Borrows set to tighten belts at troubled 3i
PRIVATE equity house 3i is expected to shake-up its global operations after naming veteran banker Simon Borrows as its new chief executive and posting a heavy loss.
Borrows, who replaced Michael Queen yesterday after answering calls from some of the group’s larger shareholders to go for the top job, will cut costs as he tries to reverse the group’s share price decline and patchy investment record.
Borrows is said to have agreed a clear mandate with the board for tackling the group’s issues.
He hinted at his strategy when he said he would tackle the “difficult legacy portfolio from the peak years of 2007 to 2009” and noted that many of the “challenged investments” came out of offices in Britain and Spain. The firm’s global footprint will be “more focused and a lot leaner” although he re-affirmed his faith in its operations in the emerging markets of India and Brazil.
Shares in 3i, Britain’s oldest private equity firm, have fallen by more than a third over the past year. Yesterday it said net asset value per share was 279p at 31 March, down 20.5 per cent from 351p a year ago.
The dividend was raised to 8.1p from 3.6p last year as Borrows, who joined 3i as chief investment officer in October, set out to cheer unhappy investors.
Total return, a measures of the change in the value of its investments and its fee income, fell to a negative of £656m for the year, compared to a £324m gain the previous year.