3i ups investment as realisations slow

The mid-market continues to provide investment and realisation opportunities for the global firm. Philip Yea, its chief executive stressed the importance of remaining selective.

3i, the international private equity firm, stepped up its investment in the three months to the end of June compared with the same period last year. It put £428 million (€538.2 million; $844.7 million) to work in direct investments and a further £347 million was invested on behalf of funds managed or advised by the firm, bringing total investment for the period to £775 million compared with £702 million last year.

Philip Yea, 3i’s chief executive, said in a statement: “The mid-market has remained open over the first three months of the year, providing both investment opportunities and continued realisations despite the challenging economic outlook.”

He added: “We remain highly selective with respect to new investment, and continue to monitor closely the financial performance of our portfolio. This approach, combined with the diversity of our business in terms of asset class, geography and sector put us in a good position to deal with what continues to be an uncertain economic environment.”

Investments on behalf of funds was up from £111 million in the period last year, reflecting a significant contribution of £182 million invested by 3i’s QPE team, which takes positions in quoted companies.

Realisation proceeds received by 3i, excluding funds managed or advised by the firm, were £301 million compared with £605 million. This excludes the realisation proceeds of approximately £240 million from ABX and Freightliner, which were both announced during the period and are expected to complete in the next three months. 

Returns for the three months to 30 June 2008 represent a positive start to the year ending 31 March 2009.

Realisations for the three month period have been achieved at aggregate uplifts over 31 March 2008 carrying values of 26 percent. The largest realisation in the period, Giochi Preziosi, was valued on an imminent sales basis at £151 million at 31 March 2008, a 10 percent discount to final proceeds.

The quoted portfolio has generated a positive return of £79 million during the period.

During the period, 3i issued £430 million of new 3.625 per cent convertible bonds due 2011 to refinance the existing €550 million convertible bond due 25 July 2008.