3i in dividend sweetener for shareholders

PRIVATE equity house 3i Group faces an anxious wait to see if a doubling of its dividend and a wave of job cuts will pacify its unhappy shareholders.

Last night serial critic Laxey Partners dismissed the dividend rise as pointless while other key investors Blackrock, Schroders, Scottish Widows and Legal & General all declined to put their head above the parapet.

Earlier 3i lifted its interim dividend payout to 2.7p from 1.2p last year and said it would more than double the full year dividend to 8.1p, a 125 per cent increase on the previous year. It also reported a £500m loss and said it will cut around 50 jobs.

Colin Kingsnorth, co-founder of Laxey, said: “The increased dividend is simply not enough to make a difference.”

Chief executive Michael Queen has been criticised over a share price that has trailed asset values by around 40 per cent in recent months, and the write-downs of some of its portfolio companies.

Yesterday Queen ruled out an immediate share buyback and said global market turmoil “has had a direct impact on our results, particulary because when we value assets we use multiples derived from stock markets”.

Net asset value fell 16 per cent from the end of March to 294p. Analysts’ had forecast a range of 281p to 310p.

The group realised £532m in the first half from sales, such as industrials groups Hyva and Norma, mainly in the first couple of months of the period. It retains stakes in Agent Provocateur and architects Foster + Partners.