You would be forgiven for thinking private equity was protected from the mood swings of public markets. But investors such as 3i (III) need to value companies in which they hold stakes, and to unlock value through sales, and these processes often depend on stock markets. Considering the late-summer correction in stocks, 3i is not doing too badly.
A gross investment return of 7 per cent, relative to portfolio value at the start of the period, compared unfavourably with 8 per cent in the first half of FY2015. Profit on disposals* came in lower at £26m, compared with £34m. But it was the revaluation of 3i's private equity investments which was well down on last year, both because earnings growth provided less of a boost and because the valuation multiples applied to earnings moved in the wrong direction. All in all, 3i received £174m from revaluations over the period, far less than the £308m uplift in the first half of last year.