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Quote of the Week: Patience With Dry Powder

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May 15, 2014

The current environment is a tricky one for new investments. There is an excess of capital looking for investment opportunities and this has driven up sellers’ price expectations. We have benefited from this in our realisation programme, however as we review new investment we will need to continue to be patient and disciplined.

 

Who said it: Simon Borrows, Chief Executive 3i Group

 

In Context: UK-based 3i, one of the oldest publicly-traded PE fund managers, delivered its financials this week, announcing a “strong” total shareholder return of 30%, a solid dividend for stockholders, and a 43% uplift in its value. 3i results echo the trends we’ve been reporting about mid-market buyout fund managers in the DealMarket Digest. Its top management extolled the excellent economic environment for exits, but warned of expensive equity in the mid-market deals it is screening. 3i says a “selective” investment strategy and cost-consciousness are integral to its “alpha-generating economics”, and it is relying on “sourcing deal flow outside of highly competitive processes”. He is not the only European fund manager expressing such a view EQT’s chief, Thomas von Koch told the FT that from a PE investor’s point of view asset prices are in “dangerous territory”.

 

Where we found it: 3i Press Release

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