TIDMIII

RNS Number : 3650N

3i Group PLC

25 October 2016

25 October 2016

3i agrees sale of its Debt Management business to Investcorp

 
  Highlights 
 
    *    3i Group plc ("3i" or "the Group") has agreed the 
         sale of its Debt Management business ("3iDM") to 
         Investcorp 
 
 
    *    The transaction will generate cash proceeds to 3i of 
         GBP222 million and an exceptional profit on disposal 
         of GBP36 million, subject to closing adjustments 
         which are dependent on the transaction's completion 
         date. The proceeds will be reinvested in 3i's Private 
         Equity and Infrastructure divisions 
 
 
    *    The transaction is expected to close by the end of 
         March 2017, subject to satisfaction of closing 
         conditions including the required regulatory 
         approvals 
 
 
   Simon Borrows, 3i's Chief Executive, commented: "Our 
   Debt Management business has produced strong cash 
   income for the Group since our strategic review in 
   2012. However, the division fits less well with the 
   3i of today as we focus on our growing Infrastructure 
   business and a proprietary capital approach in Private 
   Equity. We are proud to have built 3iDM into an industry 
   leader in its markets and are delighted with our 
   agreement with Investcorp, which we believe has the 
   strategic commitment, capital and distribution capabilities 
   to support 3iDM in its next phase of growth." 
==============================================================

Strategic rationale for the transaction

3i's Debt Management business was formed in February 2011 following the acquisition of Mizuho Investment Management, then one of Europe's leading debt management businesses, from Mizuho Corporate Bank. 3i built on that platform through the acquisition, in 2012, of WCAS Fraser Sullivan Investment Management, a leading specialist US debt manager, and of five European CLO management contracts from Invesco. Today, 3iDM is a global leader in its markets, with strong investment teams based in London and New York and assets under management of approximately $12 billion.

3iDM has played an important role since our 2012 strategic review. Predominantly a third-party asset management business, it has provided us with cash income, contributing to achieving and maintaining a group operating cash profit, as well as good cash returns from our investments in the underlying CLOs. However, today the cash income from our Debt Management activities is less important as we focus on building our Private Equity and Infrastructure portfolios from a robust position, with a strong balance sheet and a lean cost base.

Information on the transaction

As part of the transaction, 3i will be selling its 3iDM fund management business and CLO equity investments required to meet risk retention requirements, valued at GBP182 million at 30 September 2016. Investcorp has also agreed to take over 3i's debt warehouse commitments in Europe and the US. 3i will continue to hold certain CLO investments valued at GBP56 million at 30 September 2016, together with the benefit of certain incentive fees and will maintain its commitments to the Global Income Fund and the Senior Loan Fund.

The transaction will generate cash proceeds to 3i of GBP222 million and an exceptional profit on disposal of GBP36 million, subject to closing adjustments which are dependent on the transaction's completion date.

The sale is expected to close by 31 March 2017, subject to satisfaction of closing conditions including the required regulatory approvals. 3iDM's employees are expected to remain with the 3iDM business that transfers to Investcorp. The leadership of 3iDM will remain unchanged, with Jeremy Ghose continuing as CEO of the overall division and John Fraser continuing to oversee the US operations.

Note: the audited gross assets of the two entities being sold totalled GBP225 million at 31 March 2016. The entities' total comprehensive income for the year ended 31 March 2016 totalled GBP20 million.

- Ends -

For further information, please contact:

 
Silvia Santoro 
 Investor Relations Director      Tel: 020 7975 3258 
Toby Bates 
 Interim Communications Director  Tel: 020 7975 3032

Notes to editors

About 3i and 3i Debt Management

3i is a leading international investment manager focused on mid-market Private Equity, Infrastructure and Debt Management. Our core investment markets are northern Europe and North America. For further information, please visit: www.3i.com.

3i Debt Management is a leading global credit management business. It manages funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporates in the UK, Europe and the US. Assets under management as of 30 September 2016 totalled c. $12 billion. The business employs c. 50 people based in London, New York and Singapore.

About Investcorp

Investcorp is a leading provider and manager of alternative investment products and is publicly traded on the Bahrain Bourse (INVCORP). The Investcorp Group has offices in London, Bahrain, New York, Saudi Arabia, Abu Dhabi and Doha. Investcorp has three business areas: corporate investment, real estate investment and alternative investment solutions (formerly known as hedge funds). As at June 30, 2016, the Investcorp Group had $10.8 billion in total assets under management, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp receives fees calculated on the basis of assets under management.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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