Foundation of 3i

The 1931 MacMillan Committee Report identified a "MacMillan Gap"; a chronic shortage of long-term investment capital for small and medium-sized businesses. It recommended the formation of a company "to devote itself particularly to these smaller industrial and commercial issues". This company would, in addition to its ordinary capital, issue preference share capital backed by the debentures or shares of the companies which it financed and therefore serve as an intermediary between small investors and small and medium-sized industrial borrowers.

Hence, 3i's roots were laid through the establishment of ICFC (Industrial and Commercial Financial Corporation) and the FCI (Finance Corporation for Industry) in 1945 under the UK's labour government led by Clement Atlee following the second world war. The ICFC was established to serve small and medium sized businesses through the provision of long term and permanent capital (typical investments of £5,000-£200,000). It was exclusively funded by the major clearing banks and the Bank of England, who collectively agreed to provide share and loan capital up to £45m, led by Lord William Piercy as its first Chairman. In the same year, the FCI was founded with £25m of capital and the ability to borrow a further £100m. Share capital was subscribed by insurance companies, investment trust companies and the Bank of England with a remit to provide capital (principally in the form of debt) in larger amounts than the ICFC to facilitate the rationalisation and restructuring of key sectors of British industry and for post-war re-equipment.

The 1970s saw the merger of the FCI and ICFC forming "Finance for Industry" (FFI), which during the 1980s was rebranded to "Investors in Industry" and later in July 1994, at the time of its London Stock Exchange flotation and entry into the FTSE100, became "3i" as we know it today.