Balfour Beatty share price up, sells 80% stake in offshore project

Balfour Beatty announced on Monday it had sold a £40 million stake in its wind farm operations off the coast of Kent as a part of the struggling British infrastructure groups turnaround plan.

The group said it had reached a deal with fund management company Equitix to sell 80% of its Thanet offshore transmission project.

The project is a high-voltage electricity transmission system that connects the 300MW Thanet wind farm to the onshore transmission grid. Equipped with 100 turbine generators, the farm delivers electricity to around 200 000 homes a year.

Balfour Beatty completed the acquisition of the project in December, after it was named preferred bidder in 2010. However, the company outlined that the £164 million it paid included the right to operate the facility.

The company will retain the 20% stake left and it will continue to operate and maintain the system, under the 20-year license its acquired from Great Britains energy regulator Ofgem.

Despite the sale Chief Executive Leo Quinn said in a statement that the sector “remains a key market”.

Additionally, a spokesman for the company said it was nothing out of the ordinary for a company to dispose of stake in a project in order to raise capital to finance future investments, while keeping operation and maintenance services.

“This disposal validates the directors’ valuation of the investments portfolio,” said Mr. Quinn. “We look forward to working with our partner, Equitix, to ensure the long term success of this project.”

Last month the company lifted the projected value of its infrastructure investments to £1.3 billion from £1.05 billion in June 2014 during a business revenue undertaken by Mr. Quinn, who became CEO in January.

Mr. Quinn finds himself in a difficult position after the company issued six profit warnings last year, triggered by increased costs and badly priced projects.

Last year the company came close to a debt default after it failed to complete a merger deal with Carillion. However, it managed to reach a deal with WSP Global to sell its engineering and design business Parsons Brinckerhoff for £820 million.

Balfour Beatty gained 0.17% on Friday and closed at GBX 235.40 in London. On Monday the stock gained 0.95% to GBX 237.63 at 14:14 GMT, marking a one year-decrease of 22.98%. The company is valued at £1.62 billion.

According to the Financial Times, the 11 analysts offering 12-month price targets for Balfour Beatty have a median target of GBX 230.00, with a high estimate of GBX 285.00 and a low estimate of GBX 115.00. The median estimate represents a 2.29 % decrease from the last closing price.