3i Group Plc, Britain’s oldest private-equity firm, said it plans to step up cash returns to shareholders after reducing debt.
3i will return as much as 20 percent of the 665 million pounds ($1 billion) it expects to raise from asset sales this year to shareholders after cutting gross debt, the London-based company said. The company had said in May it would return the money if debt fell to less than 1 billion pounds and leverage to below 20 percent.
“These conditions have now been satisfied and the group intends to initiate additional shareholder distributions above the annual base dividend in respect of the financial year ended 31 March 2014,” 3i said today.
3i, which replaced its chief executive officer last year, is under pressure to halt investments and return money to shareholders. Activist investor Edward Bramson, who became chairman of London-based F&C Asset Management Plc after ousting his predecessor, started building a stake in 3i in January.
Gross debt fell to 913 million pounds at June 30, down from 1.08 billion pounds at the end of March, 3i said. Leverage, or gearing, dropped to 7 percent.
The stock fell 0.6 percent to 379 pence in London trading for a market value of about 3.7 billion pounds. The stock has rebounded 74 percent this year.
The amount of money available for distributions will be lower if the company makes additional investments, Chief Financial Officer Julia Wilson said on conference call with reporters today. The company said it is again considering making investments in Northern Europe and the U.S., after focusing the latter team on selling assets since last year.
Asset sales in the three months through June 30 generated proceeds of 195 million pounds, up from 119 million pounds in the year-earlier period, 3i said. Net realized profit was 59 million pounds, driven by the sale of private-equity investments including British software company Civica Group Ltd.
Net asset value increased 5 percent to 326 pence a share in the period.