3i upbeat despite wider losses

Money men: 3i expects higher investment this year

Venture capital giant 3i has reported wider losses, but said it sees "clear evidence" of a turnaround.

The company said that losses for the 12 months to late March widened to £960m from £142m the year before, while total investment fell by almost half to just over £1bn.

The losses are due largely to a sharp decline in the value of 3i's investments, reflecting a slump in share prices last year.

Chief executive Brian Larcombe said the year had been "challenging," but added that the company now sees "clear evidence of improved conditions".

Upturn

The company managed to make a profit of £137m during the second half of the year, in a sign that investment returns were picking up.

And a 3i survey of business confidence, to be published later this month, shows a "marked improvement," 3i director of corporate affairs Liz Hewitt said.

"It's pretty good evidence of a turnaround," she told BBC News Online.

3i was hit hard by the collapse in technology stocks two years ago, and has had to absorb further losses stemming from a wider slump in share prices since then.

Last year, the company cut jobs and closed some of its offices in an attempt to curb costs.

Go windfall?

3i is one of the UK's most powerful investment companies, stage-managing some of the most high profile corporate deals in recent years.

It backed the management buy-out of no-frills airline Go from former owner British Airways, holding onto its 43% stake in the low-cost carrier.

On Thursday, rival low-cost airline EasyJet said it had clinched a deal to buy Go for £374m, nearly four times its original sale price of about £100m.

In August last year, 3i invested in up-and-coming media and entertainment group Ministry of Sound, and also funded a buyout of educational retail company the Early Learning Centre, formerly part of John Menzies.

The company said it expected to step up its investment programme this year.