3i, the UK-listed private equity firm, has announced that it is to withdraw from the Irish private equity market with the closure of its Dublin office.
“3i has completed a number of investments to date in Ireland and believe that further opportunities may arise in the future as the local private equity market develops. However, in the near term we do not see sufficient activity to support a dedicated local presence,” said Clive Austin, head of 3i’s Irish operations.
The firm said that the slower-than-expected development of the Irish private equity market, which has been impacted by the general economic slowdown, has been the principal reason for the office’s closure. Austin will return to London, although the firm will continue to make investments in Ireland.
3i opened its Dublin office in May 2001 at a time when Ireland’s venture capital market, was enjoying a boom in activity, particularly in the technology sector. However, the VC market was affected by the broader downturn in the technology markets, falling sharply in 2002. In the first six months of 2002, Irish venture capital investment fell by more than 30 per cent to E147.5m, compared with E220m in the first half of 2001, according to figures published by Irish corporate finance house Ion Equity.
3i’s Dublin office was focused on small-cap, traditional, private equity transactions rather than tech-based deals, which are overseen by the firm’s London team. The firm’s most recent investments in Ireland are Giraffe Childcare, a Dublin-based childcare company into which it invested E2m last November and an undisclosed investment in NewCourt, an outsourcing business, which was made earlier this year.
“We saw the large majority of all opportunities in the market but the Irish private equity market is still in its very early stages with very few players,” added Austin, who will continue to manage the firm’s three investments in the North and its two deals in the Republic.
The closure is the second announced by 3i in 2003. In February, the firm closed its Tokyo office after it completed only one deal in almost three years of existence. The firm will make Japanese deals out of its Hong Kong office.
Last month, the firm said it expected to make writedowns on its portfolio of up to £400m in 2002. It is also planning to hold a first close of its fourth European buyout, targeting up to E3bn, in May.