The name 3i (III) harks back to the FTSE 100 group's 1980s branding 'Investors in Industry', but could equally be seen as a reflection of its 'three investments': private equity, infrastructure and debt. All three had something to shout about for the year to 31 March, contributing towards an overall 20 per cent return on shareholder's funds, compared to 16 per cent in 2014. Results like these explain why the shares have nearly tripled since chief executive Simon Borrows unveiled his recovery strategy nearly three years ago.
Leading the good news was 3i's private equity business. This targets north European and US companies with poor governance structures; 3i tries to improve these and then sell the company on to other companies or private-equity houses. The company realised £831m from these investments (from £669m in 2014), while earnings in the portfolio companies grew by 19 per cent. Four investments were added to the portfolio at a cash cost of £369m.
The company's infrastructure investment is carried out by the listed 3i Infrastructure (3IN) fund, in which it holds a 34 per cent stake and to which it acts as investment adviser. 3i upped its management and advisory fees, including performance fees, by two-thirds to £40m. Meanwhile, in debt management the company added six new collateralised loan obligations and grew assets under management by 11 per cent to £7.2bn.
3i has now completed a three-year restructuring, but that has delivered £70m of ongoing savings, against its original £40m target. It has reduced the number of its offices, realised underperforming assets and reduced its headcount by 37 per cent to 276 at the end of March. The group is now looking to recruit staff to boost business development in debt management and investment expertise in its other business lines - a sure sign that its corporate recovery is close to complete.
Analysts at Barclays have upped their March 2016 NAV estimate by 4 per cent to 440p a share.
| 3i (III) | ||||
|---|---|---|---|---|
| ORD PRICE: | 526p* | MARKET VALUE: | £5.1 bn | |
| TOUCH: | 525.5-526.5p | 12-MONTH HIGH: | 533p | LOW: 341p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 7 | |
| PREMIUM TO NAV: | 33% | NET CASH: | £49m | |
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 351 | 189 | 19.6 | 3.6 |
| 2012 | 279 | -777 | -82.8 | 8.1 |
| 2013 | 311 | 363 | 38.3 | 8.1 |
| 2014 | 348 | 520 | 54.8 | 20 |
| 2015 | 396 | 702 | 73.9 | 20 |
| % change | +14 | +35 | +35 | - |
Ex-div: 18 Jun Payment: 24 Jul | ||||
