3i Group turns in solid full-year performance

Private equity giant 3i Group described a solid performance in its full-year results on Thursday, with a total return for 2022 of £4.01bn, or 44% on opening shareholders' funds.

A year ago, those measures came in at £1.73bn and 22%, respectively.

The FTSE 100 company said its net asset value was 1,321p per share at year-end on 31 March, rising from 947p year-on-year.

It said its private equity business delivered a gross investment return of £4.17bn, or 47%, up from £1.94bn and 30%.

“This excellent result was driven by strong earnings growth and realisation profits with valuation multiple increases contributing just 6% of private equity gross investment return in the year,” the board said in its statement.

Benelux-focussed discount retailer Action delivered annual revenue growth of 23% and EBITDA growth of 36% in 2021, and had started 2022 “well”, 3i said.

Action's last-12-months EBITDA to 3 April was €932m, compared to €602m a year earlier, reflecting recovery in the group's trading since the severe Covid-19 restrictions in the first three months of 2021.

“This strong performance underpinned value growth of £2.66bn million in the year, in addition to £284m of dividends received.”

In competitive markets, the private equity team deployed £529m, including six new investments and two transformational bolt-on acquisitions.

3io said that in addition, its portfolio companies completed a further 13 self-funded bolt-on acquisitions.

Across the group, it received over £1.2bn of cash primarily via portfolio company realisations, refinancings and dividends in the year.

Its infrastructure business generated a gross investment return of £241m or 21%, up from £178m and 16%, which was driven by the increase in the share price of 3i Infrastructure, as well as dividend income.

Scandlines generated a gross investment return of £112m, or 26%, rocketing from £25m and 6% year-on-year.

Freight volumes were described as “consistently strong”, finishing ahead of 2019 levels, while leisure volumes showed some signs of recovery but remained below 2019 levels due to varying degrees of travel restrictions throughout 2021.

3i Group said the total dividend for the 2022 financial year would be 46.5p per share, with a second dividend of 27.25p per share to be paid in July, subject to shareholder approval.

“We have entered our new financial year acutely aware of the political and macroeconomic challenges the world is facing, but we do this from a position of strength,” said chief executive Simon Borrows.

“Our teams are experienced and well-embedded in their local markets across northern Europe and North America.

“Our processes are carefully designed and disciplined which allows us to react fast to sudden or sharp changes in markets or the broader environment and our portfolio is well constructed from a thematic, geographic and sector perspective and has demonstrated clear resilience over the last few years.”

Borrows said the company asset manages a portfolio assembled with price discipline in mind, having not “over-bought” recent “highly-priced vintages”.

“In Action we have a formidable retail company that will continue to grow and thrive in today's challenging environment.

“We also have a number of healthcare and consumer assets which have the potential to deliver significant longer-term compounding returns for the group.”

At 0922 BST, shares in 3i Group were down 2.6% at 1,254.5p.

Reporting by Josh White at Sharecast.com.