3i Infrastructure’s Future Biogas acquires majority stake in biogas portfolio

3i Infrastructure, via its Future Biogas subsidiary, is acquiring a 51% stake in a portfolio of six gas-to-grid anaerobic digestion (AD) facilities from JLEN Environmental Assets Group, in a deal worth £68.1m. 

The transaction is being funded by 3i Infrastructure, which is investing £30m, with the balance funded by Future Biogas from committed debt facilities. 

JLEN will continue to own 49% of the AD portfolio.

Future Biogas developed five of the six plants, with a combined gas output of 333GW, and has operated them for an average of eight years.

As majority owner, Future Biogas said it would “be able to deliver investment-led enhancements already identified by the management team”. The acquisition also provides Future Biogas with immediate scale, which “we expect will be attractive to potential acquirers when we decide to exit”.

Philipp Lukas, CEO of Future Biogas, said: “We are very pleased to be acquiring a stake in this portfolio of anaerobic digestion plants from JLEN, who we will continue to work with constructively.

“The transaction is a key step in building a scalable AD platform under Future Biogas, enabling us to upgrade the plant portfolio and extend their lives beyond the current RHI subsidy. Critically, it provides a means to continue to deliver under our Project Carbon Harvest mission to generate and supply green gas, helping decarbonise UK farms and industry.”

Scott Moseley and Bernardo Sottomayor, managing partners and co-heads of European Infrastructure at 3i Investments, said: “It is increasingly clear that biogas will play an important role within the UK’s energy transition. This acquisition represents an important milestone, clearly establishing Future Biogas as the leading independent owner and developer of AD plants in the UK.”

Ed Warner, chair of JLEN, said: “This deal is a great outcome for JLEN, enabling us to recycle capital within the portfolio, while continuing to benefit from the future growth and income generated by this attractive AD Portfolio.

“This is the company’s second divestment, following the sale of our French wind assets in January 2022, and provides funds for JLEN to commence buybacks in accordance with our stated approach to capital allocation.

“We are pleased to continue our partnership with Future Biogas who we have worked with since 2017. Having them as co-owners will help to deliver further value from the business model they have developed and put into practice on other projects for post-subsidy operations. Anaerobic digestion projects such as these have a valuable role to play in the decarbonisation of heat as part of the UK’s net zero goals.”

To read the latest IPE Real Assets magazine click here.