3i tumbles as asset value disappoints

PRIVATE equity giant 3i marched back into first half profit yesterday but saw its shares drift downwards as its net asset value undershot expectations.<br /><br />Britain&rsquo;s oldest buyout firm, which invests in companies as diverse as Interflora and Ministry of Sound, said the underlying value of its portfolio rose 2.5 per cent between April and September, towards the bottom end of forecasts. Its shares fell 8.5 per cent on the news but rallied to close the day 4.1 per cent down at 267.5p.<br /><br />The company announced a total return of &pound;81m or 3.2 per cent, compared with a first half loss of &pound;182m last year and a &pound;2bn loss in the second half of 2008.<br /><br />3i largely held back from corporate activity as uncertainty hovered over the strength of the recovery, investing just &pound;190m over six months in contrast to &pound;668m over the same period last year.<br /><br />A spokesperson said the firm was hungry to make more acquisitions in 2010 following a quiet period. It now has &pound;2bn in cash on its books, giving it the firepower to go on a buying spree as economic growth returns.<br /><br />Chief executive Michael Queen said 3i&rsquo;s financial position had been transformed thanks to shareholders&rsquo; support of its &pound;732m rights issue in May, which allowed it to bring down gearing by two thirds.<br /><br />However he added: &ldquo;I had hoped to be reporting clear evidence of an upturn &ndash; unfortunately, at this stage, we are only seeing clear signs of recovery in India and China.&rdquo;<br /><br />FAST FACTS 3I<br />&9679; 3i runs a varied portfolio ranging from obscure names to high street brands like Agent Provocateur and restaurant group Giraffe<br />&9679; Founded in 1945 as a source of funding for SMEs, 3i is the UK&rsquo;s original private equity firm <br />