3i windfall from Telecity float

The European venture capital company stands to reap a £260m (E430m) windfall tomorrow.

3i will turn a £19m investment in Telecity into a windfall of up to £260m when the facilities management company floats on the London Stock Exchange tomorrow, Financial News reports.

The European venture capital company's profitable exit comes only two years after its initial investment in what was then a start-up vehicle for Mike Kelly's ambition to create an alternative internet data centre for routing internet traffic in the UK. Telecity has prospered since 1998, and now has carrier-independent Telecity internet exchanges in Manchester, London and Amsterdam.

The market capitalisation of the company is expected to be between £500m and £650m.

Clive Austin, investment executive at 3i's Manchester office, told Financial News the higher than normal committment his firm had made to the business was worth it, as he explained: “By investing in Telecity, 3i is not taking a technology risk per se, but benefitting from the growth rates in the internet market. The level of funding is at the larger end of 3i's technology investments, but we felt that this was a company with real fundamentals that could benefit from internet-level growth rates.”