3i cash raising efforts see it halve its debt

3i GROUP, the listed private equity giant, said yesterday it had managed to cut its debt in half over the last three months as it offloaded assets and completed a heavily-discounted rights issue.

The £732m raised in the rights issue – where existing shareholders were offered bargain-priced shares as the group scrambled to raise cash – helped it to slash the net debt to £961m by the end of June, compared to £1.9bn at the end of March.

The liquidation of the 3i Quoted Private Equity (3iQPE) subsidiary fund aided the debt cuts, the group said. Sales of assets produced £163m in total during the quarter, exceeding the amount spent on making new investments by £87m.

“Our focus in the first quarter was on strengthening the balance sheet,” chief executive Michael Queen said. “A substantial increase in liquidity and the reduction in net debt provide further resilience in what remains a fragile environment.”

Private equity firms have seen the value of their investments slump as falling revenues and shaky outlooks hit company valuations.

And new deals have come to a virtual halt as the debt required to fund them has dried up.

Oriel Securities analyst Iain Scouller said the leverage position of 3i has improved significantly.

“It is now roughly equivalent to 35 per cent of the total value of its assets, compared to 103 per cent in March,” he said.

In a separate statement, 3i said the recently-named chairman of electronics retailer DSG International, John Allan, would be joining the board as a non-executive director from September.

And Alistair Cox, chief executive of Hays, is joining board as part of the group’s ongoing revamp.