TIDMIII

RNS Number : 7254G

3i Group PLC

19 March 2020

Press release

19 March 2020

3i Group plc

Update on Covid-19 and

Action Capital Markets Seminar

3i Group plc ("3i" or "the Group") will be holding a Capital Markets Seminar this morning, involving a presentation from the management team of Action. Presentation materials will be made available on 3i's website ( www.3i.com ), and a copy of the transcript will be published when it is available.

Since 3i published its performance update for the nine months to 31 December 2019 on 30 January 2020, the global impact of Covid-19 on public health, business, financial markets, and governments' responses has developed rapidly. This further update provides a brief summary of the current status of 3i's balance sheet position and our Private Equity portfolio ahead of the valuation of the portfolio as at 31 March 2020.

3i Group balance sheet

3i has had a conservative balance sheet strategy since its restructuring in 2012. It has two long-dated bonds (GBP200 million, maturing in 2023, and GBP375 million, maturing in 2032) which have no financial covenants. On 13 March 2020, we completed the refinancing of our Revolving Credit Facility ("RCF"), increasing its amount from GBP350 million to GBP400 million in a five year facility with an option to extend annually for a further two years. The cost of the facility, which has no financial covenants, was also reduced. At 31 March 2020, we expect our cash balance to be c.GBP800 million before the payment of carry in respect of the Action liquidity event due in May 2020; there are currently no plans to draw on our RCF.

Private Equity portfolio

We completed our semi-annual portfolio company review meetings of the substantial majority of our top 20 investments (which at 31 December accounted for 97% of the total Private Equity portfolio value) in the week commencing 9 March 2020. Although the situation is very fluid, the majority of our portfolio is expected to experience a modest short-term disruption to its business, principally as a result of the country by country lockdowns. A small number of other companies are more directly and significantly affected, at least in the short term. These include Action, BoConcept and Hans Anders in the retail sector, and Audley Travel and ICE in the travel sector. Basic-Fit, in which we have a 13% stake, has also seen a significant decline in its share price.

An update on Action's performance for 2019, and the current status of the impact of Covid-19 on the business will be provided at the seminar this morning.

More generally, we are focused on working with our portfolio companies to support them through these unprecedented times. The weighted average net debt of the portfolio at 31 December 2019 was 4.0x excluding Action.

Private Equity investments and realisations

We invested GBP471 million in the nine months to 31 December 2019, including new investments in Magnitude Software, Evernex, and the new bioprocessing platform. We have recently seen a number of new investment processes being postponed in light of the current environment. We are focusing our efforts on supporting our portfolio companies to deal effectively with the Covid-19 situation.

On 5 December 2019, we announced the signing of an implementation agreement to dispose of our investment in ACR. We received final approvals to complete this transaction. Proceeds are subject to a number escrow arrangements; we expect to receive the first tranche of c.$136 million in Q3 2020.

We have also signed an agreement to sell another portfolio company for proceeds of up to EUR96 million, which will be announced in due course and is expected to complete later this year.

Portfolio valuation at 31 March 2020

For some time, we have had a policy of taking a longer-term approach to the multiples used to value our portfolio. This has meant that, in recent years, we have typically used multiples lower than those prevailing for comparable quoted companies. As a result, we have been able to mitigate the impact of market volatility in the past. Although the valuation of our portfolio will depend on market multiples and outlook as at 31 March 2020, the significant and continuing falls in equity markets will put more pressure on the multiples that we will use to value the portfolio as at that date, particularly for those portfolio companies currently most directly exposed to the impact of Covid-19.

- Ends-

For further information, contact:

 
 3i Group plc 
 
  Silvia Santoro            Tel: +44 20 7975 3258 
  Investor enquiries        Email: silvia.santoro@3i.com 
 
  Kathryn van der Kroft     Tel: +44 20 7975 3021 
  Media enquiries           Email: kathryn.vanderkroft@3i.com 
 

Notes to editors:

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 .

Appendix 1 - Top 20 investments

 
      Company             Value at Dec 19 
                                     GBPm 
---  ------------------  ---------------- 
 1    Action                        3,461 
      3i Infrastructure 
 2     plc                            791 
 3    Scandlines                      464 
 4    Cirtec Medical                  256 
 5    Hans Anders                     249 
 6    Q Holding Inc                   245 
 7    WP                              237 
 8    Audley Travel                   217 
 9    Evernex                         206 
 10   Aspen Pumps                     203 
 11   Basic Fit                       198 
 12   Smarte Carte                    183 
 13   Havea                           180 
 14   AES                             179 
 15   Formel D                        177 
 16   Royal Sanders                   170 
 17   Regional Rail                   163 
 18   ICE                             159 
 19   Tato                            158 
 20   Boconcept                       149 
      Top 20 by NAV                 8,045 
---  ------------------  ---------------- 
 

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END

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