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By Kylie MacLellan
LONDON, Jan 30 (Reuters) - British private equity group 3i has abandoned plans to raise a Brazilian fund and willnot make any new investments in the region because of changingmacroeconomic conditions.
Reporting results for the three months to Dec. 31, the ownerof women's fashion retailer Hobbs and Tommee Tippee baby bottlemaker Mayborn said it would continue to manage its investmentsin Brazil but would cut back on its resources.
"Brazil remains a really interesting market but conditionshave changed over the past 12 months, there is much greatermarket and political uncertainty and that has also beenreflected in currency volatility," 3i Finance Director JuliaWilson told reporters on a conference call.
The firm set up its Brazilian operation in 2011 and now hasan eight-strong team in the country. It said in 2012 that itwanted to launch a $500 million fund in Brazil in late 2013.
However, Wilson said that the weight of due dilligencerequired for new investments because of the firm's strategy ofavoiding competitive auctions has slowed capital deployment.
"The level of investment has just been lower than we thoughtit might have been," she said.
Wilson said the group's two investments in Brazil, cableoperator Blue Interactive and eyewear retailer Oticas Carol,were worth 34 million pounds ($56.3 million) at Dec. 31.
Worries over the health of emerging economies has promptedan exodus of capital from those markets, forcing many centralbanks to raise interest rates to contain the spread of thesell-off.
3i said the pace of its private equity divestments hadslowed in its third quarter, with 29 million pounds completed,taking its total proceeds for the financial year so far to 557million pounds.
Net profit on those proceeds was 143 million pounds, 3isaid, representing a return of 1.8 times its investment.
New investment during the quarter increased, with 3iinvesting 247 million pounds of cash from its balance sheetcompared with only 4 million pounds in same period in 2012.
3i said diluted net asset value per share, a key measure forvaluing its portfolio, had increased 3 percent on the previousquarter to 333 pence.
The firm's shares were up 0.4 percent at 377.4 pence by 0840GMT.
