3i Group Plc (III), Britain’s largest publicly traded private-equity firm, promoted investment chief Simon Borrows to run the company, boosted its dividend and said it would distribute more cash to investors.
Borrows, 53, replaces Michael Queen as chief executive officer, London-based 3i said in a statement today. The firm said its net asset value dropped 21 percent from the year- earlier period to 2.79 pounds a share at the end of March.
Borrows said 3i’s costs are “not consistent” with his plans, which include growth for the company’s infrastructure and debt-management businesses. 3i is under pressure from Laxey Partners Ltd., a hedge fund that owns about 1 percent of the company, to narrow the stock’s discount to the value of its holdings. Queen announced his departure in March after he struggled to boost the pace of investments and asset sales following the credit crisis.
“It has undoubtedly been a challenging year for 3i,” Chairman Adrian Montague said in the statement. Borrows will “pursue a clear and concrete set of measures that he and the board have agreed to maximize shareholder value.”
The company will pay a full-year dividend of 8.1 pence a share, up from 3.6 pence in 2011. 3i also said it plans to distribute as much as 20 percent of its gross cash to investors from now on through special dividends and share buybacks.
Borrows became chief investment officer when he joined 3i in October from Greenhill & Co., where he served as chairman of the investment bank’s international unit and founded its European operations. He assisted 3i with its 1994 initial public offering while working at New York-based Greenhill.
“It’s clear to me which areas are capable of making a significant contribution,” he said on a conference call with reporters today.
The new CEO said that he plans growth for all of 3i’s businesses, and would like to see the fastest increase within infrastructure and debt management. 3i’s infrastructure fund invests in electricity and water networks.
3i invested 646 million pounds ($1 billion) in the period, 10 percent less than the previous year. 3i reaped 771 million pounds from asset sales, up from 609 million pounds the prior year.
After 3i dropped out of the FTSE 100 in September, Queen more than doubled the dividend to assuage shareholders, some of whom pushed for buybacks as cash reserves swelled. 3i and other publicly traded private-equity companies including SVG Capital Plc (SVI) and Candover Investments Plc are being pressed to return cash to investors amid a depressed environment for dealmaking and slumping stock markets that widened the gap between the firms’ share price and net asset value.
Queen, who became CEO in January 2009, sought to boost profit by combining 3i’s leveraged-buyout team with its growth capital unit and diversifying into credit with the purchase of Mizuho Investment Management U.K. Ltd. He said he would seek to deliver a 15 percent return on equity over any given five-year period and reduce 3i’s historically high earnings volatility.
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