3i mulls debt business, merges units

As part of a restructuring process, 25-year veteran and former head of buyouts Jonathan Russell is leaving the firm.

3i Group, the UK’s longest-running private equity investor, is forming plans to launch a debt investment business to run alongside its private equity and infrastructure programmes.

The firm said Friday it is exploring the possibility of a separate debt management business. As of the end of March, the firm had invested €130 million in non-3i-related leveraged loans and has a further €195 million of a facility from Lloyds Banking Group to invest.

Jonathan Russell

The potential for a debt business was mentioned as part of a wider restructuring on Friday that will see it merge its buyout and growth capital divisions into one consolidated private equity business line. “This will mean that 3i has two distinct business lines, infrastructure and private equity,” the firm said in a statement.

“We have the advantage of being strong regionally and our sector teams have been working increasingly together across our buyouts and growth businesses for some time,” said Michael Queen, 3i chief executive, in a statement. “So this is a logical step and one which we think will make us even more effective in the market.”

Veteran Jonathan Russell, who has run the firm’s buyout division for more than 10 years, is leaving as part of the shake-up.

Russell, whose 3i career spanned almost a quarter of a century, had been part of the firm’s management committee since 1999 and also spent a year as chairman of the European Private Equity and Venture Capital Association.

Leadership of the private equity business will be shared between four managing partners with different geographical remits. Guy Zarzavatdjian, formerly head of growth capital, will take charge of France, Spain and Italy. Bob Stefanowski will continue to head up North America and Asia, Alan Giddins will run UK private equity and BeNeLux head Menno Antal will see his remit extended to include Germany and the Nordic region.

Russell’s departure follows that of the firm’s head of buyouts for Asia earlier this summer. David Osborne, who had been with the firm for 25 years, left the Singapore office to join infrastructure investment business CapAsia. At the time the firm said its Asian operations were predominantly focused on growth capital rather than buyouts.

3i’s shares stood at £2.79 (€3.34; $4.38) at press time, down marginally from £2.86 this morning.