By Sarah White
LONDON Nov 15 Private equity group 3i
wants to launch a $500 million fund next year in Brazil, one new
market still underpinning its turnaround plans as it retreats
from Spain and Asia.
3i has been on a drive to reboot its flagging performance
since former banker Simon Borrows took over as chief executive
earlier this year, and the group said it had already cut just
over 100 jobs as it retrenches to its northern European roots.
It is keeping its nascent business in Brazil, however, and
Borrows said it planned to launch a fund there.
"We are not looking to do that until well into the second
half of next year," Borrows told Reuters in an interview, adding
that Brazil was a country with "good demographics" where 3i had
set up a strong team.
3i made its first investment in Brazil, buying a stake in
cable TV group Blue Interactive, at the end of last year.
Elsewhere 3i is pulling back. The group said in its
half-year results on Thursday it had shut five offices, from
Barcelona to Copenhagen, adding it had made "strong and
measurable progress" on the cost cutting plans it outlined in
June and was on track with targets.
It will also exit Birmingham by January, taking its offices
down to 13. 3i said it had completed more than half of the 160
layoffs outlined, which represented about a third of its staff.
3i has now also launched a compensation review, which
Borrows said would likely result in "more variability in pay" as
the firm differentiates more between low and top performing
staff while bringing down overall costs.
The group, set up after the second world war to help the
reconstruction of British industry, has been hit by a spate of
poor deals and the retrenchment is a fresh attempt to appease
disgruntled shareholders, after former CEO Michael Queen was
ousted earlier this year.
3i, whose investments include women's fashion retailer Hobbs
and Agent Provocateur lingerie, was hurt after paying high
prices for companies in declining markets like Spain during the
peak of the buy-out boom before the 2007-08 financial crisis.
Like rivals, it has also been hit by volatile markets and a
drop in deals since then, and 3i said on Thursday it was
cautious on the macroeconomic outlook, with sovereign debt
concerns in Europe still creating uncertainty.
That could make exiting businesses more challenging.
The firm did beat expectations on some counts, with asset
values coming in at 273 pence per share for the three months to
the end of September, above analyst forecasts. Asset values
stood at 275 pence per share at the end of June.
"The cause of the surprise was stronger-than-expected
portfolio earnings growth," Barclays analysts said in a note,
adding that 3i still had a "bloated operating and net finance
3i said it was on track to reduce gross debt to below 1
billion pounds ($1.58 billion) by June 2013.
Shares were down 0.19 percent to 209.3 pence at 0930 GMT.
They are up some 17 percent since Burrows took the helm.
3i is targetting 40 million pounds in annual cost cuts
initially, growing to 45 million pounds by 2014. It booked 25
million pounds of expenses in its half-year results related to
The group set its interim dividend at 2.7 pence per share,
adding that it planned to propose a total dividend for the year
of 8.1 pence.