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Attero owns two energy from waste (‘EfW’) plants, two sorting and pre-treatment facilities, six anaerobic digestion facilities, seven composting facilities and 10 landfills. The company processes waste from a diverse mix of domestic municipalities, commercial and industrial customers, as well as a number of UK and Irish exporters.
Attero has good revenue visibility due to its long-term contracts with customers. It is well positioned within the Dutch market with two of the largest and most efficient EfW plants in the country, strategically positioned with good port, road and rail access for both import and domestic waste supply. In addition, Attero is strongly positioned to benefit from favourable underlying trends in the European waste market, driven by EU directives targeting more recycling.
Attero outperformed expectations in the year, on the back of higher waste volumes, gate fees and power prices. The core Energy from Waste business unit benefitted from these favourable market conditions and was able to renew and extend a number of key commercial and industrial waste supply contracts, and lock-in current high electricity prices for the coming year. Organics and Plastics also outperformed expectations, while Minerals slightly underperformed due to lower construction activity due to Covid-19 in the second half of 2021.
The company is currently looking at a number of investment opportunities, including a new post-separation recycling line, a new anaerobic digestion (biogas) facility and solar installations at its closed landfill sites.
On the back of several years of strong growth and highly resilient performance, despite Covid-19, Attero raised additional long-term debt on attractive terms and refinanced existing facilities.
Attero’s activities primarily relate to recycling and recovery of energy from waste produced by society, and as such it plays a key role in helping to deliver on the Netherlands’ and European environmental and sustainability objectives. Since 2019, Attero has fully offset its CO2 emissions by the volume of emissions avoided. It is committed to increase its avoided emissions to one million tonnes CO2 by 2025 by increasing the production of renewable energy and recycled materials. Attero is also exploring CO2 capture at its main facilities.
DNS:NET is a leading independent telecommunications provider in Germany. Established in 1998, DNS:NET owns the largest independent fibre-to-the-cabinet network in the Berlin area and is rolling out a fibre-to-the home network in Berlin and the surrounding regions.
The company differentiates itself through a superior network, local brand recognition and attractive pricing of high bandwidth products, which drives high customer satisfaction. 3i Infrastructure’s backing will allow DNS:NET to accelerate its build programme to provide gigabit-ready connectivity to its customers.
Following our initial investment, 3i Infrastructure injected £33 million of further equity in DNS:NET to fund the next phase of its fibre network build-out. The Company’s stake in the business increased to 64% as a result, the remainder being owned by Alexander Lucke, founder and CEO of the business.
Since our investment, DNS:NET has performed in line with our expectations. Although the roll-out began slower than anticipated initially, the management team has since accelerated the build programme, signing agreements with two contractors to increase capacity. Customer take up remains high and build costs are in line with our expectations. More broadly, German market fundamentals continue to be favourable, with a 30% growth in fibre-to-the-home connections in the year.
In line with our best practice for newer investments, we have strengthened the board with the appointment of a non-executive Chair, Charles Frankl, who brings a background in sales and technology management functions for larger corporates and of scaling growth businesses.
In June 2021, 3i Infrastructure plc invested c.€182m to acquire a 60% stake in DNS:NET.
Fibre is superior to other broadband access technologies because it provides reliable low latency, high bandwidth and distance-independent connectivity for both download and upload. Demand for FTTH connectivity is forecast to grow rapidly, as consumers normalise data intensive activities such as cloud-based remote working, high definition streaming and online gaming, and increasingly view high speed broadband as an essential service.
Germany lags behind most European countries in its FTTH deployment, with only 14% coverage today compared to the European average of 33%. The market is projected to grow at 30% p.a. to meet the German government’s objective of every one of its 43 million households having access to gigabit speed broadband by 2025.
DNS:NET’s business has a very low GHG footprint once the network is deployed. Fibre is a greener alternative to copper, requiring significantly less energy to transport data and less repair work to maintain. Additionally, enhanced connectivity can lead to a reduction in GHG emissions related to business travel and commuting as well as enable smart building energy management systems, which will further drive energy efficiency and GHG reduction.
Headquartered in Esbjerg, Denmark, ESVAGT is a leading provider of emergency rescue and response vessels (“ERRV”) and related services to the offshore energy industry in and around the North Sea and the Barents Sea. The company is also the market leader in the fast growing segment of service operation vessels (“SOV”) for the offshore wind industry.
Its ERRV services mainly involve the rescue and recovery of personnel, but also include the dispersion and recovery of oil spills, crew transfers and towing. ESVAGT is the leading provider of ERRV services in Denmark and Norway, with market shares of approximately 100% and 50%, respectively, as well as an established and growing presence in the UK. The majority of ESVAGT’s ERRV revenues are associated with North Sea oil and gas production support, with the remainder generated by supporting exploration activity.
ESVAGT is also the pioneer and market leader in the provision of SOVs to offshore wind farms, with seven bespoke vessels in operation and a further two under construction. SOVs are purpose-built, high performance vessels, providing efficient transport of maintenance technicians to wind turbines and other offshore wind equipment, under long term contracts. The offshore wind market, and hence demand for SOVs, is expected to grow strongly over the coming years, creating significant opportunities for the company.
ESVAGT has been operating since 1981, employs c.1,100 people and owns a fleet of c.40 vessels.
ESVAGT has established a leading position in the offshore wind service operation vessels (‘SOV’) market. Despite increasing interest from competitors, the business recently signed a contract with Ørsted for the world’s first green SOV which will service the Hornsea 2 wind park in the UK.
In the US, ESVAGT and its joint venture partner, Crowley, are exploring several SOV opportunities to service existing European customers.
ESVAGT’s emergency rescue and response vessel segment is also generating momentum due to increasingly attractive supply/demand dynamics and a renewed focus on security of energy supply in Europe.
An important multi-vessel contract was signed with Total Energies in Denmark in the year.
We recently appointed Soren Poulsgaard Jensen, ex-CEO of Scandlines, to the ESVAGT Board. He brings significant experience in the maritime sector and knowledge of working with 3i.
3i Infrastructure acquired ESVAGT from AP Møller-Maersk and other minority shareholders in September 2015, in a consortium with AMP Capital.
ESVAGT has strong infrastructure characteristics and operates in an attractive market:
SVAGT is maintaining its market position as the leading offshore wind service vessel provider. It has clear emissions reductions goals which tie back to the company’s aim of becoming CO2-neutral by 2035. ESVAGT’s strategy has been further advanced by the latest SOV design, powered by batteries and dual fuel engines, capable of sailing on renewable e-methanol.
Global Cloud Xchange (“GCX”) is a leading global data communications service provider and owner of one of the world’s largest private subsea fibre optic networks. The business provides high-bandwidth connectivity to a range of customers including over-the-top content providers, telecom carriers, new media providers and enterprises.
GCX’s 66,000km of cables span from North America to Asia. It is particularly strong on the Europe-Asia and Intra-Asia routes where it is well position to capitalise on growth opportunities and serve the exponentially growing demand for data traffic.
In November 2021, 3i Infrastructure plc agreed to invest c.$512m to acquire a 100% stake in GCX. The investment will not complete before Summer 2022.
Infinis is the largest generator of electricity from landfill gas (“LFG”) in the UK, with a portfolio of 121 landfill sites and total installed capacity of over 300MW.
Alkane Energy acquisition
In March 2018, the Company announced its intention to increase its investment in Infinis by £125 million to fund Infinis’s acquisition of Alkane Energy (‘Alkane’), an independent power generator from both coal mine methane (‘CMM’) and reserve power (‘Peaking’) operations and the largest generator of electricity from CMM in the UK.
Infinis performed strongly in the year, thanks to good operating performance, higher power prices and price volatility which benefitted the power response assets in particular. It has faced some challenges in its Captured Mineral Methane business due to lower engine availability and reliability. Infinis’s cashflows are positively correlated with UK RPI inflation through the index-linked Renewables Obligations Certificate regime.
Infinis continues to deliver on its strategy to grow into a diversified and low-carbon renewable energy player: on the solar front Infinis now has 117MW of consented sites with 97MW expected to commence construction in FY23.
An additional 100MW is currently in the planning process with a longer-term potential for a further 200MW+. It has experienced some delays in solar project development together with higher development costs.
In parallel, Infinis is developing a complementary pipeline of potential battery sites to capitalise on expected continued power price volatility. Infinis has 36MW of projects expected to commence construction in FY23.
The investment in Infinis is foremost a yield play. Its front-ended cashflows balance other recent investments by the Company in more growth-oriented businesses. Revenues are underpinned by the inflation-linked UK Renewables Obligation Certificate (“ROC”) regime until 2027. Infinis could also become a platform to make new investments in activities such as distributed power generation from other gas sources, distributed energy storage by exploiting the business’s spare engine and grid connection capacity, and additional landfill gas sites.
Infinis is the largest generator of electricity from LFG in the UK, with a portfolio of 121 landfill sites and total installed capacity of over 300MW. LFG is produced by decomposing organic matter in landfill sites. If released into the atmosphere unchecked, LFG contributes to pollution and is a potent greenhouse gas. By extracting LFG from landfill sites, Infinis fulfils an essential role in helping landfill operators meet their environmental compliance obligations. By using the collected LFG to generate electricity, Infinis supplies distribution networks with a consistent source of baseload power.
Infinis continues to make good progress on its sustainability agenda. Its targets have been aligned to its ambition to meet the growing energy demand whilst reducing industry emissions, support the transition to new renewable energy sources and grow a clean low-carbon economy whilst also taking care to safeguard biodiversity and manage natural resources responsibly.
Ionisos is a leading owner and operator of cold sterilisation facilities servicing the medical, pharmaceutical and cosmetics industries. Established in 1993 in Civrieux, France, Ionisos is the third largest cold sterilisation provider globally and operates a network of 11 facilities in Europe with market leading positions in France and Spain. It has over 200 employees and a highly diversified customer base of more than 1,000 customers.
Ionisos delivers a mission-critical, non-discretionary service for the medical, pharmaceutical and cosmetics industries for whom cold sterilisation is an essential component of the manufacturing process. It is typically applied to single use products that would be damaged by the heat and/or humidity of hot sterilisation methods.
Ionisos delivered strong performance in the year, exceeding expectations with market growth outperforming and with a favourable product mix. The business is working on plans to increase capacity to meet the additional demand, through a combination of expanding existing facilities, exploring further greenfield investments and monitoring potential M&A opportunities. The construction of the new sterilisation site in Kleve, Germany, is progressing in line with budget and is expected to start operating in Summer 2022.
In January 2022, we appointed Michel Darnaud as Independent Chair of the board of Ionisos. Michel is the former President of Europe for Baxter and Boston Scientific, and Chair of MedTech Europe. Ionisos will benefit from his expertise and network to continue its European development.
3i Infrastructure acquired Ionisos in September 2019, having committed to invest in July 2019.
As part of its sustainability strategy, Ionisos aims to reduce its GHG footprint over the next five years through green initiatives. The other key priorities to its sustainability strategy include providing a great place to work for its employees: the board is focused on promoting a good culture and awareness of health and safety across the business. Ionisos is also striving to build valuable partnerships with its stakeholders, through an active engagement programme with customers, key suppliers, regulators and local authorities.
Joulz is a leading owner and provider of essential energy infrastructure equipment and services in the Netherlands. It leases essential energy infrastructure equipment and meters to a large and diversified customer base of industrial, commercial and public sector customers. It has two business units: Infrastructure Services and Metering.
The Infrastructure Services business owns and leases medium voltage electricity infrastructure such as transformers, switchgear and cables under long-term contracts. The Metering business owns and leases approximately 50,000 electricity and gas meters for non-household customers under medium term contracts.
Financial performance for Joulz wasbroadly in line with expectations in the year. The carve-out from Stedin and implementation of a new ERP system are now complete. The Infrastructure Services business is seeing strong order intake ahead of expectations, which is partially offset by some delays to project completions and by some churn in the Metering business. A new head of Metering was appointed during the year, and performance has improved in recent months.
Following the innovative micro-grid solution developed for a customer near Schiphol Airport, Joulz continues to see strong interest in the larger integrated projects which bring together Infrastructure Services, Metering, Solar and other storage/generation products to solve customers’ increasingly complex power requirements.
In December 2021, the Company invested £5 million of further equity in Joulz to fund growth projects, including the acquisition of further commercial transformers from Stedin.
3i Infrastructure acquired Joulz in April 2019, having committed to invest in March 2019.
Sustainability is a key element of Joulz’s business strategy: it has expanded its customer offering into new energy transition solutions with solar and EV charging products, and is exploring opportunities in low-carbon heating solutions and energy storage.
Transport & logistics
Oystercatcher is the holding company through which the Company holds a 45% interest in Oiltanking Singapore Limited.
Oiltanking Singapore is a 1.3 million cubic metre facility focused on storage and blending of refined clear petroleum products for a range of blue chip customers. With a premier location, on Jurong Island, it is accessed by pipeline, sea going vessel and barge.
Oiltanking is one of the world’s leading independent storage partners for oils, chemicals and gases, operating 41 terminals in 18 countries with a total storage capacity of 16 million cubic metres.
Market conditions for oil storage were mixed in the past year: high oil prices have resulted in a backwardated market. On the other hand a resumption in demand has meant increased levels of customer activity at storage terminals. In the year Oiltanking Singapore renewed contracts, maintaining its high utilisation levels and increasing storage rates secured, but accepting shorter contract tenors in some instances.
Financial performance for the year was in line with expectations and, looking ahead, we remain confident that, as demand for oil products in the Asia Pacific region grows post Covid, the supply/demand balance for oil storage will tighten and storage rates will step up.
Oiltanking has long placed significant focus on sustainability, including high standards of environmental management and a strong focus on health and safety. During the year it has announced the results of a strategic review which will see the company rebranded and focusing on supporting its customers in the energy industry to achieve their sustainability ambitions, for example by supporting them to grow their renewable fuels businesses.
Transport & logistics
Renewing social infrastructure
SRL, which is headquartered in Cheshire, is the market leading temporary traffic equipment (“TTE”) rental company in the UK. SRL’s product range includes temporary traffic lights, adaptive detection systems, pedestrian and cyclist systems, variable messaging systems, barriers and CCTV. SRL offers its customers a full-service rental solution, which includes the planning and design of traffic management systems, installation, maintenance and integration with existing systems, as well as direct sales of equipment assembled by SRL.
SRL’s market-leading reputation is supported by its network of 30 depots nationwide, providing a 24/7 365 day a year service on which customers rely for quick deployment and reactive maintenance work.
SRL has performed in line with our investment case to date, both financially and operationally. The fundamentals of addressing the road network maintenance backlog and strategic initiatives such as the UK fibre roll-out plan continue to provide a strong underpinning rationale for further expansion of the equipment as a service model.
On acquisition, the Company provided an £83 million bridge loan. This was repaid in February 2022, when we secured a third-party acquisition debt facility.
3i Infrastructure acquired SRL in December 2021.
Sustainability and safety form a cornerstone of our value creation plan. Temporary Traffic Equipment (TTE) allows for greater segregation and control of traffic flows, which in turn reduces congestion around roadworks. Greater rigour is being placed on health and safety through the use of more sophisticated methods of traffic management to protect highway workers and segregate traffic, cyclists and pedestrians.
Tampnet is the leading independent offshore communications network operator in the North Sea and the Gulf of Mexico. It is headquartered in Norway, with operations in the UK, Scandinavia and the USA.
Tampnet provides high speed, low latency and resilient data connectivity offshore through an established and comprehensive network of fibre optic cables, 4G base stations, and microwave links. It operates across four main business areas: fixed installations, mobile rigs and vessels, roaming for offshore workers and international carriers. The majority of its business involves providing fixed fibre links to oil platforms.
Tampnet performed strongly in the year and materially above 2021 levels. Its core business in the North Sea performed well as customers continued to upgrade their bandwidth requirements and invest in digital initiatives. Furthermore, we are seeing increasing momentum in the basin due to the higher oil price and a renewed focus on security of energy supply from European nations. During the year, Tampnet renewed an important contract with Equinor, providing long-term visibility and de-risking future cashflows.
Beyond its historic oil and gas customers, Tampnet is developing a number of new initiatives to provide digital connectivity to other players in the region such as government services, offshoreagriculture and carbon capture.
In the Gulf of Mexico, Tampnet is seeing good momentum. There were some delays in installations, due to Covid-19 and severe weather conditions, but the management team is in discussions on several new projects and data demand is continuing to increase steadily.
3i Infrastructure acquired 50% of Tampnet in March 2019 alongside Danish pension fund ATP, having committed to invest in July 2018.
The core of Tampnet’s approach to sustainability is to make a positive contribution to the underlying industry, by enabling oil and gas producers to extract more efficiently from existing resources. Tampnet is also providing connectivity and digital services in the offshore wind segment.
Transport & logistics
Globalisation, Energy transition
Headquartered in Brussels, Belgium, TCR is Europe’s largest independent asset manager of airport ground support equipment (“GSE”) and operates at 164 airports.
Since inception, TCR has defined the market for leased GSE, providing high quality assets and a full service leasing, maintenance and fleet management offering to its clients, which are predominantly independent ground handling companies, airlines and airports. This enables GSE operators to concentrate on their core business of ground handling. The GSE that TCR provides is critical infrastructure, without which some of Europe’s busiest airports could not operate.
In 2019, TCR acquired Aerolima, another lessor of GSE in France. The transaction added approximately 2,000 pieces of equipment, 20 airports and 12 workshops to TCR’s existing business.
TCR’s good performance in the year continues to evidence the resilience of its business model. Despite further travel restrictions during the winter season, TCR performed ahead of our expectations, although equipment off lease is still above pre-Covid levels. Its footprint has continued to grow, now covering 164 airports globally. New contracts were signed in the year, including with important new customers such as Finnair and Gate Gourmet as well as more recent sale and rent back contracts in Europe and Australia.
TCR has a very active pipeline of new projects with a variety of airlines, airports and ground handlers, confirming our thesis that the Covid-induced crisis in the aviation industry should increase the attractiveness of the leasing model for GSE.
TCR fits with the Company’s strategy of investing in companies with good asset backing, strong market positions and barriers to entry, yet with operational levers to achieve attractive returns for shareholders through active asset management:
Despite the Covid-19 crisis, the aviation industry continues its path towards a more environmentally sustainable model. In that context, TCR has developed its own sustainability strategy aiming to mitigate its direct impact on climate change, and through helping its customers reduce their emissions by supporting the transition to green ground support equipment (‘GSE’) including electric vehicles, pooling initiatives, and the roll-out of telematics on GSE, which contribute to optimising GSE fleet sizes and therefore lower total emissions.
Valorem is a leading independent renewable energy development and operating company. It is one of the largest onshore wind developers in France, having developed over 480MW of capacity over the last 10 years.
The French power market is experiencing a major transition as it looks to reduce its reliance on nuclear generation and to increase generation from renewable sources of energy such as wind and solar. The energy transition has been continuously supported by the French governments over the past decade. With in-house capabilities across the entire project cycle and a strong local footprint, Valorem is well positioned to benefit from this shift in energy mix.
Valorem’s asset base has continued to increase, with 663MW of fully owned capacity having reached financial close, compared to 179MW at acquisition. Despite lower than anticipated revenue from electricity generation due to low wind conditions in the year, the core business in France continues to perform in line with expectations. The successful closing of the Viiatti wind project in Finland represents a key milestone for the company. It is over four times the size of Valorem’s previous project in Finland and almost 10 times its largest project in France. Approximately half of this project was sold in the year.
In December 2021, the Company completed a follow-on investment of £21 million in Valorem and increased its equity stake in the company to 33.1% in order to continue funding the pipeline across Valorem’s fast growing markets.
In France, both the solar and wind pipelines are progressing well, with an increased focus on larger projects, and Valorem is trialling projects in the hydrogen sector, with two projects in Rouen and Saint-Brieux. In Finland, Valorem will focus on the construction of the Viiatti project and progress planning for the MegatuuIi wind project (313MW), expected to be financed by 2024. A first wind project in Greece is expected to close this year.
Renewables benefit from strong support from the French Government, which has an objective of a 32% renewables contribution by 2032 coupled with a carbonneutral electricity mix by 2040. In line with the need to triple the current installed PV capacity by 2023, in December 2017 the Government announced an increase of future PV auctions from 1.45GW to 2.45GW per annum over the next three years.
This investment diversifies the Company’s portfolio with exposure to a growing renewables business in one of the most attractive European markets, and access to recurring, inflation-linked cash flows underpinned by a robust regulatory regime.
Led by its experienced management team, Valorem is a best-in-class developer, being the fourth largest French wind developer and the largest independent one. It has a significant pipeline of projects at an advanced stage of development that it expects to convert into operating assets, with further projects at earlier stages to bring through the development process.
As a producer of renewable energy, the business is net carbon negative. Beyond its core mission as a contributor to the energy transition and GHG emissions reduction, Valorem strives to promote protecting biodiversity, sustainable procurement and employee wellbeing. This was demonstrated by Valorem becoming an Entreprise à Mission in December 2021.