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

FY2023 progress and FY2024 outlook

  • Strong Group GIR of 36%, driven by £3,769 million of unrealised value growth, £514 million of portfolio income and a foreign exchange gain, including hedging, of £652 million
  • Private Equity GIR of £4,966 million, or 40%, with a £4,344 million contribution from Action
  • Infrastructure GIR of £86 million, or 6%, reflecting good performance of our US infrastructure portfolio offsetting the derating of our quoted 3iN holding
  • Scandlines GIR of £52 million, or 10%, reflecting strong freight volumes, recovery in leisure volumes and cash distributions received

Key risks4

  • Impact of Russia’s invasion of Ukraine on global supply chains and commodity prices resulting in market volatility  nd inflationary pressures which could impact portfolio valuations and portfolio earnings
  • Investment rates or quality of new investments are lower than expected
  • Operational underperformance in portfolio companies affects earnings growth and exit plans
  • ESG regulations or changes to consumer preferences in relation to ESG factors affect earnings or valuations
  • Sterling materially strengthens against the euro and US dollar. At 31 March 2023, 87% 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

FY2023 progress and FY2024 outlook

  • 32% increase in NAV per share to 1,745 pence (31 March 2022: 1,321 pence), after dividend payments of 50.50 pence per share in the year
  • Our portfolios have started FY2024 with good momentum

Key risks4

  • Ongoing geopolitical uncertainty further dampens investor sentiment
  • Wider political and economic uncertainty impacts 3i’s portfolio companies and valuations

Cash realisations 1, 2

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

Progress, outlook and key risks

FY2023 progress and FY2024 outlook

  • Cash proceeds of £885 million including £471 million from the disposal of Havea and £332 million from the partial disposals of Q Holding
  • Realisations and refinancings in FY2024 are subject to supportive market conditions and to portfolio company performance remaining resilient

Key risks

  • Market volatility or prolonged invasion of Russia in Ukraine delay exits or affect pricing
  • Subdued M&A activity and macroeconomic uncertainty in our core sectors reduces investor appetite for our assets
  • Debt markets become less supportive of leveraged buyouts or refinancings

Cash investment 1,2,5

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

cash investment

Progress, outlook and key risks

FY2023 progress and FY2024 outlook

  • Invested £397 million, including four new investments
  • Completed 11 bolt-on acquisitions for the Private Equity portfolio, three of which we supported with further investment of £63 million
  • Interesting pipeline of new investment opportunities and bolt-on acquisitions
  • Invested £30 million to purchase a small additional stake in Action and at the same time crystallised some of the outstanding carried interest in the Buyouts 2010-12 scheme relating to Action, which is expected to result in a c.£200 million carried interest payment to participants in that scheme in May 2023

Key risks

  • Debt markets become less supportive of leveraged buyouts or refinancings
  • Failure to attract, invest in and retain talented 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 profit1,2,3

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

Operating cash profit

Progress, outlook and key risks

FY2023 progress and FY2024 outlook

  • Generated cash income of £351 million from Private Equity (2022: £346 million), including £325 million of dividends from Action (2022: £284 million); £107 million (2022: £91 million) from Infrastructure; and £39 million from Scandlines (2022: £13 million)
  • Modest increase in cash operating expenses to £133 million (2022: £110 million) reflecting full-year impact of new hires and inflationary impacts on costs
  • Good cash income expected to continue from Infrastructure and Scandlines

Key risks

  • Portfolio underperformance results in liquidity or other constraints limiting our ability to generate portfolio income
  • 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.

Total shareholder return

Progress, outlook and key risks

FY2023 progress and FY2024 outlook

  • TSR of 27% driven by a share price increase of 21% and by dividend payments of 50.50 pence in the year
  • Well-positioned, low-geared balance sheet supports a total FY2023 dividend of 53.0 pence per share

Key risks

  • Lower NAV due to investment underperformance or market volatility, political and economic uncertainty
  • Investor appetite for 3i shares could reduce in a volatile macroeconomic environment or in the context 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. Further details on these APMs are included in our Financial review on page 77 of our Annual report and accounts 2023.
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 131 of our Annual report and accounts 2023.
3 Cash operating expenses includes lease payments.
4 This is not an exhaustive list of risks, but a selection of examples of key risks which could potentially impact the respective KPIs. A summary of the Group’s current principal risks is set out on pages 88 to 92 of our Annual report and accounts 2023.
5 Cash investment of £397 million is different to cash investment per the cash flow of £330 million due to a £57 million syndication in Infrastructure which was received in FY2023 and a £10 million investment in Private Equity to be paid in FY2024.

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