Agent Provocateur and Hobbs owner 3i posts largely positive results despite tricky market conditions
British private equity firm 3i reported solid half-year results despite challenging market conditions forcing it to cut back on spending.
The figures
Net asset value per share, a common performance marker for funds that measures how much investments are worth, was 401p for the six months ended 30 September, up 12 per cent from the same period in 2014. This is despite paying a 14p dividend in July.
By the end of September, the firm had £13.5bn of assets under management, which has hardly changed from the the group's full year results in March.
Operating profits rose slightly to £17m.
The private equity group sold more than it bought, realising £307m from its investments over the period, and spending only £208m. Profits on realisation were £29m down from £35m in September 2014.
Total returns on opening shareholders' funds fell to 4.4 percent, down from 7.1 per cent this time last year.
The volatile markets had a greater effect on the group's debt management operations, which resulted in an £18m write down on the portfolio.
3i announced an interim dividend of 6p per share and said it expects to pay a full year dividend of at least 15p.
Why it's interesting
Borrows was bought in in 2012 to turn around the company's ailing share price and growing debt, and earlier this year announced it had completed its recovery plan.
Analysts at Numis seemed convinced, pointing to the fact that 3i, the largest-listed private equity fund in London, had outperformed the FTSE All Share index, which declined by 2.8 per cent over the period.
The broker also said it was satisfied that “clear exit plans [are] being formulated.”
New Chairman Simon Thompson said 3i had reduced its exposure to the emerging markets, including Asia and South America, which has protected it from some of the market volatility. He said:
The market environment has been characterised by reduced investor confidence as a result of uncertainties in the Eurozone, the impact of depressed commodity prices and concerns about the growth outlook for China and other emerging markets. While we are not immune to these developments, we are seeing the benefit of the strategic decision to reduce our presence in Asia and South America and to focus on our core sectors in northern Europe and North America.
What 3i said
Simon Borrows, 3i’s chief executive, said:
“We have completed another solid half year with each business making important progress. The macro and market environment has clearly deteriorated over the course of this year and the steps we have taken since 2012 to create a more resilient business are proving their value.
We are enjoying good momentum across 3i and anticipate that the current environment will, over time, create attractive opportunities and we have the people, financial resources and agility to take advantage of them.”
In short
3i seems to be on far firmer footing despite some bruising from the market.