Second half upturn provides cause for optimism

3i looks to brighter prospects for 2002 despite announcing a 19 per cent negative return on its investments for 2001.

3i has described the prospects for its future progress as encouraging despite announcing results for 2001 which saw a negative return of nearly 20 per cent (-£960m).

The year provided the UK private equity firm with a set of disparate figures with the first half seeing the firm record a negative total return in excess of £1bn. Figures for the second half were considerably improved, with the firm generating a positive return of £137m.

The overall return is largely due to a fall of £890m in the valuation of the portfolio. This fall was the result of a drop in the valuations of its quoted and unquoted technology investments and an increase in provisions. 3i intends to maintain its commitment to technology at the 20 per cent level.

Commenting earlier this year on the prospects for 2002, Michael Queen, finance director at 3i, said that investee companies were showing an increased level of optimism. “The feedback we have received from investee companies suggests a more positive approach for 2002, which could lead to an increase both in M&A activity and in realisations for 3i.” Today’s exit of Go will have a considerable effect on boosting the firm’s performance in 2002.

On the growth capital side, the firm's acquisition of Swedish venture capitalist, Atle AB in April 2001, was a highlight. The integration of this acquisition has created a Nordic business unit covering Denmark, Finland and Sweden. An office has also been opened in Dublin.

3i’s European office network comprises 10 UK offices and 20 offices across continental Europe.  In October last year 3i announced a 17 per cent cut in its workforce to counter the sharp fall in its portfolio value.