LONDON British private equity company 3i Group Plc has no immediate plans to raise a new fund despite a turnaround in its business since a leadership change last year, preferring to give its team longer to prove themselves to investors first.
The owner of women's fashion chain Hobbs and Tommee Tippee baby bottle maker Mayborn has spent the last 18 months restructuring after shareholders criticised its poor share price performance and weak results from its buyout business.
"We obviously are focused on when is the appropriate time to launch a new private equity fund ... it is not something that is going to happen in this financial year or even in the next financial year," Chief Executive Simon Borrows told reporters after the company announced its interim results.
3i last raised a pan-European fund in 2006.
Borrows, a former investment banker who replaced Michael Queen last year, said the company was talking to investors but felt it needed to give its current private equity team longer to show evidence of a good run of investments and divestments.
"I feel we need a period where this current private equity team ... need to make investments, manage investments, and exit investments," Borrows said.
"They came together at the end of 2010, so they really started to do this in 2011 and I think we need a little longer for them to evidence the progress under their own speed."
3i said it had generated proceeds of 528 million pounds ($844.3 million) from private equity divestments in the six months to September 30, including from the sale of Norwegian-based Xellia Pharmaceuticals and UK software provider Civica.
As a result of meeting its goal for gearing of less than 20 percent and gross debt below 1 billion pounds, 3i is going ahead with plans announced earlier in the year to boost shareholder payouts with a special dividend.
It said it would pay 20 pence per share for the year to March 2014, including an annual base dividend of 8.1p.
3i said its net asset value per share, a key measure for valuing its portfolio, had increased to 322p from 311p six months earlier, but analysts said this was below estimates.
Shares in 3i, which have almost doubled since Borrows took over and which hit a three-month high of 384.6p earlier this month, were down 3.5 percent at 358p by 0823 GMT. Over the past 12 months the stock has gained 70 percent against a 16 percent rise in the FTSE 100 index.
Activist investor Edward Bramson's Sherborne Investors, which built a 5 percent stake in 3i earlier in the year, on Wednesday said it no longer had any exposure to the company after seeing better opportunities elsewhere.
Bank of America Merrill Lynch analyst Philip Middleton said this was good news for 3i. "To our knowledge Sherborne had no input into 3i's strategy but represented a potential stock overhang," he said.
Borrows said the company did not expect to be as busy with divestments in the second half of the year, and while the investment outlook had picked up, with three investments made since the end of September, it was still challenging.
"The pipeline is better, it is more interesting, but it is still not what would I would call a robust pipeline," he said. "The volumes in mergers and acquisitions in Europe are still quite depressed."
(Editing by David Goodman and David Holmes)