3i posts 6% gross return for PE, down from 20% for FY 2019

Results are down from the previous year, when 3i's private equity division reported a gross return of £1.148bn or 20%.

The portfolio had performed well overall in the 11 months ending on 29 February and was on track to generate larger returns before the impact of Covid-19 on the portfolio valuation at 31 March, according to a statement.

The pandemic is said to have impacted 3i's travel, retail and automotive portfolio companies, while companies in medical technology, personal care products, e-commerce and other specialty manufacturers are experiencing strong demand.

3i made three new investments in the financial year – in Evernex, Magnitude and a new bioprocessing products platform – for a total of £413m, and completed 13 bolt-on acquisitions during the year, most of which were self-funded.

In November 2019, 3i completed a single-asset restructuring process for Netherlands-based discount non-food retailer Action, realising liquidity for the firm and its LPs. The exit deal value and restructuring were based on an enterprise value of €10.25bn, amounting to a net multiple of 20.3x EBITDA for the year ending in September 2019. The deal was funded by a combination of rolling LPs, new LPs and 3i, which reinvested in Action to increase its gross holding from 45.3% on 31 December 2019 to 52.6%.

The firm has reported that the company is now valued at around 17x Action's run-rate earnings to March 2020.

Realisations from the firm, excluding Action, totalled £446m. Exits include the realisation of Aspen Pumps, which generated a 4.1x money multiple; the sale of a tranche of Basic-Fit; and the sale of ACR, a long-hold investment.

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