3i to sell debt management business to Investcorp

Investment manager 3i Group is to sell its debt management business to Investcorp, a Bahrain-based manager of alternative investments, for around £222m to focus on growing its private equity and infrastructure portfolios.

The deal, which is expected to close by the end of March, will generate £222m in cash to the company and a £36m profit, subject to closing adjustments, which will be reinvested in the company’s private equity and infrastructure divisions.

Simon Borrows, 3i chief executive, said: "Our debt management business has produced strong cash income for the group since our strategic review in 2012. However, the division fits less well with the 3i of today as we focus on our growing Infrastructure business and a proprietary capital approach in Private Equity.

“We are proud to have built 3iDM into an industry leader in its markets and are delighted with our agreement with Investcorp, which we believe has the strategic commitment, capital and distribution capabilities to support 3iDM in its next phase of growth."

As part of the transaction, the company will sell its 3iDM fund management business and collateralised loan obligation equity investments which were valued at £182m at 30 September to meet risk retention requirements.

The company will continue to hold certain collateralised loan obligation investments valued at £56m, with incentive fees and maintain its commitments to the global income fund and the senior loan fund.

Investcorp also agreed to take over the company’s debt warehouse commitments in Europe and the US.

3iDM’s chief executive Jeremy Ghose will remain as CEO of the division and John Fraser, a managing partner, will continue to oversee US operations.