3i Group PLC Agreement to sell Debt Management business (3650N)
October 25 2016 - 2:00AM
UK Regulatory
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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