* Interim dividend 2.7 pence, signals 8.1p for full year
* Net asset value falls 16 percent to 294 pence since March
* Challenging environment had direct impact on results
By Simon Meads
LONDON, Nov 10 Private equity firm 3i Group Plc unveiled a sharp increase in dividend payments to
placate shareholders frustrated at its underperforming share
price, despite turbulent markets knocking its performance in the
3i has come under fire from shareholders over a share price
that has trailed asset values by around 40 percent in recent
months, and the writedowns of businesses like outsourcing
company Enterprise Group.
The firm, which has investments in architecture group Foster
+ Partners and Tommee Tippee baby bottle maker Mayborn, lifted
its interim dividend payout to 2.7 pence from 1.2 pence last
year, and said it would more than double the full year dividend
to 8.1 pence, a 125 percent increase on the previous year.
However, 3i said its business was not immune to the stormy
economic conditions battering global markets.
"This environment has had a direct impact on our results,
particulary because when we value assets we use multiples
derived from stock markets," chief executive Michael Queen said
in a conference call with reporters on Thursday.
The group said net asset value fell 16 percent from end
March to 294 pence, towards the middle of analysts' expected
range of 281 pence to 310 pence.
Shares were up 2.2 percent at 204.3 pence at 0945 GMT, with
analysts welcoming the increased dividend.
"This raised dividend implies a respectable yield of now 4
percent," said Barclays Capital in a note to investors.
NO TO BUYBACKS
3i's Queen said the board had looked very seriously at the
prospect of share buybacks but ruled them out in the near term.
"In the current financial climate it would be irresponsible
of any board to take on additional leverage to return capital at
this moment in time," Queen said.
"Will that satisfy shareholders? Time will tell," he added.
As concerns about sovereign debt crisis in Italy batter
already fragile markets, Queen said the environment for selling
companies had deteriorated in recent months.
The group realised 532 million pounds ($847 million) in the
first half from company disposals, such as industrials groups
Hyva and Norma, though the bulk of the proceeds came through in
the first couple of months of the period.
"We are not anticipating a significant level of realisations
over the next 6-12 months," Queen said. The group has pulled the
sale of chemicals distribution firm Azelis and will focus on
boosting the business in emerging markets.
New investment is also expected to be muted as the firm
takes a more cautious approach and the investment period on the
firm's 5 billion euro ($6.77 billion) buyout fund expires
shortly, requiring it to fund future deals off balance sheet.
"Investment activity is low. I think you have to be very
selective, pricing for assets hasn't come down significantly to
reflect the uncertainties out there," Queen said.