3i, the private equity, infrastructure and debt management group, has more than doubled its full-year dividend despite seeing returns and assets under management (AUM) slip during the year to March 31st.
"This has been a challenging year for 3i and the stability of the Eurozone remains central to the outlook. Whatever the environment, we have a clear set of measures to maximise shareholder value and the returns to our co-investors in our funds," said Chairman Adrian Montague.
A final dividend per share (DPS) of 5.4p (in addition to the interim DPS of 2.7p) bring the total DPS to 8.1p, 125% up year-on-year. Additionally, the board has decided to further strengthen its distribution policy in order to "give shareholders a direct share in the success of the group's realisation activities by adopting a policy of returning a share of gross cash realisations."
3i also announced today that it has appointed Simon Burrows, currently Chief Investment Officer, as its new Chief Executive Officer (CEO) with immediate effect, following the announcement of Michael Queen's departure at the end of March.
Prior to joining 3i Burrows had served as Chairman and Co-CEO at Greenhill & Co, an independent investment bank listed on the New York Stock Exchange. Before founding the European operations of Greenhill & Co in 1998, he was the Managing Director of Baring Brothers. He is also a non-executive director of The British Land Company and of Inchcape.
Burrows commented: "3i has a great brand and a strong long-term track record of investing. Whilst there are clear challenges ahead, particularly in light of the current uncertain macro-economic environment, I am committed to improving the performance of 3i and maximising long-term shareholder value."
Returns and AUM decline
For the 2011-12 fiscal year, the group said that the performance in Private Equity was offset by a continued drag on returns from pre-credit crisis investments and the value of its largest Asia asset, reinsurance business ACR, was affected by natural disasters.
"These factors, together with the impact of economic uncertainty on both the multiples used to value the portfolio, as well as the earnings used for valuations, adverse movements on currency and pensions, meant that our total return for the year was £(656)m. This was a disappointing result in the light of the progress that we have made and our potential for the future," said outgoing CEO Queen. The return in the year ended March 31st 2011 was a positive £324m.
Total AUM dropped from £12.7bn to £10.5bn during the period, reflecting the fall in Eurofund V AUM, net divestment activity and a £249m reduction due to the weakening of sterling against euro-denominated funds.
As for the economic outlook, Montague said: "It is clear that uncertainties over the environment remain, especially with respect to the Eurozone. It is early days but the performance of our recent Private Equity vintages is more encouraging, as can be seen from the additional disclosure that we have provided on the portfolio this year."
3i, which owns the Agent Provocateur and Early Learning Centre brands (amongst a host of others), has seen its shares fall 37% in the last 12 months. Shares rose 1.55% to 182.39p in early trading on Thursday.
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