LONDON (Reuters) – British private equity firm 3i Group Plc (III.L) said on Monday it has acquired the assets of listed vehicle 3i Quoted Private Equity Plc QPE.L, giving it access to 240 million pounds of valuable cash reserves.
3i QPE was set up in early 2007 with some 400 million pounds to buy minority positions in smaller quoted companies, however it struggled to find targets as the economic climate worsened.
3i said it would pay 3i Quoted Private Equity (3i QPE) shareholders an equivalent of 88.8 pence, the net asset value (NAV) of the vehicle at Jan 31, valuing the entire issued share capital at 355.2 million pounds ($515.8 million).
The deal will be structured as a voluntary solvent liquidation, allowing 3i to unlock the capital held in the vehicle in which it has a 44.9 percent stake. Shareholders will receive 50 pence in cash and get 0.1706 new 3i shares for each 3i QPE share.
3i raised some 60 million pounds last week through a private placing of a 9.5 stake in 3i Infrastructure Plc, and has made disposals of about 100 million pounds since January as it looks to reduce its 2.1 billion debt burden.
A spokesman for 3i said the group would receive 110 million pounds in cash following the deal and said the acquisition would remove the “double discount” to NAV.
3i holds the investment at quoted value, a 25 percent discount to NAV at Friday’s close, and the main group’s shares also trade at a discount of close to 80 percent, meaning main group shareholders see their interest in 3i QPE discounted twice.
3i Group shares were up 1.5 pence at 219.5 pence at 1015 GMT while 3i QPE shares were up 28.9 percent at 85.5 pence.
Among the investments 3i QPE did manage to make were oil and gas exploration company Salamander and toy producer Character. These will be incorporated into the broader 3i portfolio.
3i said it had received irrevocable undertakings from independent shareholders speaking for 14.97 percent of 3i QPE shares, while another shareholder has agreed to the offer in the absence of a competing bid. ($1=.6887 Pound) (Reporting by Simon Meads; Editing by Joel Dimmock and Sharon Lindores)