, including the provision of two extra platforms at Marylebone. The 20 year franchise can be shortened if objectives are not met.

All trains will be fitted with automatic train protection systems. M40 hopes the investment will double the number of passengers and significantly improve punctuality.

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