3i closes Birmingham office

The London-based international private equity firm has closed its main office in Birmingham, the UK’s second-largest city, from where it had targeted deals in the West Midlands region.

3i has closed its main office in the city centre of Birmingham in the UK’s West Midlands. A source at the firm confirmed a report in today’s Financial Times, saying that six of the ten-strong team that had been based there will be relocated to the firm’s London office, while two employees faced possible redundancy.

In an interview with PEO, 3i group communications director Patrick Dunne said Richard Bishop, director and head of the Birmingham team, would be among those relocating to London in order to join the firm’s growth capital team. Two other members of the team will move to the firm’s other Birmingham office near Birmingham International Airport, which focuses on administration and portfolio management.

Dunne said the decision was strategically motivated: “The business is being organised very much on a business line basis. The focus is on having specific teams for venture, growth capital and buyouts, whereas historically the firm was organised on a geographic basis.

We have gone from seeking to have the best team in a particular place to having the best team for a particular transaction

Patrick Dunne, group communications director, 3i

We have gone from seeking to have the best team in a particular place to having the best team for a particular transaction.”

He added that the firm was also seeking an increasing international dimension, pointing as an example to the recent opening of an office in India and the fact that around half the firm’s assets are now outside the UK. 

The closure of the Birmingham office appears to signal the conclusion of 3i’s restructuring of its UK network. The recent announcement that the firm was closing its Reading office followed previous closures in recent years in Edinburgh, Nottingham and Liverpool, as well the halting of new deal activity in Bristol and Glasgow to focus on portfolio management.

Dunne said there would be no further closures in the UK in the foreseeable future. The focus in now on venture capital in London and Cambridge; growth capital in London, Aberdeen and Leeds; buyouts in London, Aberdeen and Manchester; and portfolio management in Birmingham, Bristol, Glasgow, London and Manchester.

Dunne added that 3i would continue to pursue opportunities in the West Midlands. “We still feel very positive about the region and are keen to do more there. We have a good portfolio of businesses based in the region and feel that we will be able to service them better through our specialist teams.”

3i has a long history of investments in the West Midlands. Notably, it was part of a syndicate that rescued van maker LDV from receivership in 1993, since when the business has thrived. In December 2003, it participated in a refinancing at the company, investing £45 million in growth capital alongside EAC and Baring English Growth Fund.

A Birmingham-based private equity lawyer said he was “shocked and saddened” by 3i’s departure from the city, which he said he had not seen coming. He went on: “It’s a blow to lose one of the VCs that had a permanent presence. To become a “virtual” player puts it behind the competition that’s based here.” He opined that resident firms such as Barclays Private Equity and Bridgepoint would “prosper as a result”.

3i’s strategic overhaul is being spearheaded by Philip Yea, who became the firm’s first external CEO when he joined from Bahrain-based buyout house Investcorp in May last year. In October, he said his challenge was to make the organisation “more fleet of foot”.