3i debates offloading stake in Norman Foster’s indebted UK architecture firm

PRIVATE equity provider 3i is understood to be considering selling its stake in architect Norman Foster’s design house Foster & Partners.

3i is believed to have contacted investment banks about a possible exit, as one of the options it looks into three years after buying the stake. It is yet to appoint an adviser and is considering other strategies.

It bought a 40 per cent stake in the consultancy, which has designed London landmarks such as City office building the Gherkin, for an undisclosed amount in May 2007.

But Foster & Partners has faced a challenging environment since, and while estimates valued the business at £300m in 2007, it had amassed a debt burden of £340m by the year ending April 2009.

It managed to reduce this to £327m by the April 2010 year-end, but interest payments dragged a £25m underlying operating profit to a pre-tax loss of £15m.

Sales fell 13 per cent to £134m in 2010 and it set about a restructuring, shedding about 400 staff.

Foster founded the consultancy in 1967, growing it into a global brand with more than 1,000 staff in 18 offices worldwide by 2007.

The 3i deal was the group’s first external equity sale, designed to fund international expansion.

3i has assets under management of £7bn and a host of investments including Interflora, HSS Hire Service and Travelex among others.