Pre-close period briefing

01 Apr 2011

 

3i Group plc ("3i"), an international investor focused on Private Equity, Infrastructure and Debt Management, will be holding discussions with analysts and investors for the financial year end period ending 31 March 2011. 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 2011 on 12 May 2011.

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

"We have made good strategic progress across our whole business. Overall, the private equity portfolio has performed well. There have, however, been marked regional differences, with strong growth in Northern Europe counterbalanced by weaker performance from UK companies. This regional dispersion in performance is due to a combination of macro and company specific factors."

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

1. Investments and realisations

3i invested a total of £581 million in the 11 months to 28 February 2011, compared with £311 million in the equivalent period last year. Of this investment, £184 million was new investment, £244 million was further investment in the portfolio and the balance was capitalised interest.

Investment by business line was as follows:

 

 

9 months to

 

11 months to

11 months to

 

 

31 December

 

28 February

28 February

 

 

2010

 

2011 (total)

2010 (total)

 

 

£m

 

£m

£m

Private Equity

 

 

 

 

 

 

Buyouts*

 

436

 

476

185

 

Growth Capital

 

23

 

45

93

Infrastructure

 

15

 

15

2

Debt Management*

 

36

 

45

13

Non-core activities

 

-

 

-

18

Total

 

510

 

581

311

*The Debt Warehouse, previously managed in Buyouts, has been transferred to the newly established Debt Management business line.

Realisation proceeds received by 3i totalled £491 million in the 11 months ended 28 February 2011 (2010: £998 million).

Realisation proceeds by business line were as follows:

 

 

9 months to

 

11 months to

11 months to

 

 

31 December

 

28 February

28 February

 

 

2010

 

2011 (total)

2010 (total)

 

 

£m

 

£m

£m

Private Equity

 

 

 

 

 

 

Buyouts*

 

168

 

168

191

 

Growth Capital

 

126

 

162

468

Infrastructure

 

1

 

1

46

Debt Management*

 

40

 

86

63

Non-core activities

 

63

 

74

230

Total

 

398

 

491

998

*The Debt Warehouse, previously managed in Buyouts, has been transferred to the newly established Debt Management business line.

Total proceeds do not include the expected sales proceeds from the sales of MWM and Hyva, which together will be around £350 million. Realisations for the 11 month period to 28 February 2011 have been achieved at aggregate uplifts over 31 March 2010 carrying values of 24%.

2. Returns

As usual, an important element in the determination of 3i's results for the full year to 31 March 2011 will be the detailed valuation exercise carried out on its investment portfolio as at that date.

Although this process has not yet completed, it is apparent that strong unrealised profits in much of the portfolio, particularly in Northern Europe, will be materially offset by reductions in value in a small number of portfolio companies, principally in relation to UK assets.

As noted at the half year, discussions with the trustees of the UK defined benefits plan are continuing with respect to the triennial funding valuation to 30 June 2010. It is not expected that the outcome of these discussions will have an impact on returns for this period.

3. Cashflow and balance sheet

The Group had cash, cash deposits and undrawn committed facilities of £1.93 billion at 28 February 2011 (31 December 2010: £1.91 billion). Net divestment cash inflow in the two month period was £50 million. Net debt decreased by £45 million to £422 million (31 December 2010: £467 million).

4. 3i Debt Management/Mizuho Investment Management

During the period, the completion of the acquisition of Mizuho Investment Management (UK) Limited ("MIM") from Mizuho Corporate Bank, Ltd was announced. MIM was one of Europe's leading debt management businesses with assets under management ("AUM") of £3.7 billion as at 31 March 2010. 3i's existing debt management activities were merged with MIM to form a distinct business line, 3i Debt Management.

For information please contact:

Patrick Dunne, Group Communications Director
3i Group plc
020 7975 3566

Kathryn van der Kroft, 3i Press Office
020 7975 3021

This statement aims to give an indication of certain key elements of the Company's performance for the 11 months to 28 February 2011. 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 2011 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 2011 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.