* Expects to exceed cost-cutting targets for year
* Asset values rise 4.8 percent in three months to Dec. 31
* On track to cut gross debt below 1 bln stg by June
By Kylie MacLellan
LONDON, Jan 31 British private equity group 3i
is to focus on further asset disposals over the coming
months, saying that it intends to build on strong progress made
in its efforts to restructure the business.
Since shareholder frustration at poor share price
performance and weak results from its buyout business forced a
change in chief executive last year, the owner of women's
fashion retailer Hobbs and Tommee Tippee baby bottle maker
Mayborn has been on a drive to reboot its flagging fortunes.
Former banker Simon Borrows, who spent his first six months
in charge cutting jobs and closing offices as the company
retrenched to its northern European roots, said he expects 3i to
exceed its cost-cutting targets for the financial year.
"We are well into the first phase of restructuring at 3i and
have made strong and measurable progress," he said in Thursday's
The company said that net asset value (NAV) grew 4.8 percent
to 286 pence a share in the three months to Dec. 31, reducing to
283 pence after paying its interim dividend this month.
Gross debt, which stood at 1.2 billion pounds ($1.9 billion)
at Dec. 31, is on track to fall below 1 billion pounds by June,
the company said.
This week 3i revealed that activist investor Edward
Bramson's Sherborne Investors and its broker Jefferies had been
buying shares in the company.
In a call with reporters, Finance Director Julia Wilson
declined to comment further on Bramson, who has a history of
taking on the managements of businesses he considers to be
underperforming. Wilson would only say that 3i had not had any
communication with Bramson or Sherborne.
Oriel Securities analyst Iain Scouller thinks that
Sherborne's interest in 3i could prove to be short-lived.
"In the past Sherborne abandoned potential investments after
prices of targets rose. We think this must be a possibility in
the 3i situation, given their initial activity appeared to be
below the 230 pence price level," he said.
Shares in 3i, which have risen by about 47 percent since
Borrows took over, fell 2.4 percent to 266 pence by 1015 GMT.
The company said that private equity investment disposals,
which it describes as "realisations", generated 210 million
pounds in the nine months to Dec. 31. That compared with 93
million pounds of new investments in the period.
"Over the past six months, in addition to implementing the
reorganisation and cost-reduction programme, we have been busy
preparing for realisations within private equity," Borrows said.
"We expect to see the benefits of this coming through over
the next 18 months, with a number of key realisations as well as
an increasing level of investment activity."
3i, which was set up after the Second World War to help with
the reconstruction of British industry, sold its remaining stake
in German engineering group Norma last month.
At the time, a source familiar with the situation said the
company was preparing to sell more companies, including Canadian
manufacturer Mold Masters, UK software maker Civica and
German-Danish ferry operator Scandlines, over the next few
"From here, we believe the story will be about NAV growth
and capital returns; hence we believe the market will likely
focus heavily on disposals," Barclays analysts said in a note
"We expect a strong pick-up (in realisation activity) from
businesses being prepared for divestment."