The investor’s Monterey arm already owns 68.5 per cent of Infinis – which is chaired by former SSE boss Ian Marchant and has offices in Edinburgh and Northampton – and last year said it was considering selling its stake.
However, Terra Firma chief executive Guy Hands said recent changes to the regulatory landscape had prompted the firm to “rethink our strategy” for the company, which runs 137 power plants, comprising landfill gas and onshore wind sites.
Under plans announced by the UK government earlier this year, the renewables obligation initiative, through which subsidies are paid to renewable power generation schemes, will be closed to onshore wind farms from 1 April next year.
The sector was later rocked by Chancellor George Osborne’s decision to scrap the climate change levy exemption for green electricity – a move that Infinis chief executive Eric Machiels said had come “quite without warning”.
Terra Firma has agreed to pay investors 185p a share for their holding in Infinis – a premium of about 40 per cent on yesterday’s closing price – in a deal that values Infinis at about £555 million.
Hands said: “We believe that this transaction offers Infinis’ shareholders an attractive cash consideration for their shares in Infinis and allows Terra Firma to pursue alternative options to monetise its investment in Infinis once it is a private company.
“We are pleased that the Infinis independent directors have unanimously recommended the transaction and are grateful to the Infinis board and management team for their support, in particular as we have jointly completed the preparations for the offer announced today.”
Marchant added: “Since the initial public offering of Infinis two years ago, our management and employees have delivered what was promised in terms of both operational performance and the development of the business, with 135 megawatts of new wind capacity in construction.
“However, the challenging regulatory and political environment and the reduction in power prices in the last two years have adversely affected both the cash generation and the growth prospects of the business. Accordingly, the Infinis independent directors have been actively exploring ways to maximise value and have looked at offers for the whole business as well as selling the assets separately. Following this work, the Infinis independent directors firmly believe that the offer from Monterey represents the best combination of risk and return for shareholders.”
The deal to take the company private is expected to complete by the end of this year, following a general meeting due to be held before the end of next month.