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LONDON (Alliance News) - 3i Group PLC is seeking out new investment opportunities but warned that political instability and the weakness of the economy in Europe is making it think hard before parting with its cash.
According to Chief Executive Simon Borrows, 3i is seeing "good earnings momentum" in its larger investments and has a number of realisation and refinancing projects in process, though he remains cautious of new investments.
"We continue to seek new investment opportunities, but we recognise the increasing political uncertainty and stagnating growth in Europe and are mindful of the risks of over-paying for new investments in this environment," Borrows said in a statement.
"We will continue to manage our portfolio energetically, capitalise on realisation opportunities and be selective in making new investments," Borrows added.
Chairman Adrian Montague said that uncertainty and volatility were a concern, especially with the concerns about the Eurozone and conflict around the world.
"This has led to increased volatility in currencies and other financial markets," Montague said. "In this environment we are taking a cautious approach to costs, gearing and investment and retaining a strong focus on cash returns for shareholders and our fund investors, supported by a resilient investment portfolio," he said.
3i's outlook came as the group said it delivered realisation proceeds of GBP324 million and realised profits of GBP35 million in the first half of its financial year, citing "careful" exit planning, in "supportive" markets. A further GBP218 million proceeds have been received since the period ended on September 30.
Net asset value per share rose to 358 pence at the end of September, after the payment of the 13.3 pence final dividend in July, from 348 pence at the end of March. 3i reported a total return of GBP234 million after accounting for a foreign exchange translation loss of GBP73 million. At the same stage last year, 3i's total return was GBP175 million.
3i lowered its interim dividend to 6.0 pence per share from 6.7p, but said that the strength of its pipeline means it expects to generate sufficient proceeds to support a total dividend for the year of at least 15 pence per share, although that depends on market factors.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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