3i raises £700m for quoted infrastructure fund

UK-listed private equity company has missed the top of its range by £600m but gearing still means it has £1bn to spend on infrastructure.

3i, Europe’s largest quoted private equity company, has raised £700 million ($1.4 billion; €1 billion) for its listed infrastructure investment business, which will begin conditional trading tomorrow, hitting the bottom of its intended range. It had hoped to as much as £1.3 billion. The fund’s leverage, however, effectively gives the team up to £1 billion.

A source close to firm said 3i was pleased with the result given the recent turbulence in the public markets and diminished appetite for new quoted private equity funds in the wake of Kohlberg Kravis Roberts’ Amsterdam flotation. Doughty Hanson abandoned its efforts to float a fund last year.

3i Group has subscribed for 325 million ordinary shares in the company, representing approximately 46 percent of company’s ordinary shares. The listed infrastructure company is acquiring an initial portfolio of UK investments from 3i Group, including interests Anglian Water, the fourth largest water supply and waste water company in England and Wales; in Infrastructure Investments, one of the largest UK equity funds investing in secondary PFI projects; and investments in two other projects.

The new fund is aiming to make investments with an overall objective of providing its shareholders with a total return—that is the increase in net asset value, plus distributions, per share—of approximately 12 percent on the initial proceeds of the placement.

A total of 700,000,000 ordinary shares, at a price of £1 per ordinary share, and 70,000,000 warrants with a subscription price of £1 each will be issued.