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25 Jul 2018 07:00
25 July 2018
3i Group plc
FY2019 Q1 performance update
A good start to the year
· NAV per share of 760 pence and total return of 5.1% for the three months to 30 June 2018
· Cash realisations of £337 million in the quarter, net of the £535 million reinvestment in Scandlines
· Completed two new Private Equity investments in Royal Sanders and International Cruise and Excursions ("ICE") totalling £245 million
· Advised 3i Infrastructure plc ("3iN") on its investment in Attero and a further investment for Infinis, Alkane Energy |
Simon Borrows, Chief Executive, commented:
"This was another productive quarter for 3i with good portfolio performance as well as significant investment and realisation activity. We completed the Group's sale and reinvestment into Scandlines, two new Private Equity investments and advised 3iN on its investments in Attero and Alkane Energy. Our balance sheet is strong but we remain cautious about the pricing of new investments in the current environment. Overall, our portfolio of international companies remains well positioned, despite the macro uncertainties, to deliver another year of good earnings growth."
Private Equity
Portfolio performance
The Private Equity portfolio generated good returns in the quarter. The majority of the portfolio performed well with notable value growth increases from Action, Basic-Fit, Cirtec Medical and Etanco.
Private Equity investments
We completed our £135 million investment in Royal Sanders, a private label and contract manufacturing producer of personal care products, in April 2018. In June 2018, we completed our £110 million investment in ICE, a global travel and loyalty company that connects leading brands, travel suppliers and end consumers. In addition to our proprietary investment, we continue to originate acquisition opportunities for our portfolio companies. In the quarter, Royal Sanders announced its first acquisition under our ownership and there is a good pipeline of other acquisition opportunities across the portfolio, the majority of which are expected to be funded by the companies themselves.
Private Equity realisations
We generated total cash proceeds in the quarter of £868 million, principally from the £835 million received from the sale of Scandlines in June 2018, before taking account of the Group's £535 million reinvestment.
Private Equity | Realisation proceeds | |
| £m | |
Full realisations |
| |
| Scandlines1 | 835 |
| SLR | 30 |
Partial realisations |
| |
| Other | 3 |
Total Q1 2019 cash proceeds | 868 | |
1. Private Equity proceeds are shown gross and before the Group's £535 million reinvestment.
In June 2018, we announced the realisation of Etanco, one of the last investments in Eurofund V, for proceeds of c.€102 million. At 30 June 2018, Etanco was held on an imminent sales basis and valued at £88 million, an uplift of 32% compared to its value at 31 March 2018 of £66 million.
Infrastructure
Our Infrastructure team had a busy start to the year, including advising 3iN on the completion of its investments in Attero and Alkane Energy and its refinancing of TCR. 3iN's shares performed well in the quarter, generating unrealised value growth of £27 million for 3i in addition to dividend income of £11 million.
The infrastructure market remains very active and our Infrastructure team is working on a pipeline of interesting investment opportunities in Europe and North America.
Total return and NAV position
We recognised a £99 million gain on foreign exchange in the quarter, as both the US dollar and euro strengthened against sterling. Based on the balance sheet at 30 June 2018, a 1% movement in the euro and US dollar would result in a total return movement of £47 million and £10 million respectively. The diluted NAV per share increased to 760 pence (31 March 2018: 724 pence) or 738 pence after deducting the 22p per share FY2018 dividend, which was paid on 20 July 2018.
Balance sheet
Top 10 investments by value at 30 June 2018
|
|
| Valuation | Valuation |
|
| Valuation | Valuation | Mar-18 | Jun-18 |
|
| basis | currency | £m | £m | Activity in the quarter |
Action | Earnings | EUR | 2,064 | 2,215 |
|
3i Infrastructure plc | Quoted | GBP | 581 | 604 | Ex-dividend 14 June 2018 |
Scandlines | Price of recent investment | EUR | 803 | 539 | Full realisation and 3i's partial reinvestment completed on 21 June 2018 and generated net proceeds of £300m |
Basic-Fit | Quoted | EUR | 270 | 334 |
|
Weener Plastics | Earnings | EUR | 244 | 248 |
|
Audley Travel | Earnings | GBP | 233 | 238 |
|
Q Holding | Earnings | USD | 229 | 235 |
|
Cirtec Medical | Earnings | USD | 190 | 219 |
|
Hans Anders | Earnings | EUR | 189 | 191 |
|
Smarte Carte | DCF | USD | 167 | 179 | Received refinancing proceeds of £4m |
The 10 investments in this table comprise 72% (31 March 2018: 75%) of the total Proprietary Capital portfolio value of £6,915 million (31 March 2018: £6,657 million).
Balance sheet
At 30 June 2018, the Group's balance sheet included net cash of £638 million, before the 22 pence FY2018 dividend (£213 million), which was paid on 20 July 2018.
- ENDS -
Notes
1. | Balance sheet values are stated net of foreign exchange translation. Where applicable, the GBP equivalents at 30 June in this update have been calculated at a currency exchange rate of €1.1310:£1 and $1.3201:£1 respectively. At 30 June 2018, 64% of the Group's net assets were in euro and 14% were in US dollar. |
2. | At 30 June 2018 3i had 973 million diluted shares. |
3. | Action was valued using a post discount run-rate EBITDA multiple of 16.5x based on its run-rate earnings to 30 June 2018. |
For further information, please contact:
Silvia SantoroInvestor Relations DirectorTel: 020 7975 3258
Kathryn van der Kroft
Communications DirectorTel: 020 7975 3021
About 3i Group
3i is a leading international investment manager focused on mid-market Private Equity and Infrastructure. Our core investment markets are northern Europe and North America. For further information, please visit: www.3i.com.
All statements in this performance update relate to the three month period ended 30 June 2018 unless otherwise stated. The financial information is unaudited and is presented on 3i's non-GAAP Investment basis in order to provide users with the most appropriate description of the drivers of 3i's performance. Net asset value ("NAV") and total return are the same on the Investment basis and on an IFRS basis. Details of the differences between 3i's consolidated financial statements prepared on an IFRS basis and under the Investment basis are provided in the 2018 Annual report and accounts. There have been no material changes to the financial position of 3i from the end of this quarter to the date of this announcement.
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