January 10, 2013 7:22 pm

3i sets disposal programme in motion

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3i Group has started the sale processes of at least four companies, including Canadian group Mold Masters, as it focuses on returning cash to investors under the helm of new chief executive Simon Borrows.

The London-listed private equity group, which has struggled to reignite dealmaking after the financial crisis, has been disposing of assets, cutting staff and closing offices since Mr Borrows took over from Michael Queen in May, in a move to boost the share price.

Britain’s oldest private equity investor, whose roots date back to 1945, when it was set up to provide finances to war-torn companies, said on Thursday it had sold its remaining 16.7 per cent stake in Norma, a German maker of engineered joining products, bringing total proceeds to €385m since listing the Maintal-based company in April 2011. That is 5.5 times the company’s initial investment.

3i has hired Morgan Stanley to advise on the sale of Mold Masters, a manufacturer of plastics melt control systems worth about C$700m (US$710m), people with knowledge of the matter said. The company is likely to attract interest from US trade buyers, they said.

The group is also selling UK software maker Civica, which it took private for about £218m in 2008. The company, which provides software for UK local councils as well as police forces, generates about £40m in annual earnings before interest, taxes, depreciation and amortisation, the people said.

The private equity investor is also preparing to offload Scandlines, a Danish-German ferry operator, in an auction scheduled to start in the next few months. A disposal would value the company at up to €1.5bn, based on about €190m in ebitda, the people said.

3i is also considering bids from private equity groups including Paris-based PAI Partners for its minority stake in French medical diagnostic company Labco, following unsolicited approaches last year. A transaction could value the laboratories network at up to €1bn including debt, the people said.

“The sales of Scandlines and Mold Masters could make a big difference to market perception,” a banker with knowledge of the situations said.

3i’s share price has increased nearly 40 per cent since Mr Borrows, formerly at US investment bank Greenhill, took over. The shares rose 1.6 per cent Thursday to 234.1p.

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