3i Group, Europe’s largest listed private equity provider, has acknowledged it is facing a slowdown in buyout transactions due to the problems in the credit markets.
Recent activity has still been strong, however: according to a pre-close briefing published today, 3i invested £1.012 billion ($2.047 billion, €1.446 billion) in the five months to the end of 31 August 2007, compared with just £452 million in the same period last year.
During the period, buyout investments went up from £251 million to £339 million. Quoted equity investment and growth capital activity both rose sharply, with £182 million and £445 million committed respectively in comparison to £9 million and £106 million in the same five months last year. The quoted equity commitment came from the firm’s cornerstone investment in 3i Quoted Private Equity, a £400 million listed vehicle, which aims to use private equity techniques of leverage and active management in listed businesses.
£258 million was invested on behalf of co-investment funds managed by 3i, in comparison to £116 million during the same period in the previous year. Venture capital investment went down to £45 million from £75 million.
Philip Yea, 3i chief executive, said: “While the dislocation in leveraged finance markets is expected to lead to a slowdown in new buyout transactions completed, our strategy of broadening the spread of our asset classes and geographies, combined with our balance sheet resources, enables us to address the current period of adjustment from a position of strength.”
The firm also said it had made £1.011 billion of realisations, excluding its co-investment trusts, in comparison to £627 million previously. More than half the firm’s realisations, or £539 million, came from buyouts, in comparison to £298 million last year.
The firm also continued winding down its legacy smaller minority investments portfolio with £58 million of realisations and no new commitments.
3i shareholders received a £807 million bonus issue of listed B shares and a 17 for 20 share capital consolidation at 3i’s EGM on 12 July 2007. The buyout group also bought back 6.1 million ordinary shares for an average of £63.8 million.