3i Group PLC Q3 Performance update (2299N)
January 28 2016 - 2:00AM
UK Regulatory
TIDMIII
RNS Number : 2299N
3i Group PLC
28 January 2016
28 January 2016
3i Group plc
FY2016 Q3 performance update
3i Group plc ("the Group" or "3i") today issues its performance
update relating to the third quarter from 1 October 2015 to 31
December 2015 ("the quarter") of FY2016.
Another solid quarter with some important transactions
and strong earnings growth
* NAV per share of 413 pence and total return of 7.4%
* Realised GBP403 million in the 9 months to 31
December 2015, excluding the c.GBP188 million due
from the sale of Element Materials Technology
* Invested GBP364 million in Private Equity in the 9
months to 31 December 2015 with three new investments
* Launched two new CLOs in Debt Management in the
quarter, one in Europe and one in the US
* The portfolio companies in Private Equity continue to
perform well with a good increase in unrealised value
supported by value weighted earnings growth,
including acquisitions, of 18%
Simon Borrows, Chief Executive, commented:
"This was another steady quarter for 3i. We
delivered a solid result, supported by good
levels of investment and divestment activity,
despite the challenging market backdrop. Our
portfolio companies continue to perform well
with strong unrealised value growth from a
number of our key investments such as Action,
3i Infrastructure plc, Scandlines and GIF.
Investment activity was strong in the quarter,
with the highly profitable sale of Element
Materials Technology at 4.5x euro cost and
the purchase of Audley Travel, a business with
excellent growth potential. We have a good
level of planned realisations and an interesting
pipeline of potential new investments, but
we remain disciplined on price given the broader
macroeconomic and market uncertainties.
With earnings growth, including acquisitions,
of 18% and average gearing under 3x EBITDA
in Private Equity, we expect our investment
portfolio to continue to demonstrate its resilience
as we complete the important final quarter
of our financial year."
==============================================================
Private Equity
Investments
The team had a busy end to the 2015 calendar year. We completed
a GBP159 million investment in Audley Travel, a market leader in
tailor-made luxury travel based in the UK and with a growing
presence in the United States. On completion of the transaction, 3i
also underwrote an GBP87 million loan pending the refinancing of
Audley Travel's debt facilities. This amount was repaid in full on
27 January 2016.
Total Proprietary
Capital
investment investment
========================= =========== ============
Audley Travel(1) GBP159m GBP156m
H1 2016 investment GBP247m GBP208m
Total cash investment as GBP406m GBP364m
at 31 December 2015(1)
========================= =========== ============
1 Cash invested in Private Equity excludes the
GBP87 million (GBP85 million 3i Proprietary
Capital) loan underwritten on behalf of Audley
Travel which was repaid on 27 January 2016.
Realisations
We received total cash proceeds in the quarter of GBP43 million.
This included proceeds of GBP17 million from the refinancing of
Geka, as well as proceeds of GBP20 million from a partial sale of
our quoted holding in Refresco Gerber and the full sale of
Consultim.
On 17 December 2015, we announced the sale of our investment in
Element Materials Technology ("Element"), with estimated proceeds
of GBP188 million, representing a 12% uplift against the value at
30 September 2015 and a 30% uplift against the value at 31 March
2015. Inclusive of the proceeds from Element's refinancing
completed in August 2014,
the transaction will generate a 4.5x euro money multiple (3.9x
in sterling) and is expected
to complete before 31 March 2016. Element was valued on an
imminent sale basis at
31 December 2015.
3i realisation
proceeds
======================================== ===============
Full realisations
Consultim GBP10m
Vijai GBP4m
Other GBP1m
Partial realisations
Refresco Gerber GBP10m
Refinancings
Geka GBP17m
Deferred consideration
Other GBP1m
====================================== ===============
Total Q3 2016 cash proceeds GBP43m
======================================== ===============
H1 2016 cash proceeds GBP307m
Total cash proceeds as at 31 December GBP350m
2015
======================================== ===============
Element GBP188m
Total Private Equity realisation GBP538m
proceeds including Element
======================================== ===============
Portfolio performance
The underlying Private Equity portfolio performed well in the
quarter despite the challenging macroeconomic and market
conditions. The portfolio has limited direct exposure to regions or
sectors that have shown weakness over recent months, such as
emerging markets or oil and gas or commodities. Value weighted
earnings growth, including the effect of portfolio acquisitions,
over the last twelve months was 18% (September 2015: 19%) and 12%
excluding Action (September 2015: 14%).
Action, our largest investment, maintained its strong like for
like revenue and EBITDA growth, excellent cash flow generation and
good progress on store openings, resulting in strong unrealised
value growth for this asset. Action's momentum in trading and store
openings has continued through its final quarter. Together with the
good levels of unrealised value generated from assets such as
Scandlines and GIF, this more than offset the continued negative
effect of weak macroeconomic and market conditions on the valuation
of assets such as AES, Dynatect, Etanco and JMJ.
The value weighted average EBITDA multiple used to value the
Private Equity portfolio decreased by 1% to 11.3x before liquidity
discount and 10.7x after liquidity discount in the quarter.
Excluding Action, the multiple before liquidity discount decreased
by 3% to 9.8x (post discount: 9.2x).
Top 10 investments by value at 31 December 2015
Valuation(1) Valuation(1)
Valuation Valuation Sep-15 Dec-15
basis currency GBPm GBPm Activity in
the quarter
=================== ============= =========== ============= ============= =====================
Action Earnings Euro 712 797
=================== ============= =========== ============= ============= =====================
GBP10m interim
2016 dividend
3i Infrastructure accrued within
plc Quoted GBP 450 463 income
=================== ============= =========== ============= ============= =====================
Scandlines DCF Euro 257 271
=================== ============= =========== ============= ============= =====================
Sale signed
in December
2015 and completion
Imminent expected by
Element sale USD 168 182 March 2016
=================== ============= =========== ============= ============= =====================
Amor / Christ Earnings Euro 174 174
=================== ============= =========== ============= ============= =====================
Audley Travel Price GBP - 156 The GBP85m loan,
of recent repaid on 27
investment January 2016,
is accounted
for as a current
debtor
=================== ============= =========== ============= ============= =====================
Weener Plastic Earnings Euro 149 151
=================== ============= =========== ============= ============= =====================
Basic-Fit Earnings Euro 119 123
=================== ============= =========== ============= ============= =====================
GIF Earnings Euro 106 120
=================== ============= =========== ============= ============= =====================
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