UK-based private equity firm 3i has said that it expects to make further writedowns on its portfolio when it publishes its full-year results in May.
In its pre-close briefings published today, the UK-listed firm said that provisions for companies that may fail would be below the £400m written down last year. Last year’s writedown accounted for around ten per cent of the total portfolio, which is currently valued at £4.25bn. Despite the anticipated writedowns, the firm said that portfolio was continuing to perform satisfactorily.
Despite a depressed M&A market, the firm has continued to make realisations. In the eleven months to March 2003, the portfolio generated cash inflows of £934m. Realisation proceeds in the first half amounted to £619m. In 2002 the firm invested a total of E790m in 16 transactions with a total transaction value of E2.5bn.
3i said that a first close for its fourth pan-European mid-market fund, launched last year, would be held before the firm announces its results in May. It described the current fundraising environment as ‘difficult’. The fund is thought to be seeking to raise around E3bn, of which half is expected to come from third party investors. The predecessor fund, Eurofund III, will continue to make investments until around July of this year, when it will be fully invested.
As a result of the briefing, analysts at Dresdner Kleinwort Wasserstein downgraded their opinion on 3i to 'hold' from a previous 'buy'. It cut its net asset value for the group to 470 pence per share from 520p. Shares in 3i are currently trading at 441.5 pence per share, down from a high of 871p on 20 September 2002.