Yield hungry investors are piling into private equity, with record amounts of money being raised for new deals. In light of rising competition for assets, 3i (III) is cautious about not overpaying, according to chief financial officer Julia Wilson. The group invested £250m in two new private equity investments during the first half, down on £529m last year, meaning the group is unlikely to reach the £750m typically spent annually.
However, that restraint seems to be paying off. Private equity cash realisations of £1.05bn were more than triple the prior year and represented an average 4.8 times the money invested. That’s well ahead of management’s target multiple, according to Ms Wilson. Around half the cash realised was reinvested in Scandinavian ferry operator Scandlines. The private equity portfolio generated a gross return of £667m, equivalent to 11 per cent of the opening value of the portfolio. Largest investment, French retailer Action, grew £271m in value for 3i.
Gross investment returns for the infrastructure arm were equivalent to 13 per cent of the opening portfolio value, up from 5 per cent in 2017, after unrealised profits on 3i’s investments more than tripled to £76m.
Analysts at Numis expect net assets of 835p a share at the March 2019 year-end, up from 724p at FY2018.
| 3I GROUP (III) | ||||
| ORD PRICE: | 797.8p | MARKET VALUE: | £ 7.76bn | |
| TOUCH: | 797.6-798.2p | 12-MONTH HIGH: | 1,023p | LOW: 796p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 5 | |
| PREMIUM TO NAV: | 3% | NET CASH: | £512m | |
| Half-year to 30 Sep | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 652 | 656 | 68.2 | 8 |
| 2018 | 776 | 713 | 73.8 | 15 |
| % change | +18 | +9 | +8 | +88 |
| Ex-div: | 13 Dec | |||
| Payment: | 09 Jan | |||
| *Adjusted NAV | ||||
