3i expects portfolio companies to be hit by coronavirus disruption
3i expects the majority of its private equity portfolio to experience disruption to its business, as a result of the coronavirus outbreak.
The group said the “modest short-term disruption” is a result of the country by country lockdowns.
It expects a small number of other companies to be significantly affected in the short term, including Action, BoConcept and Hans Ender in the retail sector. Additionally, Audley Travel and ICE in the travel sector, which has been adversely affected by the travel restrictions.
3i said: “We are focused on working with our portfolio companies to support them through these unprecedented times.”
The group said it had invested £471m in the nine months to 31 December 2019, nicluding new investments in Magnitude Software, Evernex, and the new bioprocessing platform. However, 3i said a number of new investment processes had been postponed in light of the global pandemic.
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Last September, 3i announced it would dispose of its investment in ACR and today revealed it will sell another portfolio company for €96m. It did not disclose which company but it is expected to complete later this year.
On the valuation of its valuation, 3i said: “Although the valuation of our portfolio will depend on market multiples and outlook as at 31 March 2020, the significant and continuing falls in equity markets will put more pressure on the multiples that we will use to value the portfolio as at that date, particularly for those portfolio companies currently most directly exposed to the impact of Covid-19.”