3i launches its growth fund with €1.2bn

LISTED private equity giant 3i is closing in on several more deals for its new growth capital fund after announcing the first investment, fruit juice maker Refresco, yesterday.

The mid-market specialist has launched the fund with €1.2bn (£1.1bn) assets under management. Some analysts were disappointed at the amount supplied by external investors – €400m. But Numis said raising such a sum in the current environment was “very good”.

It is the first time 3i has part-funded a growth capital project with cash from third parties.
Guy Zarzavatdjian, head of 3i’s growth capital business, told City A.M. the fund would focus on healthcare, general industrial and financial services companies, plus consumer-facing businesses with exposure to Asia.

It will run with a 10-year life span. Roughly two thirds will be allocated to European companies, with the remainder going to internationally-orientated enterprises in the US.

Zarzavatdjian said the 20 per cent stake in Dutch firm Refresco, which 3i previously backed between 2003 and 2006, was typical of the kind of deal the fund would do.

He continued: “We are looking at around 10 deals every month and there’s a couple that are progressing nicely. The timing is fantastic after the credit crunch, with the IPO market closed, because entrepreneurs are still very keen to grow.”

A seed portfolio of seven recent investments worth €339m will also be rolled into the fund.
Shares in 3i closed up 1.5 per cent at 296.5p after the positive update.

● 3i’s roots lie in growth capital. The firm was backed by the Labour government in 1945.

● The new growth capital fund will invest in companies needing between €25m and €150m to expand abroad or make acquisitions.