Infinis

Infinis is the UK's largest independent renewable energy generator

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In 2003, Terra Firma acquired Waste Recycling Group (‘WRG’), one of the leading waste management companies and the leading waste disposal operator in the UK. In 2004, the UK assets of Shanks, the third largest landfill operator in the UK, were acquired by Terra Firma and merged with WRG as part of its consolidation strategy. The fledgling landfill gas division of WRG was identified as a profitable growth business underpinned by the growing focus on alternative energy sources and the government financial incentives put in place to encourage investment. This landfill gas business had been under-managed, with its generating capacity under-developed and most capacity outsourced to third parties.

Investment strategy 

Asset-Backed: The business had 57 MW of installed capacity at acquisition, enough to power 76,000 homes. 

Requiring Fundamental Change: The fledgling biogas division of WRG was identified as a profitable growth business underpinned by the growing focus on alternative energy sources and the government financial incentives put in place to encourage investment. The business had been undermanaged, with its generating capacity under-developed and some capacity outsourced to third parties.

Creating value 

  1. Transforming strategy

    • In 2006, the landfill gas division was demerged from WRG to create a standalone business, Infinis, which retained the rights to the landfill gas produced from WRG’s landfill sites and used it as fuel to produce renewable energy for the UK electricity grid. Since then, Infinis has expanded its landfill gas portfolio, diversified into onshore wind and small-scale hydro generation and overhauled its site operations with the establishment of leading in-house operational and maintenance capabilities.
    • Infinis started out as a small non-core, neglected and largely outsourced unit within a waste management company. Today, the business has been completely transformed into a FTSE-listed enterprise that ranks as one of the UK’s leading independent renewable power generation companies.
  2. Strengthening management

    • Terra Firma set up a separate governance structure and installed a new management team, appointing a new CEO, CFO, Operations Director, Commercial Director and Head of Wind Development.
  3. Developing through capital expenditure

    • Infinis has invested heavily in the roll-out of its gas collection systems and engines, taking the landfill gas
      generating capacity from 57 MW in 2003 to 315 MW at the end of March 2015. It has also developed a significant onshore wind business, diversifying away from the original landfill gas focus. At the end of March 2015, its total onshore wind capacity was 274 MW and it continues to develop projects from an organic onshore wind development pipeline with up to 150 MW due for completion by 2017.
    • Infinis has established one of the industry’s most advanced control and remote monitoring centres, allowing the company to track the environmental and operational performance of its generating capacity across the UK on a real-time 24/7 basis.
  4. Building through mergers and acquisitions

    • The company has undertaken a constant flow of merger and acquisition activity, selectively expanding and enhancing its portfolio of operational and development assets.
    • Acquisitions have ranged from small opportunistic transactions to relatively large strategic deals that involved taking private publicly-listed peers. Infinis’s acquisition of Novera Energy in 2009 added 148 MW of installed capacity made up primarily of onshore wind and landfill gas with a small hydro asset base, and increased its organic wind development pipeline. As Infinis has grown, the small hydro operations have become non-core and were sold in February 2015.
  5. Lowering the cost of capital to create extra upside

    • The diversification of its power generation portfolio, increase in scale and the geographic spread of its assets has reduced the operational risk of the business. In December 2009, Infinis completed a refinancing, providing the business with £275 million of proceeds from a five-year bond backed by the landfill gas assets. In 2013, this bond was itself refinanced with a £350 million six-year bond with lower interest charges. In conjunction with these transactions, Moody’s upgraded Infinis’s credit rating to Ba3 in early 2013 and later Fitch Ratings issued a new rating of BB-.
    • In late 2013, ahead of the IPO, Infinis refinanced its entire operational wind portfolio with a secured term loan facility of £296 million and ancillary facilities of £34 million, reducing the cost of debt by over 200 basis points. The transaction received the ‘European Onshore Wind Deal of the Year 2013’ from Project Finance Magazine. 

Status of Investment: The Infinis investment is partially realised.


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