Private equity firm 3i Group holds dividend despite profit slump
Buyout firm 3i Group today said it will pay its 2020 dividend as planned despite a collapse in profit caused by the coronavirus crisis.
3i said it would keep its total dividend of 35p per share for this year, with a dividend of 17.5p per share to be granted in July subject to shareholder approval.
Shares in 3i Group rose more than five per cent in early trading this morning.
It came as the group’s total return slumped to just £253m, representing a profit of three per cent on opening shareholders’ funds. This was down from £1.3bn, or 18 per cent, in March last year.
3i’s private equity business delivered a gross investment return of £352m or six per cent, compared to £1.1bn or 20 per cent in 2019.
The company said its portfolio had been on track before the outbreak of Covid-19, which slashed the value of its investments in travel, retail and automotive companies.
This was only partially mitigated by strong demand for medical tech, personal care products and ecommerce.
3i said European discount retailer Action, which it part owns, had been forced to implement total or partial store closures in a number of countries, but was beginning to rebound as lockdowns were lifted.
Earlier this year the company closed the transaction to provide liquidity to investors in Eurofund V from the realisation of the fund’s investment in Action through a sale to the 3i 2020 co-investment vehicles.
This transaction achieved an enterprise value of €10.3bn (£9.1bn), it said.
Chief executive Simon Burrows said 3i had delivered a “solid return” despite the impact of Covid-19.
“We enter our new financial year with a carefully assembled portfolio of private equity and infrastructure companies and an experienced team that has proved adept at managing these investments against a deteriorating macroeconomic backdrop,” he said.
“We have been cautious investors for some years and have maintained a strong balance sheet since our restructuring in 2012. This conservative approach will help us to navigate the challenging months ahead minimising significant interruptions so that we can continue to generate attractive returns for our investors through the cycle.”