TIDMIII
RNS Number : 2735H
3i Group PLC
31 July 2019
31 July 2019
3i Group plc
FY2020 Q1 performance update
A good start to the year
* Increase in NAV per share to 864 pence (31 March
2019: 815 pence) and total return of 6.2% for the
three months to 30 June 2019
* Completed GBP139 million Private Equity investment in
Magnitude Software Inc and signed the US
Infrastructure investment in Regional Rail, LLC,
which completed in early July
* Strong share price performance from 3i Infrastructure
plc ("3iN"), which completed its investment in Joulz
and announced a bolt-on investment for Valorem
Simon Borrows, Chief Executive, commented:
"This was another good quarter for 3i. Our Private Equity
portfolio performed well with Action again generating good growth,
as well as 3iN delivering another strong share price performance.
Both our Private Equity and Infrastructure teams had a busy quarter
on origination and investment. Our balance sheet is well-funded but
we remain cautious about the pricing of private investments in the
current environment and have continued to focus on platform and
bolt-on acquisitions."
Private Equity
Portfolio performance
The Private Equity portfolio generated good returns for the
quarter. Action has performed strongly since the end of 2018,
trading ahead of its budget for the first six months of 2019, with
good cash generation and a further improvement in year to date
like-for-like sales growth, which is now at 5%. The two new
distribution centres which opened in early 2019 are operating well,
with much improved stock availability as a result. Action opened 86
new stores in the six months to 30 June 2019, resulting in a total
store count of 1,409.
We continue to see challenging macro-economic headwinds in
Europe and in China specifically in the automotive sector, which is
affecting some of our European headquartered industrial companies.
However, there is little overall change to the momentum of our
Private Equity portfolio.
Private Equity investments
In May 2019, we completed our GBP139 million investment in
Magnitude Software Inc, a leading provider
of unified application data management solutions. We have
continued to grow portfolio value through our buy-and-build
strategy, with Havea Group (formerly Ponroy Santé) completing its
acquisition of Pasquali Healthcare and Christ acquiring Valmano, an
online retailer of jewellery and watches in Germany. These
acquisitions were funded directly by the portfolio companies and
did not require any further investment from 3i. In July, Formel D
agreed to acquire CPS, a provider of quality assurance services to
the automotive industry headquartered in France, and Lampenwelt
agreed to acquire QLF Group, one of the leading online lighting
players in the Benelux. There is a good pipeline of further
acquisition opportunities for a number of companies in the
portfolio.
During the period, we took the opportunity to purchase three
additional LP stakes in EFV, with 3i's investment totalling GBP61
million. These purchases increased 3i's holding in Action to 45.3%
(31 March 2019: 44.3%).
Since the quarter end, we have announced our investment in
Evernex, a leading international provider of third-party
maintenance services for data centre infrastructure. The investment
is expected to complete by the end of 2019.
Infrastructure
The Infrastructure business had another busy quarter. 3iN
completed its investment in Joulz in April 2019 and in July agreed
to invest c.EUR220 million in Ionisos, a leading owner and operator
of cold sterilisation facilities headquartered in France. In
addition, 3iN's portfolio company Valorem agreed to acquire a 51%
stake in Force Hydraulique Antillaise SAS. 3iN's share price
performed strongly, generating unrealised value growth of GBP58
million for 3i, in addition to dividend income of GBP12
million.
In April 2019 we announced that the 3i European Operational
Projects Fund had agreed to invest over EUR100 million in four
projects across Europe, taking total investment to c.40% of the
fund. We also announced the US Infrastructure team's agreement to
invest in Regional Rail, LLC and this investment completed in early
July. The infrastructure market remains very active and our
Infrastructure team is working on a pipeline of interesting
investment opportunities in Europe and North America.
Top 10 investments by value at 30 June 2019
Valuation Valuation
Valuation Valuation Mar-19 Jun-19
basis currency GBPm GBPm Activity in the quarter
=========== =========== ========== ========== ==============================================
Action Earnings EUR 2,731 3,076
=========== =========== ========== ========== ==============================================
3iN Quoted GBP 744 799 Accrued a GBP12 million FY2019 final dividend
=========== =========== ========== ========== ==============================================
Scandlines DCF EUR 529 555 Received a GBP6 million dividend
=========== =========== ========== ========== ==============================================
Hans Anders Earnings EUR 246 306
=========== =========== ========== ========== ==============================================
Basic-Fit Quoted EUR 254 271
=========== =========== ========== ========== ==============================================
Audley Travel Earnings GBP 270 270
=========== =========== ========== ========== ==============================================
WP Earnings EUR 241 253
=========== =========== ========== ========== ==============================================
Cirtec Medical Earnings USD 248 253
=========== =========== ========== ========== ==============================================
Q Holding Earnings USD 241 247
=========== =========== ========== ========== ==============================================
Havea Earnings EUR 174 190
=========== =========== ========== ========== ==============================================
The 10 investments in this table comprise 75% (31 March 2019:
75%) of the total Proprietary Capital portfolio value of GBP8,295
million (31 March 2019: GBP7,553 million).
Total return and NAV position
We recognised a net GBP212 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 2019, a 1% movement
in the euro and US dollar would result in a total return movement
of GBP48 million and GBP12 million respectively, net of any
hedging. The diluted NAV per share increased to 864 pence (31 March
2019: 815 pence) or 844 pence after deducting the 20 pence per
share second FY2019 dividend, which was paid on 19 July 2019.
Balance sheet
At 30 June 2019 net cash was GBP307 million. The 20 pence second
FY2019 dividend of GBP194 million was paid on 19 July 2019.
- ENDS -
Notes
1. Balance sheet values are stated net of foreign exchange translation. Where applicable, the
GBP equivalents at 30 June 2019 in this update have been calculated at a currency exchange
rate of EUR1.1173:GBP1 and $1.2718:GBP1 respectively. At 30 June 2019, 63% of the Group's
net assets were in euro and 16% were in US dollar.
2. At 30 June 2019 3i had 973 million diluted shares.
3. Action was valued using a post discount run-rate EBITDA multiple of 18.0x based on its run-rate
earnings to 30 June 2019.
For further information, please contact:
Silvia Santoro
Investor Relations Director
Tel: 020 7975 3258
Kathryn van der Kroft
Communications Director
Tel: 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 2019 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 2019 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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