Get 40% Off
These stocks are up over 10% post earnings. Did you spot the buying opportunity? Our AI did.Read how

UPDATE 2 - 3i says asset values lag stock market rebound

Published 09/24/2009, 06:19 AM
Updated 09/24/2009, 06:21 AM

* Disposals at about same value as previously assumed

* Private equity deals "remain subdued"

* Adds two new credit facilities worth total 350 million stg

* Net debt falls to 858 mln stg from 1.9 bln at end-March

* Shares down 3.7 percent, hit lowest in almost a month

(Recasts, adds analyst comment, shares)

By Simon Meads

LONDON, Sept 24 (Reuters) - British private equity firm 3i Group Plc doused hopes that the stock market rally would quickly feed through into the value of its assets, sending its shares down more than 3 percent.

In a statement on Thursday the company said the disposals it had made in the five months ended Sept. 30 had been at about the same value it had previously assumed, helping snuff out a recovery in its shares driven by the stock market rebound.

"Realisations for the five month period have been achieved at approximately their 31 March 2009 carrying value," the company said. "Gains from earnings multiples are unlikely to fully reflect the strong performance of stock market indices since 31 March."

Shares in the group were down 3.7 percent at 277-1/2 pence at 0848 GMT, having touched a near one-month low of 268.1p.

"Despite the recent strong performance of equity markets, the economic outlook is still fragile and private equity and mergers and acquisition markets remain subdued," said Chief Executive Michael Queen in the statement.

Some analysts said they had reigned in net asset value estimates for the company. Analysts at brokerage Oriel said in a note to investors they would pare their estimate to between 310p and 320p a share from 321p to 331p.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"Given the caution in 3i's statement today and the sensitivity of 3i's valuation to stock markets ... we think it appropriate to value 3i on a larger prospective discount," said Oriel.

The brokerage increased its discount applied to unquoted net assets to 20 percent from 15 percent, reducing its share price target to 270p from 285p.

3i's total disposals over the five months to end-August amounted to 448 million pounds ($733.4 million), not including the sale of its venture capital portfolio earlier this month for around 130 million pounds.

The group invested just 155 million pounds over the period compared with 560 million over the same period of 2008 as dealflow remained sluggish.

3i said it had secured 350 million pounds in the form of two new credit facilities and now has credit lines worth 586 million. It said net debt was 858 million pounds at the end of August, down from 1.91 billion at end-March, following a heavily-discounted 732 million rights issue earlier this summer.

It said lead arrangers on the new debt facilities included Lloyds TSB, Royal Bank of Scotland and Societe Generale. (Editing by Jon Loades-Carter and David Holmes) ($1=.6108 Pound)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.