3i in $52.7m US deal

UK-listed fund 3i has agreed to purchase a 19.5 percent stake in Phibro Animal Health for $52.7 million as the company prepares to float on London’s AIM.

UK-listed investment vehicle 3i Quoted Private Equity has agreed to purchase 19.5 percent of common shares of Phibro Animal Health Corporation for $52.7 million (€34 million).

The Ridgefield Park, New Jersey-based animal health products company plans to list on the London Stock Exchange’s Alternative Investment Market.

Following the listing, current shareholders will own 70 percent of common shares. The remaining shares will be held by 3i QPE and other institutional investors.

3i QPE said it intends to subscribe for additional common shares of Phibro alongside the company’s planned AIM admission, taking its total shareholding to 25 percent to 30 percent, according to media reports.

The company’s intended AIM listing highlights a larger trend of US companies conducting initial public offerings outside what many view as an expensive and regulations-burdened US capital market.

The investment in US-based Phibro is outside of 3i QPE’s standard investment profile which is small and mid-cap quoted companies, primarily in the UK and Continental Europe. The aim of the vehicle is to apply private equity style shareholder activism to companies that are still in the public markets to achieve absolute growth in the capital value of its investments over the medium-term.

3i QPE was admitted to the London Stock Exchange on 29 June 2007 and sold 400 million shares at £1 each via a share placement. UK-listed private equity group 3i Investments purchased 188 million shares.

The investment vehicle plans to invest most of its capital within 18 months of its listing. It will then use appropriate gearing to fund further investments over the remainder of the initial investment period. The portfolio is likely to include investments in 8-12 companies. It is targeting a 16 percent a year return.