3i Infrastructure (3IN ) has highlighted the opportunities in biomethane plants and subsea connectivity that analysts say could help fuel growth over the next few years.

The £2.7bn infrastructure giant cheered analysts at its capital market day as it laid out the benefits of two recent acquisitions.

The most recent of these is Future Biogas, a developer and operator of anaerobic digestion (AD) plants across the UK, which the fund bought in February for £28m.

Tim Short, a partner on the fund’s investment team, said: ‘Biomethane from AD is the most economical solution for hard to decarbonise industrial sectors – essential in supporting energy transition.’

He said the management team at the company had a strong track record and there was an ‘exciting pipeline’ along with the opportunity to ‘accelerate growth’ through follow-on investments in new AD plants. 

Matthew Hose, analyst at Jefferies, noted  Future Biogas’ plans to roll out 25 more plans over the next decade, up to five of which could be constructed next year.

‘Importantly, having acquired Future Biogas in early 2023, 3i Infrastructure will likely sponsor part of this growth,’ he said.

This sponsorship is highlighted by 3i’s £35m addition investment to support the company’s new 15-year contract with pharmaceutical giant AstraZeneca (AZN). 

Future Biogas collaborates with local farmers to source feedstock crops which means fuel input is secured and reaches a certain quality mark. As a result corporates are willing to pay a premium for the green gas, with prices typically around £85-£95MWh.

Another company highlighted by 3i was Global Cloud Xchange (GCX), which was acquired in September last year for £318m and now makes up 10% of the portfolio. The ‘global subsea network and secure global managed service provider’ is the largest private submarine network in the world.

The fund invested via a management buyout last year, at what Hose said was ‘an attractive 7x cash EBITDA [earnings before interest, taxes, depreciation and amortization] entry multiple’.

‘It serves more than 500 customers with 144 global ‘nodes’, but sees extensive growth opportunities based on the view that digital infrastructure capacity will need to grow by 10x by 2030 to support the increased use of artificial intelligence,’ he said.

GCX has plans to grow its global network of fibre, in particular between East India and Singapore, but the process is not without its dangers.

Stifel analyst Iain Scouller said: ‘One issue we have always been worried about on undersea cable businesses such as GCX is the risk of sabotage or accidental damage to the cables, such as by fishing nets’.

Managers have said the repair to broken cables cost around $500,00 and can take up to weeks to repair.

However, the analyst added that ‘clients of undersea cable businesses normally use a range of suppliers in order to mitigate any breaks in data transmission services, thereby minimising any impact’.

Scouller said both Future Biogas and GCX have ‘clear plans for growth over the next few years’, with ‘significant pipeline opportunities, albeit with different approaches to funding this growth’.

The fund reported a net asset value rise of 10.8% in the year to 31 March, including a 3.2% gain since September, in its recent annual report. With dividends included, there was a total investment return of 14.7%, outstripping the 8-10% annual target managers Scott Moseley and Bernardo Sottomayor aim for.