3i’s diversified approach drives investment(2)

The FTSE 100 company, led by Philip Yea, remains confident that despite difficult market conditions, which may slow down its mid-market buyout business, its recently expanded growth capital team will be sheltered from the credit storm.

UK investment firm 3i has benefitted from its diversified strategy to continue investing in difficult market conditions, according to its pre-close trading statement.

Philip Yea:
investing through
the crunch

3i invested £2.15 billion ($4.32 billion; €2.74 billion) and realised £1.62 billion across its diversified portfolio in the 11 months to 29 February 2008. It continued doing deals in January and February at a comparable pace to the proceeding 9 months to 31 December, where investments stood at £1.78 billion and realisations at £1.47 billion.

3i’s buyout business invested £823 million and it realised £843 million, with investments of £431 million and realisations of £990 million in the same period last year. The firm’s growth capital business invested £960 million and realised £432 million, with investments of £432 million and realisations of £609 million last year.

3i’s finance director Simon Ball said: “For us at present we are still able to raise financing we want to raise. It has become more difficult across the market as a whole.” He said the buyout business’ mid-market status allowed it to continue doing deals but would be affected by credit market conditions, but added the firm’s main net driver of investment was growth capital.

“The buyout business has effectively balanced realisations and investments… the growth capital business on the other hand has been a substantial net investor and that’s a reflection of where we see opportunities in the market.”

3i has also exceeded its $1 billion (€634 million) target for its India Infrastructure Fund, and it expects to announce the final close on May 15. The India Infrastructure Fund has already made investments in engineering company Soma and power generation company Adani Power. 3i did not disclose the exact figure the fund would close on.

The firm’s venture business, which was merged with its growth capital business in a technology, media and telecommunications team, invested £129 million and realised £168 million.

The firm also invested £6 million in early stage venture, which 3i characterises as small and medium-sized deals, and realised £127 million. The creation of the technology, media and telecommunications team formalised the winding down of this area of the business and the group’s shift away from early stage venture. This has taken several years following a wave of write-downs of more than £1 billion of assets after the dotcom fallout.

The group also invested £182 million in quoted private equity, with £17 million realised.

3i also invested £54 million in infrastructure and realised £32 million. The results are for the FTSE100-listed entity 3i Group and do not reflect 3i’s overall business investments in infrastructure. It has a separate business in this sector, which listed last year.

3i did not release full financial details for its portfolio companies as it values them on a six month basis.