3i quartet leave to raise new fund

Four former investment directors of FTSE 100 venture capital group 3i have left to set up their own private equity fund.

The listed venture capital giant 3i, which is currently on the fund-raising trail, has seen four senior members of its investment team leave to launch a new operation.

The departing quartet comprises: Tom Sweet-Escott, who was involved in the investment in budget airline Go, which made 3i a £264m profit; Richard Campin, who headed up the firm’s French operations; Chris Graham, who was involved in a number of media investments; and Hugh Richards.

A report in The Times newspaper said the four men were aiming to raise between E500m and E1bn for their new fund, which will target European companies worth between £50m and £300m. However, they have not yet commented officially on their plans.

Asked about the reasons for the move, 3i finance director Michael Queen said: “We’re about to close a new fund that demands commitment for another seven to eight years. All the guys involved are around their mid-40s and decided it was time to go off and do their own thing.”

Queen also pointed out that they were just four members of a 250-strong investment team, and that although they had been involved in some high-profile deals, 3i would normally have a team of five to seven people working on each transaction. However, an investment banker quoted by The Times said they were ‘good guys with a good record’ and would be a ‘sad loss to the company’.

Queen expressed confidence that the departures would not have a negative impact on fundraising for Eurofund IV, which is scheduled to close by the end of the year at around E3bn. But he said: “It’s very tough out there as investors have been scaling back their allocations in 2003. It could turn out to be the worst thing they could have done.”

Separately, digital photographic software firm Pixology – in which 3i has a 17.5 per cent stake – is reported to be lining up a £40m flotation on the Alternative Investment Market. And at the end of last week, 3i backed the £11m buy in/management buyout (BIMBO) of Alderwoods, one of the UK’s largest groups of funeral directors.