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.

 

Gross investment return (“GIR”) 2022

Progress, outlook and key risks

FY2022 progress and FY2023 outlook

  • Strong Group GIR of 43%, driven by £3,824 million of unrealised value growth and £463 million of portfolio income
  • Private Equity GIR of £4,172 million, or 47%, driven by strong value growth in the portfolio, with Action contributing £2,888 million of GIR
  • Infrastructure GIR of £241 million, or 21%, reflecting good performance of 3iN and US infrastructure
  • Scandlines GIR of £112 million, or 26%, reflecting resilience in its freight operations and resumption of cash distributions

Key risks4

  • Impact from conflict in Ukraine and Covid-19 on global supply chains and commodity prices resulting in market volatility and 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 impacts earnings growth and exit plans
  • Changes to ESG regulations, or to customer demands and expectations, affects earnings or valuations
  • Sterling materially strengthens against the euro and US dollar; at 31 March 2022, 86% 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.

Nav per share

Progress, outlook and key risks

FY2022 progress and FY2023 outlook

  • 39% increase in NAV per share to 1,321 pence (31 March 2021: 947 pence), after payment of 40.25 pence dividend per share in the year
  • Our portfolios have started FY2023 with good momentum

Key risks4

  • Ongoing geo-political 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.

Cash realisations

Progress, outlook and key risks

FY2022 progress and FY2023 outlook

  • Cash proceeds of £758 million including £346 million from the disposal of Magnitude Software and £153 million from the refinancing of Royal Sanders and BoConcept
  • Subject to supportive market conditions and to portfolio company performance remaining strong, we have a good pipeline of realisations and refinancings in FY2023

Key risks

  • Market volatility, prolonged conflict in Ukraine and Covid-19 disruption delays exits or affects 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 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

FY2022 progress and FY2023 outlook

  • Invested £543 million, including six new investments and two transformational acquisitions in Private Equity
  • Completed a further 13 bolt-on acquisitions for the Private Equity portfolio, all of which were self-funded
  • We have an interesting pipeline of new investment opportunities and bolt-on acquisitions for our portfolio companies

Key risks

  • High pricing in 3i’s core sectors increases the risk of acquirers overpaying for assets, thereby reducing investment opportunities within 3i’s investment risk appetite
  • 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

FY2022 progress and FY2023 outlook

  • Generated cash income of £346 million (2021: £64 million) from Private Equity which includes £284 million of dividends from Action, £91 million (2021: £67 million) from Infrastructure and £13 million from Scandlines (2021: nil)
  • Remained disciplined over cash operating expenses, which were £110 million (2021: £108 million)
  • Good cash income expected to continue from Infrastructure and Scandlines

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.

Total shareholder return

Progress, outlook and key risks

FY2022 progress and FY2023 outlook

  • TSR of 24% driven by a share price increase of 20% and by dividend payments of 40.25 pence in the year
  • Well-positioned balance sheet supports a total FY2022 dividend of 46.5 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 macro-economic 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 57.
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 129.
3 Cash operating expenses includes lease payments.
4 This is not an exhaustive list of risks, but are examples of key risks which could potentially impact the respective KPIs. A summary of the Group’s current principal risks are set out on pages 67 to 71.
5 Cash investment of £543 million. Includes a £53 million syndication of cash investment in Infrastructure, which is to be received in FY2023.

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