3i Infrastructure has gone into the methane business. The investment trust yesterday announced a deal to buy the landfill gas division of Infinis from funds run by Guy Hands for £185 million.
Infinis generates electricity by burning the methane that bubbles out from ancient banana skins, chicken carcasses and garden waste slowly rotting beneath 128 landfill sites across Britain.
It’s a reliable earner. The sites have mostly been closed to new rubbish because of environmental concerns, but the gas keeps coming and will do so for years, though it will dwindle gradually. The half-life for methane production averages about 12 years across the portfolio.
In the meantime, after refinancing its debt, the Infinis division should produce a tasty cash yield of around 10 per cent.