Rising competition for investments in private equity and a deteriorating macroeconomic picture are not slowing down 3i Group (III). The private equity and infrastructure investor saw growing earnings in 91 per cent of its top 20 investments by value during the six months to September, up from 88 per cent last year.
However, the gross investment return was flat on the same period last year due to a slowdown in trading across a number of its industrial holdings, particularly those with exposure to the automotive sector.
As the group’s EuroFund V (EFV) reaches maturity, the group has been forced to consider what to do with its star investment – Dutch retailer Action. The investment has produced a gross internal rate of return of 75 per cent over the eight years since the group first bought in, and so the EFV fund will sell its stake to three other 3i-managed entities for €745m (£637m) – a price criticised by some analysts as being too low. The wider group also plans to increase its net investment to around 50 per cent, from a current level of 45.3 per cent.
Broker Numis forecasts adjusted net asset value of 915p a share at the March 2020 year-end, rising to 1,020p the same time the following year.
3I (III) | ||||
ORD PRICE: | 1,073p | MARKET VALUE: | £10.4bn | |
TOUCH: | 1,072.5-1,073p | 12-MONTH HIGH: | 1,189p | LOW: 755p |
DIVIDEND YIELD: | 3.5% | PE RATIO: | 8 | |
PREMIUM TO NAV: | 23% | NET CASH: | £50m |
Half-year to 30 Sep | Net asset value (p)* | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 776 | 713 | 73.8 | 15.0 |
2019 | 873 | 760 | 78.4 | 17.5 |
% change | +13 | +7 | +6 | +17 |
Ex-div: | 12 Dec | |||
Payment: | 08 Jan | |||
*Adjusted NAV |