Listed private equity group 3i has announced positive interim results for the six months to September 30, 2004, with a total return to shareholders of £231 million (€333 million; $427 million), representing a 7.2 percent return on opening shareholders’ funds.
In the six-month period, new investments, including co-investment increased to £521 million, almost doubling from £273 million in the same period last year.
At the same time, proceeds from realisations increased from £503 million in the first half of last year to £603 million this year.
Commenting on what he described as a “strong performance”, new chief executive Philip Yea said: “3i is a unique business that been through a large change programme – the extent of which hasn’t been fully appreciated externally – and the business is delivering.”
Describing some of the changes, he said: “In 1999, 89 percent of our portfolio companies were in the UK, now it’s 50 percent. In the same year, 18 of our 32 offices were in the UK, now it’s ten of 29. Perhaps the biggest difference is that in 1999, we held over 4,000 interests in portfolio companies, today it’s approximately 1700.”
At a press briefing in London today, Yea said the group was not about to embark on any radical new shifts in policy under his tenure. He said he believed the changes that had been made to 3i’s business model – replacing its geographically determined business model with one based on three strategic business lines (buyout, growth capital and venture capital) – were “absolutely right”.
One change that Yea believes needs to take place within the organisation is for it to become “more fleet of foot” and to bring the group’s “unique and considerable resources to bear with greater energy and flexibility”. Yea anticipated that the firm's growth capital business, where the firm takes minority positions in growing companies with capital needs, would be an area of concentration for the firm in the medium term. The growth capital business will be headed up by current CFO Michael Queen from next year.
Commenting on the recent organisational changes, Yea told PEO that despite the number of recent external appointments – himself as CEO in July, Denise Collis, who joins as group HR director next week and Simon Ball who will replace Michael Queen as Finance Director in February 2005 – there was “no systematic rush to recruit from the outside” and that 3i would always look to find the best person for a particular job, be that outside or inside the organisation.
On future opportunities for the business, Yea said that the firm was not engaged in “a rush towards Asia”, but thought that it was likely the business would become increasingly international: “It’s not about planting flags, but as a market-facing business, we will inevitably move organically further east, as a number of our portfolio companies are doing.”