Private Equity News & Analysis

3i investments down for 2001

3i Group has announced performance figures for 2001 ahead of its pre-closed period analyst briefings.

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Figures released by 3i for 2001 show performance staying broadly in line with market expectations.

3i continued to make investments in a broad range of sectors and geographies, albeit at a lower rate than seen in 2000. Investment in the 11 months to 28 February stood at £771m (excluding co-investment funds) in 522 companies. This amount excludes the acquisition of Atle in Sweden for £330m.

Realisations for 3i continued across its portfolio, generating cash inflow of £1.02bn in the eleven months to 28 February 2002. This figure was down on the performance for 2002 due to lower levels of activity in the mergers and acquisitions markets and the reduced appetite of the quoted markets for new issues.

Across the market as a whole, activity levels in the markets have continued to be at lower levels than last year. In 2001 the European market for management buyouts with a transaction size of £5-500m was £16.9bn compared to £21.6bn in the previous year. The European technology or early stage market in 2001 reduced from £10.8bn to £4.6bn. In October 2001, 3i announced that it was to cut its workforce by 185.

Commenting on the prospects for 2002, Michael Queen, finance director at 3i, said that investee companies were showing an increased level of optimism. “The feedback we have received from investee companies suggests a more positive approach for 2002, which could lead to an increase both in M&A activity and in realisations for 3i.”

Queen added that he believed the big question for 2002 would centre around the performance of the IPO market. “We anticipate a continuation of the pattern for 2001, which saw very little activity in the IPO markets. Any improvement in the markets is only likely to emerge towards the back end of 2002.”

With regards to the rumoured floatation of Go, the no-frills airline acquired by 3i in 2001, Queen said that he was very pleased with the airline’s performance to date. “Go increased its volume by 70 per cent in 2001, a performance we are very satisfied with, given the very tough trading conditions in the final quarter.” He declined to comment on a possible floatation of the business this year.