TERRA FIRMA BUILT INFINIS INTO ONE OF THE LEADING INDEPENDENT UK RENEWABLE ENERGY GENERATORS
Terra Firma built Infinis into one of the UK’s largest independent renewable energy platforms, with leading portfolios in landfill gas and onshore wind. In 2016, Infinis sold its landfill gas activities comprising over 300 MW generating capacity, and in 2017 sold the business’s onshore wind portfolio with its 343 MW generating capacity across 19 sites.
Asset-Backed: 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. The business had 57 MW of installed capacity at acquisition, enough to power 76,000 homes. 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.
Requiring Fundamental Change: The fledgling landfill gas division of WRG was identified as a profitable growth business underpinned by the increasing 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.
- 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. Following this, Infinis 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.
- 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.
Developing through capital expenditure
- Infinis 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 296 MW in 2016. It also developed a significant onshore wind business, diversifying away from the original landfill gas focus. Its total onshore wind capacity is 343 MW and it continues to develop projects from an organic onshore wind development pipeline of up to 66 MW.
- 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.
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 a publicly listed peer private. Infinis’ acquisition of Novera Energy in 2009 added 143 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 became non-core and were sold in February 2015.
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 late 2013, Infinis refinanced its entire operational wind portfolio with a secured term loan facility, reducing the cost of debt by over 200 basis points. The transaction was named ‘European Onshore Wind Deal of the Year 2013’ by Project Finance Magazine.
Status of Investment: The Infinis investment is fully realised. In November 2013, Infinis Energy plc successfully completed an IPO and its shares commenced unconditional trading on the Main Market of the London Stock Exchange. Terra Firma (through its holding vehicle Monterey Capital II Sàrl) sold a 30 per cent stake to institutional and retail investors. At the end of 2015, Terra Firma (through its holding vehicle Monterey Capital II Sàrl) acquired the shares that it did not already own to regain full control of Infinis. In December 2016, Infinis sold its landfill gas activities to 3i Infrastructure plc, and in May 2017 the onshore wind business was sold to J.P Morgan Asset Management.
Play the video to learn more about Infinis
onshore wind capacity
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- The WRG-Infinis story
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- Enhancing performance, energising the team
- Small steps to make a big difference
- The green energy business that's leading by example