3i creates £1bn proceeds in six months

London-listed private equity firm 3i said today that new investment and realisations had accelerated in the six months to September 30. It also said that the second half of its financial year had started positively.

3i announced that, in total, it invested £706 million (€1.04 billion; $1.23 billion) in the period, compared with £422 million in the same period in 2004. The firm also realised proceeds of £1.04 billion, compared with £603 million in 2004.

The diluted net asset value per share also rose from 574p in 2004 to 677p, an increase of almost 18 percent.

3i chief executive Philip Yea said in a statement that the refocused investment strategy had helped it achieve the results. Yea said: “As these figures demonstrate, we have a clear investment model for today and a strong determination to continue to deliver returns through the economic cycle and as we grow in new areas in the future.”

Yea joined 3i in July 2004 and has been given credit for a number of significant operational changes at the firm since. These include setting targets for its three business lines of buyouts, growth capital and venture capital investments, bringing in new personnel and internationalising the group’s focus.

During the reporting period, 3i’s buyouts team invested £304 million in 10 transactions and a further £54 million to support existing portfolio companies, with 57 percent of this deployed in Continental Europe. Key investments included the £555 million acquisition of UK car park operator NCP from Cinven in July; the €115 million ($135 million) purchase of a 40 percent stake in Italian toy manufacturer Giochi Preziosi in April; and the acquisition of Swedish healthcare services business Carema for an undisclosed sum, also in April.

In terms of realisations achieved by the buyout division, 3i said that sales to financial purchasers through secondary buyouts generated £317 million of proceeds, while £66 million of proceeds came from the refinancing of portfolio companies. Key secondary buyouts included the €1.825 billion sale of pan-European directories group Yellow Brick Road to a consortium led by Macquarie Capital in June; and Apax Partners’ £1.05 billion purchase of foreign exchange group Travelex in August.

In terms of growth capital, a jump in capital invested, from the £143 million invested in 2004 to £286 million this year, was said to be reflective of a focus on larger individual investments. Going forward, according to Yea, 3i is looking to set up a growth capital operation in the US. “We are actively exploring the opportunity to invest in growth equity situations within the US as a way of further building value for our shareholders,” Yea said in the statement.

The venture capital business was “focused on realisations to deliver cash returns”, according to 3i. As a result, £58 million was invested during the period, while £120 million was realised. This compares to 2004 investments of £72 million and realisations of £58 million for the period.

Yea added that results for the second half of the reporting period were positive so far. “On the back of a strong all-round performance in the first half, we have made a good start to the second half, both in terms of new investments and realisations. There has also been considerable progress on our agenda of developing the business for the longer term.”