FTSE 100 private equity firm 3i announces £68m gains from weakening sterling as total return climbs

Lucy White
Scandlines ferry operator is one of 3i's most valuable current investments (Source: Getty)

The drop in sterling's value may have caused a headache for some UK businesses, but London-listed private equity house 3i has managed to turn it to its advantage.

In its first-quarter performance update this morning, the European investor revealed its net asset value had grown to 628p per share over the year, representing a total return of 4.1 per cent as of the end of June.

The firm noted that £68m was generated by foreign exchange gain, and that one per cent movements in the euro and the US dollar would result in total return movements of £37m and £7m respectively.

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“This was another good quarter for 3i and our portfolio of international investments is performing well against an improving economic backdrop,” said chief executive Simon Borrows.

“We completed or signed four new investments in Germany, the Netherlands and the US and some £250m of divestments.”

The completed new investments included £172m in Dutch optician Hans Anders, £104m in German lighting shop Lampenwelt and £136m in German automotive component supplier Formel D, while a deal of around $136m (£104.51m) with US medical device manufacturer Cirtec is expected to close by September.

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Meanwhile 3i made cash proceeds of £107m from selling building merchants MKM and phone accessories retailer Dphone, at uplifts of three per cent and 30 per cent respectively of their March 2017 book value.

Since then, the firm has also sold Iberian funeral services company Memora which is expected to bring in around £117m.

3i also closed two new infrastructure funds in its first quarter, the 3i Managed Infrastructure Acquisitions Fund and the 3i European Operational Projects Fund.

The firm itself committed £21m and €40m (£35.76m) to the funds respectively.

3i's top 10 current investments by value:
Action Benelux-based discount retailer
3i Infrastructure 3i's infrastructure investing branch
Scandlines European ferry operator
Q Holding Medical component manufacturer
Weener Plastic Plastic packaging group
Audley Travel Tailor-made travel group
Basic-Fit European fitness club operator
Hans Anders Dutch optician
Atesteo Automotive testing business
BoConcept Danish furniture designer and manufacturer

3i has paid a final dividend of 18.5p for the 2017 financial year. Despite the overall positive news, 3i was trading down 0.59 per cent at the time of writing.

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