News & Analysis

3i looks to raise £400m from VC secondaries

The London-listed private equity giant is trying to sell some of its European venture capital portfolio in an attempt to reduce its debt load.

-

3i has put some of its assets up for sale on the secondary market in a bid to raise between £300 million (€325 million; $411 million) and £400 million.

It is the latest move to raise capital by the London-listed group, which has seen its share price fall dramatically in the past year and has recently suffered rating cuts by analysts concerned over the firm’s debt and liquidity levels. Last month 3i sold a 10 percent stake in its infrastructure fund for £60 million and said it expected to net £110 million from liquidating its quoted private equity fund.

3i has hired Campell Lutyens to broker the secondaries sales as part of a plan to reduce its leverage from £1.85 billion to £1 billion, according to the Wall Street Journal. AlpInvest, Coller Capital and HarbourVest Partners have been named as potential buyers.

3i and Campbell Lutyens declined to comment, while AlpIvest, Coller and HarbourVest could not be reached for comment.

Industry sources say 3i is shopping some of its European venture capital assets, a portfolio valued at almost €1 billion according to the firm’s website. The portfolio includes German biotech company Amaxa, UK-based Cambridge Silicon Radio, which manufactures Bluetooth technology, and Italian drugs company Newron Pharmaceuticals.

3i is trying to divest minority stakes in fairly old investments, possibly across more than one portfolio, according to an industry source who noted that the assets have been on the market since Christmas.

It would not be the first time that 3i has sold venture assets: In 2007 3i sold its venture capital stakes in 13 companies to secondaries firm Shackleton Ventures. The firm has been steadily winding down its venture activities since January last year, when the then chief executive Philip Yea, who was replaced by Michael Queen earlier this year, admitted that the firm intended to stop early stage venture capital financing.

This morning the firm’s shares were trading up 6 percent from close yesterday at 200.25 pence each. The firm’s share price has nosedived since a peak of 1,128.00 pence per share in November 2007.