3i to buy Infinis’ gas assets for £185m

The wind unit of the energy group, which is owned by UK buyout firm Terra Firma, will be sold separately.

3i Infrastructure has agreed to buy Infinis’ gas business in a deal worth £185 million ($224.9 million; €205.4 million).

The transaction will see 3i Infrastructure acquire Infinis’ 296MW of landfill gas assets, which cover 121 UK sites and represent the largest single landfill gas portfolio in the country, from buyout firm Terra Firma. The acquisition will be funded by the £385 million of fresh capital 3i Infrastructure raised in June.

The deal marks 3i Infrastructure’s first full foray into the landfill gas business. In 2008, the firm approached landfill gas company Novera with a takeover offer and purchased 10 percent of the business. But it then dropped plans to buy a controlling interest after Infinis itself acquired a 28 percent holding.

“The strong cash generation profile of Infinis is a natural fit for 3i Infrastructure and complements the existing portfolio well,” Ben Loomes and Phil White, co-heads of 3i Infrastructure, said in a statement.

“Our long-term plans for the business primarily involve a continuation of management's existing focus on maximising gas and electricity yield. In addition, as gas and electricity output from the current landfill gas portfolio declines, we will seek opportunities to monetise spare engine and grid connection capacity.”

The deal is the first chapter of Terra Firma’s planned sale of Infinis after the firm took the company private in October last year following regulatory changes in the UK’s renewables system which forced clean energy producers to pay the Climate Change Levy – a tax aimed at incentivising carbon reduction – which they were previously exempt from. Infinis at the time said it would impact its EBITDA by £3-4 million in March 2017 compared to March 2016.

The sale of Infinis’ wind assets, which comprise 16 onshore wind farms with a 274MW capacity, is to be completed separately from the landfill gas sale.

The company had not responded to an emailed query regarding the timing of the wind sale by press time.