Balfour Beatty has sold 12.5 per cent of its stake in M25 operator Connect Plus for £103m to private equity firm Dalmore Capital.
The contractor said it would use the funds raised to pay down borrowings in 2018, adding that there was an expected profit of £53m on the deal.
Connect Plus was valued at £78m in the contractor’s most recent results and contributed an £8m profit before tax.
As part of the deal, Dalmore will have the option to purchase a further 12.5 per cent for the same price, although this arrangement expires on 13 May 2018.
Set up in 2008, Connect Plus is a consortium of Balfour Beatty, Edge Orbital Holdings and Egis Projects.
It has a 30-year design, build and finance contract to operate and maintain the 440 km M25 motorway for Highways England, which approved the sale of Balfour’s stake today.
Balfour said it would maintain a 27.5 per cent stake following the sale to Dalmore.
Private equity buyer Dalmore has invested heavily in UK infrastructure in recent years.
In 2015 it was part of the consortium of investors selected to own, finance and deliver the Thames Tideaway super sewer project.
It has previously acquired interests in public sector assets held by Balfour, purchasing two PPP assets valued at £97m from the contractor in 2014.
Balfour said the sale meant that forecast profit and net cash were now higher than those included in its trading update earlier this month.
Chief executive Leo Quinn said: “This transaction emphasises the ongoing attractiveness of our infrastructure assets and is in line with our declared intent to maximise value for shareholders.”