UPDATE 1-3i's U.S. debt management arm raises $500 mln fund

Mon Feb 25, 2013 4:42am EST

LONDON Feb 25 (Reuters) - British private equity group 3i said on Monday its U.S. debt management arm had raised a $500 million fund to invest in corporate debt and loans to back private equity buyouts.

The collateralised loan obligation fund, Jamestown II, is 3i Debt Management U.S.'s second since it was established in August last year as a joint venture with U.S. fund manager WCAS Fraser Sullivan Investment Management.

London-listed 3i was set up after World War Two to play a role in financing the reconstruction of Britain, but in recent years private equity has produced lacklustre returns and it has been shifting its focus to debt and infrastructure investment.

"Jamestown II is further evidence of the progress we are making to expand our Debt Management business and generate further income from third-party assets under management," 3i Chief Executive Simon Borrows said in a statement.

3i said the fund, a refinancing of a $400 million Fraser Sullivan fund which had reached the end of its two-year reinvestment period, was made up of $460 million of investment grade debt and $50 million of subordinated notes.

Due to transaction costs and the fact that some of these were issued at a discount to par, the fund will have total assets under management of $500 million to focus on investing in U.S. corporate debt and senior secured loans backing private equity buyouts in the United States.

Shares in 3i were up 0.6 percent at 310.5 pence by 0932 GMT.

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