Click here for printer friendly page

European 3i sees light at the end of the tunnel despite negative returns of £935m

European private equity giant 3i believes that the worst of the economic slump has passed and has raised its dividend by 3.8 per cent despite reporting negative returns of £295m in its year-end results.

3i's investment portfolio has suffered a valuation drop of £1.2bn but Michael Queen, the firm's chief financial officer, is attributing the decline to falling stock markets. Queen claims that market movement adjustments accounted for £800m of the loss.

In addition 3i wrote off £75m of its investment portfolio, mostly from technology companies, but has emphasised this represents a significant reduction from the value of write-offs made in the previous year.

Last year, 3i made successful exits worth £1bn. Some £613m of these returns were generated in the buy-out sector and 25 per cent of this came from the sale of airline carrier Go. 3i also benefited from trade sales from its growth capital and technology portfolios. The firm made £931m of new investments in the last year.

‘We are cautious about the economic climate, but we feel we are in a good position to take advantage of an upturn and, if conditions remain as they are, we will continue to make money,' Queen said.

Queen conceded that fund raising had been tough but maintained that the £3bn fund currently being raised was proceeding well. 3i will match the £1.5bn it expects to receive from limited partners and has already secured £400m with the promise of an additional £200m from Eurofund IV.

Copyright © 2003 AltAssets