This is a big milestone and reflects both the importance we attach to renewables and the experience that we have picked up along the way; that experience is shared actively between Infinis in the UK, EverPower in the US, and RTR in Italy.

This is still a young and dynamic sector, with a diversity of participants. They are attracted by the need to reduce mankind’s reliance on fossil fuels and the excitement of pioneering new technology.

New technology has its appeal, but it carries risk. Early on, we decided that we would focus on reliable, commercially-proven technologies that could be scaled-up at lower risk.  For us, the interest lies in how to manage a large number of renewable power generating assets efficiently. It takes a lot of them to produce a gigawatt.

It is the key to building leaders in green energy.

We are seeing a return to dark clouds and storms. No one should be surprised. As I have said from the beginning of this crisis, it took 15 years to create the crisis. It will take at least this decade to sort it out.

Politics and economics are deeply inter-twined. President Sarkozy’s support has stumbled and the Dutch Government has fallen. There will be many more casualties as governments grapple with the scale of the problems in the Eurozone and fail to solve them.

Up to now, Europe has at least been travelling towards the same destination with Germany plotting the route. The shared pain made it easier to swallow the austerity medicine and harder to break ranks. But that will not remain the case.

The French and Dutch will decide that more emphasis has to be put on stimulating growth rather than cutting debt. This is a view already shared by other member countries that do not have the same weight of influence. Collectively they will still be unable to shift Germany’s determination that Europe, if it wants their continued financial support, must live within its means. Conflict at the heart of Europe will create greater market uncertainty and more political challenge.

This gloomy scenario does not mean there will be an absence of opportunities for investment. On the contrary, the continuing problems will see more under-managed assets come on the market at better prices. There will be real possibilities for those prepared to put in the effort and investment to turn them round.

But for the European economy as a whole, and all those countries who trade with it, we can expect a bumpy ride. There will be no quick fix. As I said in my New Year blog, the way ahead will require patience – and compromise for both investors and politicians.

How good to hear that levels of transparency and disclosure are rising across the industry.

As I said in my blog of 5 March, Terra Firma takes this seriously.  I was therefore particularly pleased to see examples from three of our portfolio businesses’ annual reports being held up as best in class – Phoenix Natural Gas (twice), AWAS (twice), and Annington Homes.

Transparency is a core part of our proposition to investors, it is part of our responsibility to the wider community and it is good business practice.

I don’t need convincing.   At present, Terra Firma’s team as a whole is 60% male, 40% female.  A third of our Financial and Operational Managing Directors are women.  It means that we have a higher proportion of women than perhaps any other major European private equity firm.  However, I’d still like to see more equilibrium for the simple reason that we depend upon a genuine diversity of thinking and skills to create value.

Right from the start, when Terra Firma became independent in 2002, we set out to build a diverse team.  Today we have a real melting pot of different professional and cultural backgrounds and approaches all under one roof.  Within the team – which today is 103 people – we have 23 different nationalities and the capability to speak 22 languages fluently.   It gives us a global perspective.

Tim Pryce and I have deliberately avoided creating any internal boundaries within the firm and we try to ensure that teams are flat and flexible.  Everyone has the freedom to contribute to any aspects of the business.  That way we get the benefits of our diversity – skills, fresh perspectives, greater creativity and more rigour in decision-making.

There is no doubt in my mind that having a high proportion of women in the firm helps us preserve that open culture.

The bigger the industry becomes, and the more influence it has in society, the more the industry will be focussed on.

Engaging with stakeholders demands concerted effort and over the longer term we all will gain by being open and transparent.

Terra Firma takes its role in society seriously. Back in 2008 we were one of the first in the industry to publish an annual review in line with the Walker Guidelines.In fact we went beyond these expectations.

Today we launch Terra Firma’s new and expanded website. It is our latest step in improving communication and transparency with our stakeholders.

It is a story that we are proud of. Infinis has come a long way from being a small landfill gas business buried within Waste Recycling Group, an investment that we made in 2003. Terra Firma has invested significantly in Infinis’s expansion because renewable energy offers good long-term growth potential. The case for renewable energy in the UK is simple: it will not run out; it is better for the environment; and it offers valuable security of supply.

Infinis has expanded into wind and hydropower and now generates about 10% of the UK’s renewable electricity.

Terra Firma’s objective is to build businesses that offer sustainable growth. In Infinis’s case, it is also helping the UK address its domestic energy needs, growing employment and contributing to environmental sustainability.

The private equity industry has come in for its fair share of criticism recently, despite many success stories. Infinis is a good example of private equity working at its best – identifying an opportunity, setting an ambitious strategy and backing it with consistent investment and a high-quality management team.

Bloomberg announcement 

Renewable energy businesses fit the Terra Firma mould very well – they are rich in assets, operate in essential industries and have the potential for fundamental change.

Having recognised the importance of renewable energy, in 2003 we were early private equity investors in the sector.

That year we bought Waste Recycling Group and spotted the potential of its small landfill gas business. We have been investing consistently in the sector ever since – through acquisitions and capital expenditure.

As a result, we have grown that small landfill gas business into the UK’s leading independent pure renewable energy generator – now better known as ‘Infinis’.

In 2009 we bought EverPower, a wind energy business in the United States, as a second development platform through which to invest.

We topped Bloomberg’s league last year after investing in a third platform, the RTR Group inItaly.  In March, we created RTR by acquiring a portfolio of photovoltaic (PV) plants from Terna, the operator of Italy’s high-voltage grid. It was the largest acquisition of solar generating assets that had taken place in Europe.

Since then, RTR has almost doubled its generating capacity by acquiring new plants. RTR is now over three times larger than its nearest solar rival in Italy.

We continue to see a lot of opportunities.  Having acquired these three platform businesses, collectively they have invested more than €1 billion in developing their operations.

But while we are rightly focused on the problem of the Eurozone, in reality there are other major problems the World faces, each of them as difficult as Europe’s:

What is the UK going to do to get out of its recession? Is Japan ever going to have a recovery? How will India deal with increasing disparity between rich and poor? Will the US ever be able to get its budget deficit down? Why didn’t the market naturally limit the money being lent to Greece?

On the Euro my answer is the same today as it was last March – I still believe there is at least an 80% chance that the Eurozone will muddle through with a ‘fudge’. The fudge will consist of support from the richer countries for the poorer countries (though not sufficient), increased fiscal and political union (though not a Federal States of Europe), some austerity (though not as much as the markets would want), and possibly the ejection of some economies from the euro (though probably just Greece).

This form of evolving political compromise is of course what happens when political issues are just too difficult to be dealt with decisively. The alternative to compromise and pragmatism in such cases is, more often than not, division and conflict.

Uncharacteristically, and maybe because I am getting older, I therefore hope 2012 will be a year in which compromise triumphs over ideology; a year of unfinished business in which we gradually edge towards solutions, not a year for big bangs or great leaps. The changes we are witnessing, whether the Arab Spring, the increasing entry of China onto the world stage, or the failure or success of European Federalism, will reshape our world both economically and politically for the next fifty years. For this to be done in a peaceful way will require enlightenment, tolerance, patience – and compromise.

Wishing you a healthy, prosperous and peaceful 2012.

Recently, Terra Firma has been developing several projects with the management team at Deutsche Annington (DAIG), one of our portfolio companies.  Terra Firma has managed DAIG now for over a decade.  DAIG is Germany’s leading residential property company.

Through a joint venture with Deutsche Telekom, announced ten days ago, DAIG is providing improved TV services and faster broadband to 171,000 homes. This also means that the vast majority of customers will receive these services at lower cost.  Additionally, DAIG is investing to improve the quality and cost-effectiveness of its caretaker and maintenance services by bringing the facility management services back in-house to create 400 new caretakers. Through offering industry-leading training, it will give this team the skills to act as on-the-spot quality managers for the maintenance work being carried out on DAIG’s estates. This will be carried out by a new company, formed with an experienced German partner, to provide excellent plumbing, painting and other craft services for its properties.

DAIG is setting new standards for both tenant satisfaction and operational efficiency. We believe that it is essential to deliver on both these goals in order to create a successful business over the long term.

I have found myself reflecting during the last year on the state of the
private equity industry and what we have learnt, or should have learnt,
from the past decade.

I have always felt that when times are difficult it is important to
return to your strengths. Private equity in general, I think, has also
reached that ‘back to basics’ conclusion.

The future for our sector will be very different from what I once dubbed
the ‘Woodstock Years’. Between 2002 and 2007 private equity enjoyed
extraordinary returns with capital flowing into funds and back to
investors.

It was the period that fuelled the politician’s caricature of PE as
‘locusts’.

This politicised sound-bite is not an accurate picture of our industry.
In the much more challenging conditions that we have experienced since
2008 (the ‘Wilderness Years’, as I called them at the recent
SuperInvestor Conference) we have seen private equity at its best: as an
extremely effective model for creating value through transforming
businesses during tough periods.

Contrary to popular belief, private equity has a long-term, not a
short-term approach. Back in the early days of private equity the
industry undeniably had a shorter-term perspective than investors in
listed companies did. Now it is the reverse – private equity
investments tend to be longer-term because it takes time to achieve
sustainable change in businesses. Meanwhile the public markets have
become victims of ever-shorter investment horizons.

Free from the short-term pressures of earnings announcements and market
volatility that can distract publicly-listed companies, we can look at
what a business is capable of becoming in five or seven years and
deliver the strategic and operational changes needed to achieve that
goal.

While I will not defend every practice in the industry (there are still
too many ‘pass the parcel’ deals between private equity owners, and
evidence that deal quantity is sometimes put ahead of quality), I do
believe that private equity has lot to contribute in the current
environment.

The return to creating real value by transforming businesses is ideal
for the tougher low growth environment in which we find ourselves.

It is also the best hope for we have of achieving a sustained recovery
in Europe.