Asia cuts help 3i narrow loss

Restructuring in Asia has helped the UK-based firm reduce losses, though net debt is still high.

3i Group has revealed in its latest half-year report that it narrowed pre-tax losses and its portfolio is profitable for the first time in a year after introducing extensive cuts across Asia and Europe.

For the period of April to September 2012, the firm reported a net loss of £5 million, a marked improvement from the £523 million loss during the same period last year.

In July, 3i announced plans for cutting 160 staff – more than a third of the firm’s workforce – and closing or reducing the size of 11 offices. Many of the cuts were focused on Asia, as chief executive Simon Burrows found fault with both China and India as investment sites. According to the firm, the Hong Kong and Shanghai offices have been closed, and Beijing, Singapore and Mumbai have had their staff reduced, completing the Asia restructuring.

3i's half-year report also showed that net debt decreased slightly to £493 million (€612 million; $782 million) from £531 million last year. 

The net portfolio return shows a profit of £109 million (€135 million; $173 million) in the six months to September 2012, an improvement from the loss of £385 million last year.

“We are now well into the first phase of restructuring at 3i and we are on track to meet the cost and debt reduction targets for this financial year-end,” Burrows said in the statement.

In Asia, the firm’s private equity portfolio value decreased to £336 million from £382 million last year, and the firm's investments in Asia have decreased to £6 million from £12 million last year.

Since announcing the cuts, 3i has made no new investments in the Asia-Pacific region, but continues to manage its current portfolio out of its Mumbai, Beijing and Singapore offices, a firm spokeswoman told PE Asia.