Pre-close period briefing

25 Mar 2010

 

3i Group plc ("3i"), the international private equity company, will be holding discussions with analysts and investors ahead of its close period for the year ending 31 March 2010. This statement sets out the information that will be covered in those discussions. 3i expects to announce its results for the 12 months ending 31 March 2010 on 13 May 2010.

Commenting on the statement, 3i's Chief Executive, Michael Queen, said:

"We continue to see improved performance across our business, with overall portfolio performance in line with expectations. The improved financial position of the Group means that we are well positioned to continue making new investments in a measured and disciplined way in the high quality opportunities that we are starting to see. I am also pleased to announce the successful close of our Growth Capital Fund."

The main topics that will be discussed with analysts and investors are set out below.

1.  Investments and realisations

3i invested a total of £311 million in the 11 months ended 28 February 2010, compared with £898 million in the equivalent period last year. Of this investment, £130 million was cash invested in the existing portfolio, the balance related primarily to capitalised interest.

Investment by business line is as follows:  

 

9 months ended

11 months to

11 months to

 

31 December

28 February

28 February

 

2009

2010 (total)

2009 (total)

Buyouts

162

198

507

Growth Capital

68

93

295

Infrastructure

2

2

47

Non-core activities

17

18

49

Total

249

311

898

 

Realisation proceeds received by 3i totalled £998 million in the 11 months ended 28 February 2010 (2009: £1,123 million).

Realisation proceeds by business line were as follows:
 

 

9 months ended

11 months to

11 months to

 

31 December

28 February

28 February

 

2009

2010 (total)

2009 (total)

Buyouts

124

254

491

Growth Capital

428

468

358

Infrastructure

45

46

117

Non-core activities

180

230

157

Total

777

998

1,123

Total realisations do not include Ambea and Apatech, which together will generate approximately £250 million of further realisation proceeds.  Realisations for the 11 month period have been achieved at aggregate uplifts over 31 March 2009 carrying values of 12%.

2.  Returns

As usual, an important element in the determination of 3i's results for the full year to
31 March 2010 will be the detailed valuation exercise carried out on its investment portfolio as at that date. Overall, the portfolio continues to perform in line with expectations.

At 31 March, 3i will value its portfolio using the updated IPEV guidelines.  The key changes for 3i, introduced by the updated guidelines, relate to how discounts for liquidity and marketability should be applied to the valuations. As a result, we have updated our methodology and have concluded that the impact to the valuation of the portfolio at September 2009 would not have been material as it would have resulted in an increase in the underlying valuation of the core portfolio of less than 2%.

3.  Growth Capital Fund

3i today announces the closing of a Growth Capital Fund, at €1.2 billion.  To date, investors from Asia, Europe, the Middle East and North America have committed circa €400 million to the Fund.  As part of its €800 million commitment, 3i will contribute a seed portfolio of Growth Capital investments valued at €339 million.

3i also announces today an €84 million investment in Refresco, a leading European fruit juice producer.  This investment is effectively the first new investment by the Fund.

The Growth Capital Fund will continue 3i's existing Growth Capital strategy and make minority investments in growing businesses across Europe, Asia and North America.  The fund will invest in approximately 20 mid-market companies, typically investing €25 million to €150 million of equity.
 
4.  Cash flow and balance sheet

The Group had cash, cash deposits and undrawn committed facilities of £2.35 billion as at 28 February (31 December 2009: £2.34 billion).  The cash movements from realisations and investment generated a net cash inflow of £179 million during the two month period.  As a result of these and other cash flows, net debt was further reduced by £115 million to £528 million at 28 February 2010.

The recent €350 million 5.625% 2017 issuance has enabled 3i to further extend the maturity profile of its debt at attractive terms ahead of the next £430 million bond repayment due in 2011.

For information please contact:

3i Group plc

Patrick Dunne
Group Communications Director
020 7975 3566

Rachel Richards
3i Press Office
020 7975 3573  

This statement aims to give an indication of certain key elements of the Company's performance for the 11 months to 28 February 2010.  These indications reflect the Board's current view.  They are subject to a number of risks and uncertainties and could change.  In particular, an important element in the determination of 3i's results for the 12 months to 31 March 2010 is the detailed valuation exercise carried out on its investment portfolio as at that date.  The final results for the 12 months to 31 March 2010 may differ accordingly.  Factors which could cause or contribute to such differences include, but are not limited to, general economic and market conditions and specific factors affecting the financial prospects or performance of individual investments within 3i's portfolio.

This pre-close briefing is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration and any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.