3i continues with strategic changes

published 27 July 2012

Veteran private equity group 3i claims it is making progress in its quest to become a leaner and meaner investment group.

"We are making good progress in implementing the strategic changes announced at the end of June to refocus our investment capabilities and reduce the group's cost base," said Simon Borrows, 3i's Chief Executive, in an interim management statement covering the three month period from April to June.

Realisations in the quarter were £119m, down from £337m in the corresponding quarter of 2011, generating net realised profits over the March 31st value of £56m (2011: £8m) and a money multiple of 1.6x on a cash-to-cash basis.

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The most significant disposal related to EUSA Pharma, a legacy Venture Capital asset, which generated proceeds of £72m and a profit of £42m over the March 31st value.

During the period the firm invested £65m cash, primarily relating to the completion of the acquisition of GEKA, compared to £164m the same period the previous year. The total gross investment was £71m, compared to £233m the previous year.

Unaudited net asset value (NAV) at the period end was £2.75 per share (March 31st 2012: £2.79). The calculation of NAV includes provision of £15m for implementation costs relating to the strategic review of the business announced on June 29th, plus a non-cash negative movement of £26m relating to foreign exchange and a non-cash negative movement of £14m relating to losses on the group's pension fund due to corporate bond rates falling in the period.

At June 30th, gross debt was reduced to £1,254m (March 31st: £1,623m), following the £223m repayment of the remaining balance of the June 2012 floating rate note, and early repayment of €150m of a €300m bond, which is due to mature in May 2013.

Net debt increased to £490m (31 March 2012: £464m) as net divestment was offset by operating and interest costs. Consequently, gearing also increased to 19% (31 March 2012: 18%).

Liquidity was £1.3bn (31 March 2012: £1.7bn), comprising £764m cash and cash deposits and £491m undrawn committed facilities.

The share price rose 2.44% to 205.50p by 08:42.