3i CEO buys 2.5m shares(2)

Borrows’ increased holding comes as the UK firm seeks to turn the page on a painful restructuring process.

Simon Borrows, chief executive of London-listed 3i, has bought 2.5 million ordinary shares in the business. 

These top the 4 million shares Borrows acquired between the 28th and the 30th of May 2012, shortly after he was appointed CEO at the firm on 17 May. He had previously been its chief investment officer since 2011. 

Borrows declined to comment on personal financial matters. 

His latest purchases were valued at between 305p (€3.54; $4.63) and 313p (€3.63; $4.75) per share, according to an RNS statement. This represents a stark increase on the price he paid to increase his stake last May, when the shares were valued at between 171p and £173p. 

At 3i’s Annual General Meeting in July 2011, 3i directors were authorised to repurchase up to 97 million ordinary shares in the company, which represents approximately 10 percent of the issued total. This option was not exercised last year, despite Borrows significant investment in the group. 

Simon Borrows

The company was then going through turbulent times, following a sharp decline in share price and weak results from its buyout arm. Shortly after Borrows’ appointment as top executive, 3i embarked on a thorough restructuring process, with plans to cut 160 staff – more than a third of its workforce – and close or reduce the size of 11 offices. 

3i interim Q4 results, released last month, seemed to indicate that the restructuring process had taken a toll on buyout and realisation activity at the firm last year. While the firm posted a 4.8 percent increase in NAV in the last quarter of last year, private equity realisations slowed to £210 million (€244 million, $328 million) in the nine months to 31 December 2012, down from £741 million the year before. 

But progress in cost reduction and deleveraging should allow 3i to refocus on realisations and new investments in 2013, Borrows explained last month. “Over the last six months, in addition to implementing the reorganisation and cost reduction programme, we have been busy preparing for realisations within private equity. We expect to see the benefits of this coming through over the next 18 months, with a number of key realisations as well as an increasing level of investment activity.” 

The firm sold Canadian plastic equipment maker Mold-Masters for CAD$975 million (€720 million; $967 million) earlier this month, which generated a 2.6x return on the firm’s original investment. 

Borrows tops the list of executives owning a stake in 3i, with a total now amounting to 8.2 million shares. The group’s major disclosed shareholders are BlackRock, Ameriprise Financial and Standard Life Investments, who together own nearly 220 million shares.