18 April 2016
Guy Hands is again trying to sell his UK renewables business, Infinis, and is understood to be prepared to break it up into three chunks to help flush out buyers, Environmental Finance has learned.
Hands' Terra Firma, which took Infinis back into private ownership in October, will split the company into three parts – operating onshore wind, development onshore wind and landfill gas.
The most valuable chunk is the portfolio of 274MW of operating wind farms, which is understood to be sold alongside a portfolio of 42MW of projects in development.
Industry insiders said this portfolio is considered to be of high quality and could command an enterprise value of between £600 million ($850 million) and £700 million.
The portfolio is understood to have attracted interest from between eight and 10 parties, who have made indicative offers, and the sale process is now in the second phase, during which it will select some of the stronger bidders.
The number of potential buyers for such a large portfolio is thought to be limited, but includes large insurers or pension funds, Chinese investors, or some of the UK-listed renewables funds that own wind – The Renewables Infrastructure Group and Greencoat UK Wind have both recently announced plans to raise £300 million to give them firepower to buy new assets.
As suggested in the documentation concerning the delisting of Infinis, Terra Firma will sell its 306MW of landfill gas separately. This is expected to come with debt attached, and will fetch somewhere in the region of £100 million to £130 million of equity.
The third part of the business is a development pipeline of some 275MW of wind assets. Industry insiders said this portfolio will be valued in the tens of millions because of the uncertainty surrounding wind policy in the UK.
Hands has appointed RBC to help him sell all three parts of the business. Goldman Sachs, which loaned Terra Firma the cash to help it buy back the 31.5% of Infinis shares that were in public hands, is understood to be involved in the sale process of the operating wind portfolio.
This is not the first time that Hands has tried to sell all or part of Infinis, but one market insider said he believes the sale will go ahead this time.
This is because, at the time of delisting, Terra Firma was open about its intention to exit Infinis. And the fund that owns Infinis, Terra Firma II, is into its twelfth year of operation, but was only supposed to have a duration of 10 years.
Another insider said Terra Firma was bought back out of public ownership cheaply – the offer valued the company at £555 million – which would help Hands make a decent return.
But another insider said that Hands faces headwinds because of the political uncertainty surrounding renewables policies in the UK, and because fears over the UK leaving Europe have helped devalue the pound. The Terra Firma II fund is denominated in euros.
Power prices are also on a downward trend, which will further depress sentiment.
Terra Firma said it does not comment on "market speculation".
RBC declined to comment. Goldman was not available to comment.