3i makes solid progress

Faced with big investment losses last year, private equity investor 3i (III) made steady progress in the first half while also reducing its cost base. Around one third of the group's headcount will be cut by March next year and the number of offices will be reduced from 19 to 13. Annualised cost savings are expected to reach £40m by March, rising to £45m a year later. Add that to an improved investment performance and the discount to net assets that the shares currently trade at could narrow.

Gross portfolio returns reached £180m - a significant improvement on the £331m negative return a year earlier. Realised gains grew from £31m to £65m, too, and last year's unrealised losses of £441m were replaced with a gain of £66m - although portfolio income from dividends, fees and income from loans slipped from £79m to £49m. And while total returns were a negative £5m, this was a considerable improvement on the £523m loss a year earlier. What's more, given the uncertain economic climate, 3i has adopted a more selective approach to new investments, with commitments falling from £448m a year ago to £138m.

Broker Investec Securities expects full-year net asset value per share of 279p, rising to 298p in 2014.

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