Private equity investor 3i (LON:III) has served up a much improved set of full year results, helping to push its share price up by nearly 6% in early trading. During a year that saw new chief executive Michael Queen forced to overhaul the group’s finances in the aftermath of the credit crunch, net debt was slashed from £1.9bn to £258m.
Despite a handful of business failures, the group still managed a 16.2% return on opening shareholders' funds, with a total return of £407m. That figure represents a significant recovery on last year’s minus-53% return. 3i said it had benefited from stock market recovery but also saw some strong realised profits on exit, as well as more positive earnings performance in many of its portfolio companies.
3i's chairman, Baroness Hogg, said: “A transformed financial position, improved performance, and a substantial increase in funds available to invest have put 3i in a strong competitive position.”
3i, which backs business through its buy-outs, growth capital and infrastructure arms, delivered strong realisations of £1.4bn, at average uplifts of 19% over opening carrying value. On the downside, the group’s total assets under management fell by £1.2bn to £9.6bn and its portfolio value fell by £500m to £3.5bn.
Gross portfolio returns in the year to March 2010 were 38% in buy-outs, 11% in growth capital and 27% in infrastructure. With net debt now significantly below the £1bn target that was set for the end of 2009-10, 3i said it had decided to recommend a final dividend of 2.0p, reflecting its commitment to return to a progressive approach following the rebasing last year. The move will be welcomed by investors who backed the group’s £732m rights issue in June 2009.
Michael Queen, 3i's chief executive, said: “I am confident we will see some outstanding opportunities in the next three years and believe we are now well placed, with a focused business model, good liquidity and a strong balance sheet to invest in and build some great businesses.”
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