3i to grow infra and debt management

The 3i Group will aim to diversify by adding to its infrastructure and debt management business after releasing a management statement showing another turbulent year.

3i expects the percentage of its infrastructure and debt management to increase as the firm diversifies its business.

Private equity will continue to be the core of the firm’s business and the move will not be a re-allocation of funds. But private equity is expected to grow at a slower pace than infrastructure and debt management. 

“Infrastructure is an attractive asset class and we have made excellent progress in a competitive market,” 3i chairman Adrian Montague said in a speech. The firm will make a stronger move in debt management as it tries to ensure regular fee income to help manage the balance sheet. 

3i has taken a testing year on the chin which has seen investments drop and debt increase. The firm’s interim statement conveys an improvement in portfolio performance, but notes that Eurozone stability is critical.

Fewer deals were done in the year to March 31 2012 with 3i investing £646 million (€804 million;$1 billion) compared to £719 million in the previous year. 3i’s liquidity also dropped from £1.85 billion to £1.65 billion and the firm’s gross debt decreased from just over £2 billion to £1.6 billion in the same period.

3i has some cause for celebration with realisations up to £771 million compared to £609 million a year earlier. Subject to shareholder approval, the firm will also significantly increase its dividend bringing the total up to 8.1 pence from 3.6 pence.

The statement also confirmed the news that former investment banker Simon Borrows has taken over from Michael Queen to become chief executive.

In a statement, Borrows sets out the firm’s strategy of strengthening the private equity business’ management and focusing on new developed markets investment, predominantly on northern Europe and withdrawing from new investment in Spain and Italy.