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3i Group sees portfolio value shrink as stock markets fall

Published: 09:25 23 Sep 2011 BST

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3i (LON:III) warned investors that the value of its portfolio will “inevitably” be lower at the end of the half year period as a result of falling stock markets and challenging economic outlook.

The private equity firm said the multiples which it uses to value its portfolio will reflect the falls in stock markets, which means its net asset value (NAV) at the end of September will be lower compared to the end of March this year.

“The economic outlook looks increasingly challenging and falling stock markets mean that the value of our portfolio will inevitably be lower at the half year despite an overall solid trading performance,” said chief executive of 3i Michael Queen.

“We face this environment with confidence having reshaped the business over the last few years to ensure that we have both a strong balance sheet and liquidity to continue to implement our strategy.”

Investments made by 3i increased to £303 million in the five months to end August from £257 million the same period last year. Meanwhile, asset sales quadrupled from £129 million to £528 million as the group “took the opportunity to realise assets at attractive prices”.

The sale proceeds have helped the group reduce its net debt from £522 million at the end of 2010 to £343 million at the end of August. The group also noted that it has cash and undrawn facilities worth a total £1.94 billion.

Shares in 3i climbed 1 percent to trade at 189.1 pence this morning, valuing the group at £1.835 billion.

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