3i calls time on its 3-year restructuring after asset sell-off

3i has called time on its three year-long restructuring after the British private equity group sold a string of assets into a strong market for selling and listing companies.

The London-listed group said on Thursday it generated a total return for shareholders of £659m, or 20 per cent, in the year to the end of March, compared with £478m or a 16 per cent return in the year before.

Returns were aided by £831m in proceeds generated from selling off 3i's existing investments or listing them on stock markets, versus the £369m it invested in new buyouts.

The group will also pay a final dividend of 14p, making a total payout of 20p per share for the year ending in March - the same level as the previous year.

"We are now at the end of the three-year restructuring . . . 3i is demonstrably a more resilient business, both commercially and financially, than it was when we started the restructuring three years ago," said Simon Borrows, 3i's chief executive.

Looking forward to future plans, 3i said: "We expect to invest in four to seven new investments a year and commit €500 - €750m. But we will only do this if investments meet our demanding strategic and financial criteria."

Shares in 3i rose 2 per cent to 849.0p in early trade.

One of the oldest private equity names in Europe, 3i was caught out after the financial crisis by collapsing valuations in an overstretched and difficult-to-manage portfolio.

In 2012, frustrated shareholders brought in Mr Borrows as chief executive. The firm announced a strategy of cutting costs and refocusing its business on core regions.

Like many other private equity firms in recent years, 3i has benefited from ebullient public markets for raising the value of portfolio companies and for making it easier to exit at high prices.

In the last three years, it has generated £2.1bn in proceeds from realising the value of old investments, compared with the £766m it has invested in new private equity deals.

Among deals this year, 3i has listed stakes in Refresco, a Dutch juice bottler, and the infrastructure services provider Eltel. It has sold off formerly struggling assets such as Azelis, the chemicals distributor, which was acquired by the buyout firm Apax.

The number of companies in 3i's portfolio has fallen to 65, from 124 in 2012, and it is aiming to reduce the number to 40 over the longer term.

Group assets under management were £13.5bn at the end of March, up from £10.5bn three years ago, due to growth in 3i's other businesses, infrastructure and private debt. Gross group debt has halved in three years to £815m.

The separately-listed infrastructure unit produced a total shareholder return of 25 per cent during the year to the end of March.

But with markets at or near all-time highs, 3i also warned that it would be cautious about making new investments.

"Our approach remains selective, as the availability of competing capital can quickly move prices outside our target returns," the firm said.

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