3i asset value jumps

LONDON (Reuters) - Buyout firm 3i Group said on Thursday it sees a challenging outlook for the current financial year, as assets under management rose by 37 percent in the year ended March 2008.

The value of 3i's investments in the year rose to 9.8 billion pounds from 7.1 billion a year earlier, it said. The company's return on investments, however, fell to 18.6 percent from 26.8 percent a year earlier.

Buyout firms have struggled to borrow the funds to continue doing deals during the recent credit crunch after several years' record opportunities and a cheap debt-fuelled M&A boom that lasted until mid-2007.

"With so much uncertainty still clouding economic prospects in the major economies we take a cautious view of the coming year," said 3i. However the company added it hopes to counter this outlook by taking a "highly selective approach to investments."

3i has been investing in more assets as it tries to take advantage of uncertain markets. The firm said it invested 2.2 billion pounds in the year through March, up from 1.6 billion pounds the previous year.

Among other factors that helped boost the value of the company's assets under management was growth in its Asian-owned businesses, such as those in India and China.

Many buyout firms are looking to such emerging markets for growth as the U.S. and Europe buckle under the credit crunch and an economic downturn, making growth in such mature markets more difficult.

3i (III.L: Quote, Profile, Research), which in April said it had raised a $1.2 billion (600 million pound) fund to invest in Indian infrastructure, has been steadily investing in emerging markets for several years.

The shares were up 1.7 percent to 883.5 pence at 8:30 a.m.

3i also said it is planning a new convertible bond worth about 425 million pounds as a similar existing loan matures.