3i pockets £627m in run-up to big fund close

3i, a global private equity firm, has reported £627m of realisations and £568m of investments in its pre-close period briefing. The firm expects to close its €5bn fifth European mid-market fund in the next few weeks.

3i, the London-listed private equity firm, has reported £627 million of exit realisation proceeds in the five months ended 31 August 2006, as the firm closes in on its target for Eurofund V.
In its pre-close period briefing, the global private equity firm said that the £627 million of realisations were down on the ‘exceptional’ £910 million realised in the comparable period last year. However, the figures were higher than the £557 million of realisations in the same period of 2004.

Dunne: 2005 realisations skewed by YBR and Travelex sales

Patrick Dunne, group communications director at 3i, said that the difference in figures was largely a result of two big transactions: “In that period last year, we had the realisations of Yellow Brick Road and Travelex [valued at €1.825 billion and £1.05 billion respectively], so the numbers were skewed slightly.”
Dunne added that the current realisation figures did not include the September sales of SR Technics, a Swiss aeroplane maintenance business which was sold to three United Arab Emirates-based investors in a €1 billion transaction, generating a 4.5 times money multiple and 50 percent IRR for 3i; and Keolis, a French bus and train operator acquired alongside SNCF in 2004. According to reports today, 3i has sold its 52.5 percent stake to SNCF in a £700 million deal.
Philip Yea, 3i chief executive, said in a statement that “realisations continue to benefit from a favourable market environment and have been stronger than anticipated at the time of our annual results in May”.
3i invested a total of £568 million in the five months ended 31 August 2006, compared with £578 million in the equivalent period in 2005. “In the same period last year, we had the NCP deal, which was £100 million from 3i’s balance sheet, so we’re seeing a good performance in terms of investment in this period without having a deal like NCP,” said Dunne.
Dunne also noted that 3i has purchased a 30 percent stake in Sistemas Técnicos de Encofrados (STEN), a Spanish scaffolding company. Financial terms were not disclosed for the deal, which was announced this morning.

Venture was negative, impacted by the fall in value of a number of the quoted venture stocks that we have, such as Vonage and Cambridge Silicon Radio.

Patrick Dunne, group communications director, 3i

Buyout and growth capital portfolios generated “strong” gross portfolio returns, but 3i said that venture capital is expected to deliver a “negative gross portfolio return for the half year”.
“Overall, group portfolio returns were in line with our target of around 20 percent, with growth and buyouts performing strongly,” said Dunne. “Venture, however, was negative, impacted by the fall in value of a number of the quoted venture stocks that we have, such as Vonage and Cambridge Silicon Radio. Both of those were good investments, but the value of the shares has fallen since April to today.”
Eurofund V, 3i’s fifth European mid-market buyout fund, held a first close in early August with €4.3 billion of commitments. The fund is expected to reach its €5 billion target in the next few weeks, according to Dunne, with approximately 55 percent of commitments from 3i. UBS is advising 3i on the fundraising.
Jonathan Russell, managing partner and head of 3i Buyouts, told PEO at the time of the first close that approximately 50 investors had committed at that stage, including a number of new investors from the US and the Gulf. The vehicle is expected to make around 50 investments across Europe.