REG - 3i Group PLC - Half Yearly Report <Origin Href="QuoteRef">III.L</Origin> - Part 5
12/11/2015 07:02
- Part 5: For the preceding part double click ID:nRSL4327Fd
Ordinary shares 972,524,749 972,013,634
Own shares (20,757,426) (25,467,918)
Basic shares 951,767,323 946,545,716
Effect of dilutive potential ordinary shares
Share options and awards 3,987,648 9,251,617
Diluted shares 955,754,971 955,797,333
30 September 30 September
2015 2014
Net assets per share (pence)
Basic 403 361
Diluted 401 358
Net assets (£m)
Net assets attributable to equity holders of the Company 3,851 3,426
Basic NAV per share is calculated on 956,477,854 shares in issue at 30 September 2015 (30 September 2014: 947,926,954).
Diluted NAV per share is calculated on diluted shares of 960,746,598 at 30 September 2015 (30 September 2014:
957,831,109).
5 Dividends
6 months to 6 months to 6 months to 6 months to
30 September 30 September 30 September 30 September
2015 2015 2014 2014
pence pence
per share £m per share £m
Declared and paid during the period
Final dividend 14.0 133 13.3 126
14.0 133 13.3 126
Proposed interim dividend 6.0 57 6.0 57
6 Investment portfolio
The basis for measuring the fair value of the investment portfolio is explained on page 101 of the Annual report and
accounts 2015.
6 months to Year to
30 September 2015 31 March 2015
Non-current £m £m
Opening book value 1,671 1,582
Additions 106 203
- of which loan notes with nil value (8) (48)
Disposals and repayments (167) (216)
Fair value movement 1 236
Other movements and net cash movements (148) (86)
Closing book value 1,455 1,671
Quoted investments 319 399
Unquoted investments 1,136 1,272
Closing book value 1,455 1,671
The holding period of 3i's investment portfolio is on average greater than one year. For this reason the portfolio is
classified as non-current. It is not possible to identify with certainty investments that will be sold within one year.
Additions include £18 million (31 March 2015: £69 million) in capitalised interest received by way of loan notes, of which
£8 million (31 March 2015: £48 million) has been written down in the period to nil.
Included within the statement of comprehensive income is £13 million (31 March 2015: £38 million) of interest income, which
reflects the net additions after write downs noted above, £3 million (31 March 2015: £14 million) of cash income and the
capitalisation of prior year accrued income and non-capitalised accrued income nil (31 March 2015: £3 million).
Other movements include the transfer of assets to Investment entity subsidiaries, foreign exchange and conversions from one
instrument into another.
7 Investments in investment entities
The basis for measuring the fair value of the investments in investment entities is explained on page 102 of the Annual
report and accounts 2015.
6 months to Year to
30 September 2015 31 March 2015
Non-current £m £m
Opening book value 2,079 1,909
Net cash flow to/(from) Investment entity subsidiaries 24 (272)
Fair value movement on Investment entity subsidiaries 207 530
Transfer of assets to/(from) Investment entity subsidiaries 107 (88)
Closing book value 2,417 2,079
All investment entities are classified as Level 3 in the fair value hierarchy, see Note 8 for details.
Restrictions
3i Group plc, the ultimate parent company, receives dividend income from its subsidiaries.
Support
3i Group plc provides ongoing support to its Investment entity subsidiaries for the purchase of portfolio investments.
The Group has no contractual commitments or current intentions to provide any financial or other support to its
unconsolidated subsidiaries.
8 Fair values of assets and liabilities
This section should be read in conjunction with Note 12 on pages 103 to 105 of the Annual report and accounts 2015 which
provide more detail about accounting policies adopted, the definitions of the three levels of fair value hierarchy,
valuation methods used in calculating fair value, and the valuation framework which governs oversight of valuations. There
have been no changes in the accounting policies adopted or the valuation methodologies used.
Valuation
The Group classifies financial instruments measured at fair value in the investment portfolio according to the following
hierarchy:
Level Fair value input description Financial instruments
Level 1 Quoted prices (unadjusted) from active markets Quoted equity instruments
Level 2 Inputs other than quoted prices included in Level 1 that are observable either directly (ie as prices) or indirectly No Level 2 financial instruments
(ie derived from prices)
Level 3 Inputs that are not based on observable market data Unquoted equity instruments and loan instruments
The table below shows the classification of financial instruments held at fair value into the valuation hierarchy at 30
September 2015:
As at 30 September 2015 As at 31 March 2015
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Quoted investments 319 - - 319 399 - - 399
Unquoted investments - - 1,136 1,136 - - 1,272 1,272
Investment in investment entities - - 2,417 2,417 - - 2,079 2,079
Total 319 - 3,553 3,872 399 - 3,351 3,750
This disclosure only relates to the investment portfolio and the investments in our investment entities. Investments in
investment entities are fair valued at the entity's net asset value with the significant part being attributable to the
underlying portfolio. The underlying portfolio is valued under the same methodology as directly held investments with any
other assets or liabilities within investment entities fair valued in accordance with the Group's accounting policies.
The fair value hierarchy also applies to loans and borrowings, see Note 9 for details.
Level 3 fair value reconciliation
Six months to Year to
30 September 31 March
2015 2015
£m £m
Opening book value 1,272 1,324
Additions 106 201
- of which loan notes with nil value (8) (48)
Disposals, repayments and write-offs (138) (136)
Fair value movement (14) 117
Transfer of equity Level 3 to Level 1 - (112)
Other movements1 (82) (74)
Closing book value 1,136 1,272
1 Other includes transfer of assets to Investment entity subsidiaries.
Unquoted investments valued using Level 3 inputs also had the following impact on the statement of comprehensive income;
realised profits over value on disposal of investment of £10 million (September 2014: £6 million), dividend income of £24
million (September 2014: £9 million) and foreign exchange impact of nil (September 2014: £38 million loss).
Level 3 inputs are sensitive to assumptions made when ascertaining fair value as described in the Portfolio valuation - an
explanation section. There are a number of non-observable inputs and a change in one or more of the underlying assumptions
could result in a significant change in fair value.
Valuation multiple - The valuation multiple is the main assumption applied to a multiple of earnings based valuation. The
multiple is derived from comparable listed companies or relevant market transaction multiples. Companies in the same
industry and geography and, where possible, with a similar business model and profile are selected and then adjusted for
factors including liquidity risk, growth potential and relative performance. They are also adjusted to represent our longer
term view of performance through the cycle or our exit assumptions. The value weighted average multiple used when valuing
the portfolio at 30 September 2015 was 9.6x (31 March 2015: 9.7x).
If the multiple used to value each unquoted investment valued on an earnings multiple basis as at 30 September 2015
decreased by 5%, the investment portfolio would decrease by £27 million (31 March 2015: £35 million) or 2% (31 March 2015:
2%). If the same sensitivity was applied to the underlying portfolio held by Investment entities, this would have a
negative impact of £136 million (31 March 2015: £121 million) or 5% (31 March 2015: 5%).
If the multiple increased by 5% then the investment portfolio would increase by £25 million (31 March 2015: £33 million) or
2% (31 March 2015: 2%). If the same sensitivity was applied to the underlying portfolio held by Investment entities, this
would have a positive impact of £135 million (31 March 2015: £122 million) or 5% (31 March 2015: 6%).
Alternative valuation methodologies - There are a number of alternative investment valuation methodologies used by the
Group, for reasons specific to individual assets. The details of such valuation methodologies, and the inputs that are
used, are given in the Portfolio valuation - an explanation section. Each methodology is used for a proportion of assets by
value, and at 30 September 2015 the following techniques were used: 23% DCF, nil% imminent sale, 11% industry metric, 20%
broker quotes and 5% other. If the value of all of the investments under this methodology moved by 5%, this would have an
impact on the investment portfolio of £34 million (31 March 2015: £35 million) or 2% (31 March 2015: 2%). If the same
sensitivity was applied to the underlying portfolio held by Investment entities, this would have an impact of £14 million
(31 March 2015: £6 million) or 1% (31 March 2015: 0.3%).
9 Loans and borrowings
The basis for measuring the loans and borrowings is explained on page 108 of the Annual report and accounts 2015.
30 September 31 March
2015 2015
£m £m
Loans and borrowings are repayable as follows:
Within one year - -
In the second year 244 240
In the third year - -
In the fourth year - -
In the fifth year - -
After five years 575 575
819 815
Principal borrowings include:
30 September 31 March
2015 2015
Rate Maturity £m £m
Issued under the £2,000 million note issuance programme
Fixed rate
£200 million notes (public issue) 6.875% 2023 200 200
£400 million notes (public issue) 5.750% 2032 375 375
E350 million notes (public issue) 5.625% 2017 244 240
819 815
Committed multi-currency facilities
£350 million LIBOR+0.60% 2020 - -
- -
Total loans and borrowings 819 815
All of the Group's borrowings are repayable in one instalment on the respective maturity dates. None of the Group's
interest-bearing loans and borrowings are secured on the assets of the Group.
The fair value of the loans and borrowings is £953 million (31 March 2015: £997 million), determined with reference to
their published market prices which are classified as Level 1 in the fair value hierarchy as described in Note 8.
10 Contingent liabilities
30 September 31 March
2015 2015
£m £m
Contingent liabilities relating to guarantees in respect of investee companies - 14
The Company has provided a guarantee to the Trustees of the 3i Group Pension Plan in respect of liabilities of 3i plc to
the Plan. 3i plc is the sponsor of the 3i Group Pension Plan. On 4 April 2012 the Company transferred eligible assets (£150
million of ordinary shares in 3i Infrastructure plc as defined by the agreement) to a wholly owned subsidiary of the Group.
The Company will retain all income and capital rights in relation to the 3i Infrastructure plc shares, as eligible assets,
unless the Company becomes insolvent or fails to comply with material obligations in relation to the agreement with the
Trustees, all of which are under its control. The fair value of eligible assets at 30 September 2015 was £181 million (31
March 2015: £193 million).
3i has entered into warehouse arrangements in Europe to support the creation of senior secured debt portfolios ahead of
future CLO fund launches. Whilst in the warehouse phase, 3i is subject to optional margin calls in the event of market
falls. The current capital at risk is restricted to £26 million at 30 September 2015 (31 March 2015: £15 million).
At 30 September 2015, there was no material litigation outstanding against the Company or any of its subsidiary
undertakings.
11 Related parties
All related party transactions that took place in the half year to 30 September 2015 are consistent with the disclosures in
Note 29 on pages 122 - 125 of the Annual report and accounts 2015. Related party transactions which have taken place in the
period and have materially affected performance or the financial position of the Group and any material changes in related
party transactions described in the Annual report and accounts 2015 that could materially affect the performance or the
financial position of the Group are detailed below.
Limited partnerships
The Group manages a number of external funds which invest through limited partnerships. Group companies act as the general
partners of these limited partnerships and exert significant influence over them. The following amounts have been included
in respect of these limited partnerships:
Statement of comprehensive income Six months to Six months to
30 September 30 September
2015 2014
(restated)
£m £m
Carried interest receivable (15) 7
Fees receivable from external funds 14 17
Statement of financial position 30 September 31 March
2015 2015
£m £m
Carried interest receivable 16 33
Investments
The Group makes investments in the equity of unquoted and quoted investments where it does not have control. This normally
allows the Group to participate in the financial and operating policies of that company. It is presumed that it is possible
to exert significant influence when the equity holding is greater than 20%. The Group has taken the investment entity
exception as permitted by IFRS 10 and has not equity accounted for these investments, in accordance with IAS 28, but they
are related parties. The total amounts included for investments where the Group has significant influence but not control
are as follows:
Statement of comprehensive income Six months to Six months to
30 September 30 September
2015 2014
(restated)
£m £m
Realised profit over value on the disposal of investments 3 3
Unrealised (losses)/profits on the revaluation of investments (39) 7
Portfolio income 17 13
Statement of financial position 30 September 31 March
2015 2015
£m £m
Unquoted investments 473 560
From time to time, transactions occur between related parties within the investment portfolio that the Group influences to
facilitate the reorganisation or recapitalisation of an investee company. These transactions are made on an arm's length
basis.
Advisory arrangements
The Group acts as an adviser to 3i Infrastructure plc, which is listed on the London Stock Exchange. The following amounts
have been included in respect of this advisory relationship:
Statement of comprehensive income Six months to Six months to
30 September 30 September
2015 2014
(restated)
£m £m
Realised profits over value on the disposal of investments 2 -
Unrealised profits on the revaluation of investments 11 10
Dividends 6 6
Fees receivable from external funds 6 5
Performance fees - 8
Statement of financial position 30 September 31 March
2015 2015
£m £m
Quoted equity investments 269 288
Performance fees - 45
12 Restatement of prior period information
As explained in the significant accounting policies note on page 90 of the Annual report and accounts 2015, the Group had
restated comparative information for the year ending 31 March 2014, following the early adoption of changes provided in the
narrow scope amendment to IFRS 10. Similarly, the Condensed consolidated statement of comprehensive income and the
Condensed consolidated cash flow statement, for the six months ending 30 September 2014 have been restated. The change has
no effect on total return or net asset value as reported in the Group's prior year Half-yearly report.
The impact of this restatement on a line by line basis is presented below:
Impact on Condensed consolidated statement of comprehensive income for the six months ended
30 September 2014
As originally Effect of Restated
reported restatement presentation
£m £m £m
Unrealised profits on the revaluation of investments 108 (4) 104
Fair value movements on Investment entity subsidiaries 218 1 219
Income from loans and receivables 16 2 18
Foreign exchange on investments (28) (3) (31)
Fees receivable from external funds 28 14 42
Operating expenses (56) (7) (63)
Income from fair value subsidiaries 13 (3) 10
Carried interest and performance fees receivable 14 5 19
Carried interest and performance fees payable (21) (1) (22)
Acquisition related earn-out charges (1) (4) (5)
Income taxes (1) (2) (3)
Exchange differences on translation of foreign operations (15) 2 (13)
Other income statement items (41) - (41)
Total comprehensive income for the year 234 - 234
Impact on Condensed consolidated cash flow statement for the six months ended 30 September 2014
As originally Effect of Restated
reported restatement presentation
£m £m £m
Cash flow from operating activities
Purchase of investments (82) (22) (104)
Net cash flow from Investment entity subsidiaries 128 16 144
Portfolio interest received 8 3 11
Portfolio dividends received 14 1 15
Fees received from external funds 24 13 37
Carried interest and performance fees received 2 2 4
Carried interest and performance fees paid (10) (1) (11)
Acquisition related earn-out charges paid - (10) (10)
Operating expenses (61) (2) (63)
Income taxes paid (2) (1) (3)
Other cash flows (33) - (33)
Change in cash and cash equivalents (12) (1) (13)
Opening cash and cash equivalents 643 31 674
Effect of exchange rate fluctuations (2) - (2)
Closing cash and cash equivalents 629 30 659
Independent review report to 3i Group plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the Half-yearly report for the
six months ended 30 September 2015 which comprises the Condensed consolidated statement of comprehensive income, the
Condensed consolidated statement of financial position, the Condensed consolidated statement of changes in equity, the
Condensed consolidated cash flow statement, and the related notes 1 to 12. We have read the other information contained in
the Half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The Half-yearly report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for
preparing the Half-yearly report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in the Basis of preparation and accounting policies, the annual financial statements of the Group are prepared
in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this
Half-yearly report has been prepared in accordance with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
Half-yearly report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the Half-yearly report for the six months ended 30 September 2015 is not prepared, in all material respects,
in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
11 November 2015
Statement of Directors' responsibilities
The Directors, who are required to prepare the financial statements on a going concern basis unless it is not appropriate,
are satisfied that the Group has the resources to continue in business for the foreseeable future. In making this
assessment, the Directors have considered information relating to present and future conditions, including future
projections of profitability and cash flows.
The Directors confirm that to the best of their knowledge:
a) the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as
adopted by the EU;
b) the Interim Report includes a fair review of the information required by:
i) DTR 4.2.7R of the Disclosure Rules and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year ending 31 March 2016 and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
ii) DTR 4.2.8R of the Disclosure Rules and Transparency Rules, being (i) related party transactions that have taken place in the first six months of the financial year ending 31 March 2016 which have materially affected the financial position or performance of 3i Group during that period; and (ii) any changes in the related parties transactions described in the Annual report and accounts 2015 that could materially affect the financial position or performance of 3i Group during the first six months of the
financial year ending 31 March 2016
The Directors of 3i Group plc and their functions are listed below.
The report is authorised for issue by order of the Board.
K J Dunn, Secretary
11 November 2015
BOARD OF DIRECTORS
Simon Thompson, Chairman
Simon Borrows, Chief Executive and Executive Director
Julia Wilson, Group Finance Director and Executive Director
Jonathan Asquith, Non-executive Director
Caroline Banszky, Non-executive Director
Peter Grosch, Non-executive Director
David Hutchison, Non-executive Director
Martine Verluyten, Non-executive Director
PORTFOLIO AND OTHER INFORMATION
Portfolio valuation - an explanation
POLICY
The valuation policy is the responsibility of the Board, with additional oversight and annual review from the Valuations
Committee. Our policy is to value 3i's investment portfolio at fair value and we achieve this by valuing investments on an
appropriate basis, applying a consistent approach across the portfolio. The policy ensures that the portfolio valuation is
compliant with the fair value guidelines under IFRS and, in so doing, is also compliant with the guidelines issued by the
International Private Equity and Venture Capital valuation board (the "IPEV guidelines"). The policy covers the Group's
Private Equity, Infrastructure and Debt Management investment valuations. Valuations of the investment portfolio of the
Group and its subsidiaries are performed at each quarter end.
Fair value is the underlying principle and is defined as "the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date" (IPEV guidelines, December 2012). Fair value is therefore
an estimate and, as such, determining fair value requires the use of judgement.
The quoted assets in our portfolio are valued at their closing bid price at the balance sheet date. The majority of the
portfolio, however, is represented by unquoted investments.
PRIVATE EQUITY UNQUOTED VALUATION
To arrive at the fair value of the Group's unquoted Private Equity investments, we first estimate the entire value of the
company we have invested in - the enterprise value. We then apportion that enterprise value between 3i, other shareholders
and lenders.
Determining enterprise value
This enterprise value is determined using one of a selection of methodologies depending on the nature, facts and
circumstances of the investment.
Where possible, we use methodologies which draw heavily on observable market prices, whether listed equity markets or
reported merger and acquisition transactions, and trading updates from our portfolio.
As unquoted investments are not traded on an active market, the Group adjusts the estimated enterprise value by a liquidity
discount. The liquidity discount is applied to the total enterprise value and we apply a higher discount for investments
where there are material restrictions on our ability to sell at a time of our choosing.
The table in Portfolio valuation - an explanation outlines in more detail the range of valuation methodologies available to
us, as well as the inputs and adjustments necessary for each.
Apportioning the enterprise value between 3i, other shareholders and lenders
Once we have estimated the enterprise value, the following steps are taken:
1. We subtract the value of any claims, net of free cash balances, that are more senior to the most senior of our
investments.
2. The resulting attributable enterprise value is apportioned to the Group's investment, and equal ranking investments by
other parties, according to contractual terms and conditions, to arrive at a fair value of the entirety of the investment.
The value is then distributed amongst the different loan, equity and other financial instruments accordingly.
3. If the value attributed to a specific shareholder loan investment in a company is less than its par or nominal value,
a shortfall is implied, which is recognised in our valuation. In exceptional cases, we may judge that the shortfall is
temporary; to recognise the shortfall in such a scenario would lead to unrepresentative volatility and hence we may choose
not to recognise the shortfall.
Other factors
In applying this framework, there are additional considerations that are factored into the valuation of some assets.
Impacts from structuring
Structural rights are instruments convertible into equity or cash at specific points in time or linked to specific events.
For example, where a majority shareholder chooses to sell, and we have a minority interest, we may have the right to a
minimum return on our investment.
Debt instruments, in particular, may have structural rights. In the valuation, it is assumed that third parties, such as
lenders or holders of convertible instruments, fully exercise any structural rights they might have if they are "in the
money", and that the value to the Group may therefore be reduced by such rights held by third parties. The Group's own
structural rights are valued on the basis they are exercisable on the reporting date.
Assets classified as "terminal"
If we believe an investment has more than a 50% probability of failing in the 12 months following the valuation date, we
value the investment on the basis of its expected recoverable amount in the event of failure. It is important to
distinguish between our investment failing and the business failing; the failure of our investment does not always mean
that the business has failed, just that our recoverable value has dropped significantly. This would generally result in the
equity and loan components of our investment being valued at nil. Value movements in the period relating to investments
classified as terminal are classified as provisions in our value movement analysis.
INFRASTRUCTURE UNQUOTED VALUATION
The primary valuation methodology used for infrastructure investments is the discounted cash flow method ("DCF"). Fair
value is estimated by deriving the present value of the investment using reasonable assumptions of expected future cash
flows and the terminal value and date, and the appropriate risk-adjusted discount rate that quantifies the risk inherent to
the investment. The discount rate is estimated with reference to the market risk-free rate, a risk adjusted premium and
information specific to the investment or market sector.
DEBT MANAGEMENT VALUATION
The Group's Debt Management business line typically invests in traded debt instruments and the subordinated notes that it
is required to hold in the debt funds which it manages. The traded debt instruments and the subordinated notes are valued
using a range of data including broker quotes (if available), 3i internal forecasts and discounted cash flow models,
trading data (where available), and data from third-party valuation providers. Broker quotes and trading data for more
liquid holdings are preferred.
% of
portfolio
valued
on this
Methodology Business line Description Inputs Adjustments basis
Earnings Private Equity Most commonly used Private Equity valuation methodology Used for investments which are profitable and for which we can determine a set of listed companies and precedent transactions, where relevant, with similar characteristics Earnings multiples are applied to the earnings of the company to determine the A marketability or liquidity discount is applied to the enterprise value, typically between 5% and 15%, using factors such as our alignment with management and other investors and our investment rights in the deal structure 59%
enterprise value EarningsReported earnings adjusted for non-recurring items, such as
restructuring expenses, for significant corporate actions and, in exceptional cases,
run-rate adjustments to arrive at maintainable earnings Most common measure is
earnings before interest, tax, depreciation and amortisation ("EBITDA") Earnings used
are usually the management accounts for the 12 months to the quarter end preceding
the reporting period, unless data from forecasts or the latest audited accounts
provides a more reliable picture of maintainable earnings Earnings multiplesThe
earnings multiple is derived from comparable listed companies or relevant market
transaction multiples We select companies in the same industry and, where possible,
with a similar business model and profile in terms of size, products, services and
customers, growth rates and geographic focus We adjust for relative performance in
the set of comparables, exit expectations and other company specific factors
Quoted Infrastructure,Private Equity Used for investments in listed companies Closing bid price at balance sheet date No adjustments 17%
or discounts applied
Specific industry metrics Private Equity Used for investments in industries which have well defined metrics as bases for valuation - eg book value for insurance underwriters, or regulated asset bases for utilities We create a set of comparable listed companies and derive the implied values of the An appropriate discount is applied, depending on the valuation metric used 3%
relevant metric We track and adjust this metric for relative performance, as is the
case of earnings multiples Comparable companies are selected using the same criteria
as described for the earnings methodology
Imminent sale Infrastructure,Private Equity Used where an asset is in a sales process, a price has been agreed but the transaction has not yet settled Contracted proceeds for the transaction, or best estimate of the expected proceeds A discount of typically 2.5% is applied to reflect any uncertain adjustments to expected proceeds 0%
Fund Infrastructure,Private Equity Used for investments Net asset value reported by the fund manager Typically no further discount applied in addition to that applied by the fund manager 0%
in unlisted funds
Discounted cash flow ("DCF") Infrastructure,Private Equity Appropriate for businesses with long-term stable cash flows, typically in infrastructure Long-term cash flows are discounted at a rate which is benchmarked against market Discount already implicit in the discount rate applied to long-term cash flows - no further discounts applied 8%
data, where possible, or adjusted from the rate at the initial investment based on
changes in the risk profile of the investment
Broker quotes Debt Management Used to value traded debt instruments Broker quotes obtained from banks which trade the specific instruments
- More to follow, for following part double click ID:nRSL4327FfRecent news on 3i
See all newsREG - 3i Group PLC - Block listing Interim Review
AnnouncementREG - 3i Group PLC - Director/PDMR Shareholding
AnnouncementREG - 3i Group PLC - Director/PDMR Shareholding
AnnouncementREG - 3i Group PLC - Total Voting Rights
AnnouncementREG - 3i Group PLC - Director/PDMR Shareholding
Announcement