3i’s return slips but portfolio value rises as star assets keep performing

Listed private equity firm 3i saw its total return to shareholders slip slightly this year, though the value of the underlying investments in its portfolio continued to climb.

The London-listed firm returned a total of £1.4bn to investors in the year to March, as opposed to £1.6bn a year prior.

However the value of the portfolio, which includes businesses such as tailored holiday operator Audley Travel, rocketed over the year from £5.7bn to £6.7bn.

Read more: 3i hopes Audley Travel will take off with £159m investment

"3i delivered another strong all-round performance in financial year 2018, generating a total return of 24 per cent," said Simon Borrows, 3i's chief executive​.

"Our investment teams had a very busy year. We received £1.323bn of proceeds, announced a further circa £350m of realisations to complete by July 2018, and invested £827m, including in five new companies."

One of 3i's star holdings, Dutch discount store Action, performed particularly well. The €3.4bn (£3bn) revenue business completed a refinancing over the year, which returned £307m giving the private equity firm a 7.1 times cash return on the investment to date.

3i also sold Norwegian ferry operator Scandlines to Hermes for an equity value of €1.7bn, reinvesting in the business as it believed its growth would continue.

Read more: 3i boosts stake in UK's largest landfill-to-electricity business by £125m

Borrows ventured that his firm may do the same with Action, as the fund which invested in the company is due to close and return cash to its end investors. However speaking to Reuters, he ruled out any imminent sale or float of the retailer.

The infrastructure branch of 3i also had a "very good" year, as it advised the separate 3i Infrastructure company on six investments.

"I remain confident that the group will be agile and opportunistic as we navigate what looks likely to be another year of significant economic and geo-political uncertainty," said chairman Simon Thompson.

3i announced a new dividend policy, which would aim to grow the dividend every year from a base level of the current 30p (up from last year's 26.5p).

Read more: Private equity firm 3i announces £68m gains from weakening sterling

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