Current portfolio

  • Logo Dnsnet Cropped
    DNS:NET
    Germany

    Communications

    Digitalisation

    Overview

    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. 

    Recent Developments

    DNS:NET received investment of £34 million during the year from 3iN to continue the development of its FTTH network in areas around Berlin and in the State of Brandenburg. A new CEO joined DNS:NET in July 2023. He has overseen the preparation of an updated business plan that was agreed with shareholders in December 2023. We are making good progress in building a strengthened and experienced management team.

    FTTH network rollouts in Germany remain challenging. Passing homes has been the industry’s primary focus to date. Connecting and activating customers to the network on a timely basis is an industry-wide challenge. The negative value movement in the year was driven by more conservative business plan assumptions for DNS:NET’s FTTH rollout. Throughout the year, DNS:NET has focused on connecting backbone fibre infrastructure and home connections for its owned network, as well as on securing the handover of leased networks built by authorities in the neighbouring State of Saxony-Anhalt, making good progress in the number of its connected and activated customers as a result.

    The company is now preparing for the next stages in its network delivery in a way that narrows the time lag between passing homes and connecting and activating customers on that FTTH network to improve performance. We have increased the discount rate to reflect uncertainties over available debt pricing for fibre businesses in future years and the delay against the original rollout timetable.

    Investment rationale

    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.

    Sustainability

    DNS:Net is progressing the rollout of its FTTH network in areas around Berlin (Berlin Vicinity) and in the State of Brandenburg. The provision of FTTH is widely recognised as a key driver of regional economic growth and socio-economic benefits and, through the replacement of older copper line technologies, potentially reduces energy consumption. Studies report that the value-added services enabled by high speed internet facilitated by FTTH connectivity can reduce travel requirements, enhance the quality and cost of delivering of local services and improve access to medical advice in rural areas.

  • Esvagt
    ESVAGT
    Denmark

    Energy

    Energy transition

    Overview

    Headquartered in Esbjerg, Denmark, ESVAGT is the market leader in the fast-growing segment of service operation vessels (“SOV”) for the offshore wind industry. The Company is also 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.

    ESVAGT is the pioneer and market leader in the provision of SOVs to offshore wind farms, with nine bespoke vessels in operation and a further four 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.

    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 has been operating since 1981, employs over 1,100 people and owns a fleet of more than 43 vessels.

    Recent developments

    ESVAGT performed well in the year, benefitting from strong contract rates and high utilisation levels. As the clear market leader in European offshore wind SOV provision, ESVAGT currently operates nine vessels. A further four SOVs are under construction, specifically designed to serve long-term charter agreements, and construction progress is on track. Despite inflationary pressure causing delays and cancellations in wind farm development, regulators and governments have become more supportive of incentivising growth in offshore wind.

    Inflation, while negatively impacting the construction cost of the near-term pipeline, has a positive effect on ESVAGT due to its index-linked contracts, which enhance the value of its operational SOV fleet. The offshore wind market remains on a positive trajectory and this is reflected in the pipeline for additional new SOVs in the

    North Sea and the rapidly expanding US wind market. Over the next 12 months, we anticipate several tenders to take place.

    ESVAGT’s ERRV segment also maintained positive momentum, driven by favourable supply/demand dynamics, and an increased emphasis on security of supply in Europe.

    Investment rationale

    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:

    • It is a market leader in Denmark and Norway and has a small but growing presence in the UK offshore oil and gas market and in the expanding North Sea offshore wind sector.
    • It is an asset intensive business, with a modern state-of-the-art fleet of purpose-built vessels.
    • A high proportion of its revenues is contracted over the medium term with a diverse customer base featuring limited customer concentration, underpinning stable and predictable cash flows.
    • It provides an essential service for the offshore energy industry in light of regulatory health and safety requirements, which constitutes a small component of the overall production cost, resulting in lower price sensitivity;
    • It operates in a market with high barriers to entry, as customers require bespoke vessels, manned by experienced crews with a strong safety track record. The harsh weather conditions and language barriers also inhibit new market entrants based outside the region; and
    • With its leading market position, strong safety track record and state-of-the-art fleet, ESVAGT is optimally positioned to exploit growth opportunities in the UK and potentially further afield, as well as in the offshore wind energy market.

    Sustainability

    ESVAGT now has over 60% of its contracted EBITDA serving the Wind sector, up from 25% at the time of acquisition. ESVAGT’s US joint venture, CREST, co-owned with Crowley, won its first contract in the US offshore wind market in early 2023 for Siemens Gamesa. In FY24, ESVAGT won two additional SOV contracts with Ørsted and Vestas in the North Sea. ESVAGT also signed a Memorandum of Understanding with KMC Line, a Korean shipping company, to establish a joint venture in South Korea and enter the South Korean wind market.

  • Futurebiogas Logo
    Future Biogas
    UK

    Utilities

    Energy transition

    Overview

    Future Biogas is one of the largest anaerobic digestion (AD) plant developers and biogas producers in the UK. It owns two AD plants with one further AD plant in construction, and operates 10 AD plants mainly on behalf of institutional investors under medium-long term contracts.

    Future Biogas’s plants convert a wide range of feedstocks into clean and renewable energy through AD which produces biogas. Biogas can either be used to generate green electricity, or upgraded into biomethane and injected into the UK’s national gas network. Future Biogas produces over 500GWh of biogas per year, enough energy for over 40,000 homes.

    Biomethane from AD is a ready-to-use and commercially viable solution for hard to decarbonise industrial sectors. It does not require any upgrade to the existing UK gas infrastructure. Energy produced by AD plants is carbon neutral, as the CO2 released during the process matches the CO2 absorbed from the atmosphere by the feedstock.

    Future Biogas promotes a regenerative farming approach, sustainably integrating feedstock from energy crops into agricultural systems. The circular process of returning digestate back to land can help replenish soil nutrients and carbon and displaces demand for carbon intensive artificial fertilisers.

    Recent developments

    Future Biogas performed in line with expectations due to good services revenues and index-linked contracts. The company has a promising pipeline of organic growth and M&A opportunities.

    During the year, Future Biogas signed a new 15-year gas supply agreement with AstraZeneca (‘AZ’) for unsubsidised green gas. To deliver this green gas, it is constructing the UK’s first unsubsidised AD plant. In September 2023, 3iN invested £35 million to fund the plant’s construction, which will supply 100GWh of biomethane to AZ’s UK sites.

    In November 2023, 3iN invested a further £30 million to fund the acquisition of two AD plants that Future Biogas was already managing. These strategic investments continue to transition Future Biogas from a manager of third-party biogas plants to a leading developer, asset owner and operator. The company is actively exploring viable sites for constructing new AD plants, and the interest from high-quality corporate partners is encouraging.

    Sustainability

    Future Biogas agreed a partnership with AstraZeneca to establish the UK’s first unsubsidised industrial-scale supply of biomethane gas. Energy from the biomethane facility will supply AstraZeneca’s sites in Macclesfield, Cambridge, Luton and Speke with 100 gigawatt hours (GWh) per year, equivalent to the heat demands of over 8,000 homes. Once operational in early 2025, the partnership will reduce emissions by an estimated 20,000 tonnes of CO2 equivalent ‘(tCO2e)’, adding renewable energy capacity to the national gas grid.

  • GCX Logo
    Global Cloud Xchange
    UK

    Communications

    Digitalisation

    Overview

    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 positioned to capitalise on growth opportunities and serve the exponentially growing demand for data traffic.

    Recent developments

    GCX has shown strong year-on-year growth in lease revenues and has recently signed several large bulk capacity deals on its Middle East and intra-Asia subsea routes. Financial performance was held back by a high level of cable cuts which have now been repaired. The sales pipeline is healthy and demand for subsea data

    capacity continues to grow, driven by increasing adoption of AI applications and substantial investments in capacity and route diversification by the hyperscalers.

    Looking ahead, GCX is evaluating several attractive growth opportunities, for example, acquiring new subsea capacity and developing new edge data centres near its cable landing stations that will drive additional data on its subsea network.

    Investment rationale

    In November 2021, 3i Infrastructure plc agreed to invest c.$512m to acquire a 100% stake in GCX. Additional acquisition debt was raised in March 2022, reducing the Company's equity commitment to $377m. The investment completed in September 2022.

    • GCX owns one of the most comprehensive subsea cable networks globally, serving customers in over 180+ countries
    • Benefits from the rapidly expanding data market with data usage forecast to grow exponentially
    • Operates in a market with high barriers to entry whilst providing an essential service
    • Supported by a highly experienced management team who have a strong track record in the sector

    Sustainability

    As a leading global data communications service provider and owner of one of the world’s largest private subsea fibre optic networks, GCX enables increased connectivity to underserved regions in Asia, Africa and Middle East. The business is continuously developing solutions to maximize the efficiency, utilisation and capacity of existing assets and systems, reducing environmental impacts. GCX is actively developing an ESG strategy to enhance its environmental, social and corporate governance. In addition, the business is in the process of certifying its carbon footprint and working on emission reduction initiatives.

  • Infinis
    Infinis
    UK

    Utilities

    Energy transition

    Overview

    Infinis is the UK’s leading generator of low carbon power from captured methane. The business captures methane gas from landfill sites and disused mines and converts it into electricity. Its sustainable energy expertise also includes solar power and battery energy storage technology. This work helps to reduce the impact of greenhouse gas emissions on climate change and provides secure, efficient local power generation.

    Infinis’s cashflows are positively correlated with UK inflation through the Government-backed Renewables Obligations Certificate (ROC) and CfD regimes and through index-linked corporate PPAs. Infinis’ current generation portfolio comprises:

    • Captured methane: 255 MW across 104 sites
    • Solar: 103 MW across 4 sites
    • Flexible generation: 173 MW across 29 sites

    This unique combination of green baseload power, renewable assets and flexible generation mean Infinis is ideally placed to respond to growing electricity demand, increasing energy market volatility and to play a key role in the UK’s route to decarbonisation and greenhouse gas reduction.

    Recent developments

    Infinis had a strong financial performance despite lower UK power prices. It generated a value gain of £20 million as its captured landfill methane business outperformed expectations, compensating for lower margins from its power response assets. Furthermore, Infinis is making significant progress in developing its 1.4GW solar energy generation and battery storage pipeline, with 103MW of solar capacity already operational.

    Investment rationale

    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 and its market

    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.

    Sustainability

    Infinis’ activities support the UK’s journey to net zero in several key ways:

    • Methane is a greenhouse gas. Methane emissions cause 25% of global warming today, with a major surge over the past 15 years. By capturing methane from landfill sites and disused coal mines, Infinis fulfils an essential role in helping landfill operators meet their environmental compliance obligations and contributing to the UK’s reduction of greenhouse gas emissions. By using the captured methane to generate electricity, Infinis supplies distribution networks with a consistent source of green baseload power.
    • The government views solar power as key to achieving UK energy independence, with plans to deliver up to 70GW by 2035. Infinis’ ability to deliver solar, including on challenging brownfield and landfill sites, increases the contribution of renewables to the UK’s generation mix. Its continued investment in renewable energy is helping the UK reduce its reliance on fossil fuels.
    • Flexible generation provides support for the grid as intermittent renewable generation increases, enabling a stable supply of electricity to UK homes and businesses to be maintained.

    Infinis' broader sustainability strategy revolves around creating value for its stakeholders, through protecting health, wellbeing and safety, reducing carbon emissions, eliminating exploitative work and improving diversity and inclusion.

  • Ionisos 500X367
    Ionisos
    France

    Social infrastructure

    Demographic change

    Overview

    Ionisos is a leading owner and operator of cold sterilisation facilities servicing the medical and pharmaceutical industries. Established in 1993 in France, Ionisos is one of the largest cold sterilisation providers globally and operates a network of 11 facilities in Europe with market leading positions in France and Spain. It has over 250 employees and a highly diversified customer base of around 1,000 customers.

    Ionisos delivers a mission-critical, non-discretionary service for customers, 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.

    Recent developments

    Ionisos performed below expectations due to reduced bio-processing and labware volumes, which have returned to pre-Covid levels, and weaker demand in markets connected to the construction industry which represents a small share of treatment capacity. However, the majority of product categories sterilised by Ionisos continue to exhibit strong volume growth. Ionisos is making progress in its growth initiatives. The expansion of its new greenfield EO plant in Kleve, Germany is progressing and the development of the new X-ray greenfield facility in north east France is proceeding according to schedule and within budget.

    Investment rationale

    3i Infrastructure acquired Ionisos in September 2019, having committed to invest in July 2019.

    • Diversification of 3i Infrastructure’s sector exposure and increased presence in the French market
    • Sound market fundamentals with non-cyclical drivers, including an ageing population in Western Europe
    • Growing demand for healthcare services increasingly relying on single use medical equipment
    • Increasingly stringent regulation governing the sterilisation of medical, pharmaceutical and cosmetics products
    • High barriers to entry
    • Platform potential with growth opportunities organically and through M&A

    Sustainability

    Ionisos supports public health by providing sterilisation of medical devices, ensuring that single use products are safe for medical use. Ionisos was one of the first two companies in the 3i Infrastructure portfolio to set an SBT (science-based emissions reduction target) through the Science Based Targets initiative (SBTi). This was achieved via the SME pathway which requires a 42% reduction in Scope 1 and 2 emissions to 2030 from a 2021 baseline, and a requirement to measure and reduce Scope 3 emissions. Ionisos plans to achieve this by improving electricity sourcing (e.g. from renewables), and reducing natural gas consumption on EO sites.

  • Joulz New
    Joulz
    Benelux

    Energy

    Energy transition

    Overview

    Joulz is a leading owner and provider of essential energy infrastructure equipment and services in the Netherlands. Joulz serves approximately 21,000 industrial, commercial, and public sector clients with its solutions, that encompass realization, maintenance, management, and leasing of energy infrastructure equipment.

    Joulz’ service offering includes mid-voltage infrastructure (owning and leasing transformers, switchgear and cables under long-term contracts), storage (owning and leasing large scale battery storage systems under mid- to long-term contracts), solar (large-scale installations under operational lease or with government-subsidized PPAs), metering (owning and leasing 50,000 electricity and gas meters under mid-term contracts) and EV charging (AC and DC charge points in mid-term exploitation, rental or CPO contracts). Additionally, it provides integrated solutions to address energy transition challenges such as grid congestion.

    Recent developments

    Joulz performed in line with expectations. It is benefitting from its inflation-linked longterm contracts and the completion of new installations. Joulz has seen significant interest in integrated energy transition solutions from customers seeking to decarbonise their operations and overcome constraints due to electricity grid congestion.

    Investment Rationale

    3i Infrastructure acquired Joulz in April 2019, having committed to invest in March 2019.

    • Strong established asset base as well as good potential for growth
    • Joulz is set to benefit from the Dutch government’s commitment to decarbonise the economy (the ‘Energy Transition’)
    • The Energy Transition is expected to increase electricity consumption and demand for Joulz’s equipment and services
    • 3i Infrastructure has relevant experience from investing in the Netherlands and previous investments in the electricity and leasing sectors

    Sustainability

    In 2023 Joulz installed solar capacity of 14MWp taking cumulative owned capacity to 36MWp by the end of the year. The business is also investing in battery storage systems and EV charging infrastructure. These offerings combined with traditional energy infrastructure (such as transformers and meters) have enabled Joulz to become a leader in providing integrated solutions to businesses in the Netherlands.

  • Oystercatcher Logo New
    Oystercatcher
    Singapore

    Transport & logistics

    Upgrading ageing infrastructure

    Overview

    Oystercatcher is the holding company through which the Company holds a 45% interest in Advario Singapore Limited (previously Oiltanking Singapore Limited).

    Advario 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.

    Recent developments

    Oystercatcher performed well in the year. Advario Singapore, which is 45% owned by Oystercatcher, benefitted from high utilisation levels for its storage capacity, high customer activity levels and higher rates being secured at contract renewal. Whilst the oil products market remains in backwardation, a tight storage market in Singapore and the wider region provided a helpful backdrop to renewal discussions. Advario Singapore remains the leading gasoline blending facility in Singapore and the wider region.

    The company has continued to pursue opportunities linked to sustainable fuels, in line with its sustainability strategy. Building on its success to date with Neste, which is blending sustainable aviation fuel (‘SAF’) at Advario Singapore, the terminal had actively looked to expand its role in activities to supply sustainable transport fuels.

    Sustainability

    Advario Singapore has recently converted storage facilities to enable sustainable aviation fuel (‘SAF’) storage, and supported its first SAF storage customer. This has provided the business with a first mover advantage in the SAF storage market in the region, and Advario Singapore is well placed to capture additional SAF storage demand in the future, as the market evolves.

  • Srltslogo 1200X800
    SRL Traffic Systems
    UK

    Transport & logistics

    Overview

    SRL, is the market leading temporary traffic equipment (“TTE”) rental company in the UK. 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 national depot network, providing a 24/7, 365 days a year service on which customers rely for quick deployment and reactive maintenance work.

    Recent developments

    SRL performed slightly behind expectations during the financial year. There has been a reduction in general market activity levels due to delays in capital expenditure programmes within the public sector in advance of the UK general election, and in the telecom sector as the fibre rollout has slowed.

    Despite this challenging market environment, SRL has shown resilience and continued to grow its revenue and EBITDA. It has also been successful in extending contract durations with customers, providing better revenue visibility.

    Investment rationale

    3i Infrastructure acquired SRL in December 2021.

    • TTE is mission-critical to the safe use of roads
    • SRL fits with the Company’s strategy of investing in companies with leading market positions and barriers to entry, yet with operational levers to achieve attractive returns for shareholders through active asset management
    • SRL has sound market fundamentals through the increasing emphasis placed on health and safety, and a growing propensity to rent rather than own TTE
    • Outsourcing ownership of TTE makes economic sense for traffic management companies, as it allows them to more efficiently manage maintenance and utilisation
    • SRL has a market leading reputation and is trusted by its customers

    Sustainability

    SRL's temporary traffic solutions enable greater segregation and control of traffic flows, in turn improving safety and reducing congestion around roadworks. This improves satisfaction for road users and local communities and reduces pollution. In addition, focus 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 500 X 367
    Tampnet
    Norway

    Communications

    Digitalisation

    Overview

    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.

    Recent developments

    Tampnet performed extremely well in the year, generating a value gain of £54 million. It exceeded revenue and EBITDA targets, driven by increased offshore activity and stronger demand for bandwidth upgrades.

    Tampnet is continuing to expand its network infrastructure by pursuing new fibre projects in both the North Sea and the Gulf of Mexico. Notably, Tampnet secured significant new contracts in these regions.

    Digitalisation of the offshore energy sector is gaining momentum and Tampnet’s digitisation proposition, which combines low-latency connectivity with services such as private networks, is generating considerable interest.

    Tampnet’s private networks offer a secure, closed 4G/5G system deployed on offshore platforms, providing robust connectivity and enhanced security compared to traditional Wi-Fi solutions.

    Furthermore, Tampnet is actively engaged in carbon capture and offshore wind projects within its existing network in the North Sea. The business was awarded its first offshore carbon sequestration connection in March 2024. The potential for further comparable initiatives is substantial and Tampnet is strategically positioned to contribute to their success.

    Investment Rationale

    3i Infrastructure acquired 50% of Tampnet in March 2019 alongside Danish pension fund ATP, having committed to invest in July 2018.

    • Tampnet’s fibre optic links provide customers with mission-critical reliable communications
    • Benefits from the growing requirement for high bandwidth and low latency in data networks
    • More than 50 customers including oil and gas operators, offshore service providers and telecom operators
    • Opportunity to grow into new segments such as offshore wind, commercial vessels and the point-to-point carrier segment

    Sustainability

    Tampnet is leveraging its infrastructure and expertise in connectivity and digitalisation to support an array of growing sectors offshore. This year Tampnet has entered the carbon sequestration market by supporting a number of North Sea projects in their design phase, enabling them to connect to Tampnet's network as soon as they go live. Additionally, Tampnet acquired dasNetz, a leading provider of offshore wind connectivity in the German part of the North Sea, as part of a strategy to continue expanding in offshore wind and renewables.

  • Tcr
    TCR
    Benelux

    Transport & logistics

    Upgrading ageing infrastructure, Energy transition

    Overview

    Headquartered in Brussels, Belgium, TCR is Europe’s largest independent asset manager of airport ground support equipment (“GSE”). It operates at more than 210 airports across more than 20 countries. 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.

    TCR’s GSE is the essential mobile infrastructure used to service aircraft on the ground and enable airports to handle passengers, luggage and cargo, with upwards of 30 pieces of equipment required per turnaround. Reliable GSE is critical to the smooth operation of airports and timely movement of aircraft, and TCR is able to deliver this with its access to scarce airside repair workshops, which provides a high barrier to entry. Sustainability is at the heart of the business and its mission is to deliver the most efficient and sustainable GSE services. Through its expertise in GSE fleet optimisation, “pooling” initiatives and the provision of green GSE, TCR is playing a key role in enabling the decarbonisation of airport ground operations in the airports where it operates.

    Recent developments

    TCR materially outperformed expectations, resulting in a substantial increase in value by £92 million. This performance was driven by several factors, including significant contract wins, extensions and higher fleet utilisation rates. The company is benefitting from the combination of the post-Covid aviation recovery, high interest rate environment making on-balance sheet options less attractive for customers, and the green agenda in Europe driving strong demand for new electric ground service equipment.

    In February 2024, TCR completed the bolton acquisition of KES, KLM Royal Dutch Airline’s ground equipment services subsidiary at Schiphol airport, adding incremental contracted EBITDA with a flagship European carrier and positioning TCR to support Schiphol’s decarbonisation ambitions. TCR’s footprint now spans more than 200 airports, positioning it well to grow organically with its existing clients as well as increasing market penetration of its full-service rental offering. To support its next phase of expansion, TCR successfully secured additional debt from existing and new lenders on attractive terms.

    Investment rationale

    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:

    • GSE is a scarce resource that is critical to the functioning of an airport; through first mover advantage, TCR has benefited from securing the largest independent GSE fleet in Europe. TCR has access to maintenance workshops in prime locations at airports, many of which are located airside. This means that a high quality maintenance and asset management service can be provided, resulting in high availability of TCR’s fleet.
    • TCR is able to offer full-service rentals on a pan-European basis. This creates competitive advantages against competitors, which tend to offer either dry leases or only repair and maintenance services. TCR’s network means it can offer pan-European solutions at multiple locations, matching the footprints of its customers.
    • Outsourcing ownership of GSE equipment makes economic sense for independent ground handlers, as it allows them to manage the mismatch between short-term handling contracts and the typically 10-15 year useful life of equipment.
    • TCR’s rental contracts are aligned with the ground handlers’ contracts with the airlines and are typically 3-5 years in duration. TCR has experienced a high level of contract renewal.
    • The business has a diversified portfolio and is present at over 180 airports across 18 countries with a diverse contract and customer base meaning the revenues of the business are not materially reliant on a single client or geography. 
    • The investment will provide exposure to the long-term growth in the aviation market, which is fundamentally GDP driven, yet it is expected to be insulated from short-term shocks to demand due to its exposure to aircraft movements rather than passenger numbers.

    Sustainability

    TCR’s significant growth is supported, amongst other drivers, by the ambition of most European airports to decarbonise their operations on the apron. TCR is helping its customers implement electric replacement plans where airport charging infrastructure allows, and working on a diesel-to-electric GSE conversion strategy where replacement is not feasible. In 2023, the business has grown its electric fleet by 22%. The business is also working on the development of innovative end-to-end sustainability solutions to support its customers’ decarbonisation journey, such as ‘chargingas-a service’ solutions.

  • Valorem
    Valorem
    France

    Energy

    Energy transition

    Overview

    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 600MW 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.

    Recent developments

    Valorem had a very good year with revenues from electricity generation ahead of expectations due to favourable wind conditions contributing to a value gain of £47 million. The company’s closed capacity now totals 853MW of wind, solar and hydro projects, a 10% increase from the previous year.

    Valorem completed the sale of a minority stake in part of its French operational portfolio on attractive terms, demonstrating the strong appetite for its projects and raising capital to finance development of future projects. This was supplemented by issuance of euro private placement debt for the first time.

    In France, the market fundamentals for renewable developers remains strong, as evidenced by the increase in recent auction tariff levels due to demand for projects exceeding supply. The construction of Valorem’s new projects in Finland and Greece are progressing according to or ahead of plan. The company has expanded its development pipeline from 5.7GW to 6.6GW, including securing partnerships for co-developments in Poland and Sweden.

    Regulatory and political environment

    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.

    Investment rationale

    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.

    Sustainability

    Valorem has grown its operational renewable base from 157MW at acquisition in 2016 to 529MW (gross of the impact of the farm down of 82MW made in December) with a further 318MW under construction. This includes onshore wind, solar and hydro-electric generation in France, Finland and Greece. The business is also making investments into green hydrogen, battery storage and floating offshore wind and has recently diversified internationally into Poland and Sweden.