Investor relations

Key performance indicators

We use a number of key performance indicators (KPIs) to assess progress against our strategic objectives, including both financial and non-financial measures.

These KPIs are helpful in assessing progress but are not exhaustive as management also takes account of a wide range of other measures in assessing performance.

Gross investment return (“GIR”)1,2 as % of opening portfolio value

The performance of the proprietary investment portfolio expressed as a percentage of the opening portfolio value.

 

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • Strong Group GIR of 26%, despite the disruption caused by Covid-19 and the £403 million net foreign exchange translation loss
  • Private Equity GIR of £1,936 million or 30%, driven by strong value growth in the portfolio
  • Infrastructure GIR or £178 million or 16%, reflecting good performance of 3iN and US infrastructure 
  • Scandlines GIR of £25 million or 6%, reflecting resilience in its freight operations

Key risks

  • Covid-19 disruption, market volatility and wider economic downturn impacts portfolio company earnings and valuation multiples 
  • Investment rates or quality of new investments are lower than expected 
  • Operational underperformance in the portfolio companies impacts earnings growth and exit plans 
  • Changes to ESG regulations, or to customer demands and expectations, affects valuations 
  • Sterling materially strengthens against the euro and US dollar; at 31 March 2021, 84% of the portfolio was denominated in euros or US dollars

  

NAV per share2

The measure of the fair value per share of our proprietary investments and other assets after the net cost of operating the business and dividends paid in the year.

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • 18% increase in NAV per share to 947 pence (31 March 2020: 804 pence), after payment of 35.0 pence dividend per share in the year, a 41 pence foreign exchange translation loss and 13 pence negative accounting impact of the pension transaction

Key risks

  • Covid-19 disruption, market volatility and wider economic downturn impacts portfolio company earnings and valuation multiples
  • Ongoing market volatility and geo-political and economic uncertainty further dampens investor sentiment

  

Cash realisations1,2

Support our returns to shareholders, as well as our ability to invest in new opportunities.

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • Cash proceeds of £319 million including £86 million of capital proceeds from the disposal of Kinolt and £74 million from Regional Rail following its refinancing 
  • Subject to supportive market conditions and to portfolio company performance remaining strong, we are planning for a more active pipeline of realisations and refinancings in FY2022

Key risks

  • Market volatility and further Covid-19 disruption may delay exits or affect pricing 
  • Subdued M&A activity and macro-economic uncertainty in our core sectors reduces investor appetite for our assets 
  • Debt markets become less supportive of leveraged buyouts or refinancings

   

Cash investment1,2,3

Identifying and investing in new and further investments is the primary driver of the Group’s ability to deliver attractive returns.

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • Invested £510 million, including three new investments and two transformational acquisitions in Private Equity 
  • Completed a further six bolt-on acquisitions for the Private Equity portfolio, all of which were self-funded 
  • We have an interesting pipeline of new investment opportunities and bolton acquisitions for our portfolio companies

Key risks

  • High pricing in 3i’s core sectors increases the risk of overpaying for assets, thereby reducing investment opportunities within 3i’s investment risk appetite
  • Failure to attract, invest in and retain the right investment executives impacts our ability to originate and manage assets 
  • Limited ability to source bolt-on opportunities or new investments outside of competitive auction processes

   

Operating cash profit1,2,4

By covering the cash operating cost of running our business with cash income, we reduce the potential dilution of capital returns

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • Generated cash income of £64 million (2020: £45 million) from Private Equity and £67 million (2020: £78 million) from Infrastructure
  • Remained disciplined over cash operating expenses, which declined to £108 million3 (2020: £120 million) 
  • Operating cash profit expected to be at a similar level in FY2022

Key risks

  • Portfolio underperformance results in liquidity or other constraints limiting the ability to generate portfolio income 
  • Infrastructure initiatives to increase assets under management do not generate sufficient fee income 
  • Unplanned increase in 3i’s cost base; for example, from legal, compliance or regulatory issues

   

Total shareholder return2

The return to our shareholders through the movement in the share price and dividends paid during the year.

Progress, outlook and key risks

FY2021 progress and FY2022 outlook

  • TSR of 51% driven by a share price increase of 46% and by dividend payments of 35.0 pence in the year 
  • Well-positioned balance sheet supports a total FY2021 dividend of 38.5 pence per share

Key risks

  • Lower NAV due to investment underperformance or market volatility and economic uncertainty
  • Investor appetite for 3i shares could reduce in a volatile macroeconomic environment or as a result of a wider market correction

 
1 A number of our KPIs are calculated using financial information which is not defined under IFRS and therefore they are classified as APMs. 
2 Further information on how these KPIs are factored into decisions concerning the Executive Directors’ remuneration is included in the Directors’ remuneration report on page 107 of the Annual Report.
3 Cash investment of £510 million excludes a £31 million syndication of cash investment in Private Equity, which was recognised in the prior year.
4 Cash operating expenses includes lease expense.

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