Terra Firma in £1bn Infinis IPO

The flotation, set to be finalised in November, could provide the investment firm with further ammunition as it seeks to raise a planned $3bn green energy fund.

Terra Firma Capital Partners has announced its intention to float Infinis, the UK’s largest independent renewable energy producer, on the London Stock Exchange.

The firm is targeting a £1 billion (€1.2 billion; $1.6 billion) IPO for the company, a source close to the matter told Infrastructure Investor. The company is expected to achieve a minimum free float of 30 percent following the offer, which is due to be complete in November.

It is understood that Terra Firma values the business at around £1.5 billion, equally split between equity and debt. The firm declined to comment on valuation.

Based in Northampton, UK, Infinis is the third-largest producer of renewable energy under the Renewable Obligation regime, the latest subsidy scheme designed to help the country meet its long-term needs in non-fossils power generation. With a market share of 7.5 percent, the group exported 2.5 terawatts-hours to the grid in the 12 months to end March 2013.

Infinis operates a portfolio of 147 power plants with a total installed capacity of 621 megawatts (MW) comprising landfill gas, wind and hydroelectricity facilities. Wind projects currently under development add up to another 600MW of potential fresh capacity. The biggest contributor is currently landfill gas, with a capacity of 330MW, followed by onshore wind, which can produce 274MW.

Infinis was formed in 2006 through a spin-out from Waste Recycling Group, a waste management business Terra Firma acquired in 2003. The resulting standalone business has seen its revenues grow by 19 percent, and EBITDA increase by 25 percent, on an annualised basis over the past three years. The firm sold the rest of WRG to Fomento de Construcciones y Contratas, a Spanish construction group, in September 2006.

A successful float would likely help Terra Firma lure more investors to the $3 billion green energy fund it is reportedly looking to raise. The firm has not raised a buyout fund since the EMI debacle, which saw it hand over the music production business, held in its buyout funds II and III, to its lenders.

The news comes a month after Terra Firma sold Phoenix Natural Gas, Northern Ireland’s largest gas network, to Hastings Funds Management for between £600 million and £650 million.

Infinis expects to be disbursing a £55 million dividend for the financial year ending 31 March 2015, and a dividend of similar size pro-rata for the period stretching from the IPO to end March 2014.