Business review Financial review
Portfolio and assets under management
Assets under management
At 31 March 2007 assets under management totalled £7,134 million (2006: £5,712 million). This comprised £4,362 million of portfolio assets owned directly (2006: £4,139 million), co-investment funds of £2,387 million (2006: £1,573 million) and external quoted investment companies £385 million (2006: nil)
The main contributors to this 25% growth in assets under management were the closing of 3i's latest mid-market buyout fund, Eurofund V, in November 2006 at €5 billion and the £700 million launch of 3i Infrastructure Limited on the London Stock Exchange in March 2007. 3i Group's commitment to Eurofund V is €2,780 million and the Group's investment in 3i Infrastructure Limited was valued at £334 million at 31 March 2007.
Portfolio assets directly owned by the Group
The value of the portfolio at 31 March 2007 was £4,362 million (2006: £4,139 million).
In line with our strategy, the number of companies in the portfolio was reduced further during the year. At 31 March 2007 there were 762 companies in the portfolio compared with 1,087 at the start of the year and 1,878 just three years ago. The SMI programme again made another significant contribution to this reduction with 233 exits during the year. This reduction, combined with higher realisations in other business lines, means that more than two-thirds of the portfolio is now less than three years old, and 36% is less than one year old.
| Chart A: Assets under management (£m) for the year to 31 March |
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| 2007 | 2006 |
|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 3i direct portfolio | 4,362 | 4,139 | ||||||||||||||
| Third-party advised and managed | 2,772 | 1,573 | ||||||||||||||
| Total | 7,134 | 5,172 | ||||||||||||||
| Table 6: Portfolio value by business line and age (£m) as at 31 March |
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| Up to 1yr | 1-3yrs | 3-5yrs | 5-7yrs | Over 7yrs | 2007 | 2006 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Buyouts | 461 | 599 | 148 | 23 | 50 | 1,281 | 1,465 | ||||||||||
| Growth Capital | 449 | 579 | 200 | 159 | 73 | 1,460 | 1,192 | ||||||||||
| Venture Capital | 205 | 233 | 129 | 99 | 75 | 741 | 826 | ||||||||||
| Infrastructure | 451 | – | 18 | – | – | 469 | 92 | ||||||||||
| QPE | 20 | – | – | – | – | 20 | – | ||||||||||
| SMI | 4 | 10 | 14 | 35 | 328 | 391 | 564 | ||||||||||
| Total | 1,590 | 1,421 | 509 | 316 | 526 | 4,362 | 4,139 | ||||||||||
| Percentage | 36 | 33 | 12 | 7 | 12 | ||||||||||||
| Table 7: Portfolio value by geography (£m) as at 31 March |
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| 2007 | 2006 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Continental Europe | 1,894 | 1,923 | |||||||||||||||
| UK | 1,792 | 1,736 | |||||||||||||||
| Asia | 373 | 167 | |||||||||||||||
| US | 283 | 307 | |||||||||||||||
| Rest of World | 20 | 6 | |||||||||||||||
| Total | 4,362 | 4,139 | |||||||||||||||
| Table 8: Managed funds |
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| Fund | Date closed | Fund size €m |
3i commitment €m |
Invested at 31 March 2007 % |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Eurofund III | 1999 | 1,990 | 995 | 90% | |||||||||||||
| Eurofund IV | 2004 | 3,067 | 1,941 | 90% | |||||||||||||
| Eurofund V | 2006 | 5,000 | 2,780 | 1% | |||||||||||||
The portfolio is well diversified by business line. The high level of realisations in the Buyouts business has resulted in the value of the Buyouts portfolio falling by 13% despite increasing investment by 10%. This has increased the proportion of the Buyout portfolio held for less than three years from 64% to 83%.
Excluding Infrastructure investment (£89 million) from the 2006 total, Growth Capital investment grew by 18% in the year, and the proportion of the portfolio represented by Growth Capital increased to 33%. During the year, £234 million of portfolio assets were transferred to 3i Infrastructure Limited, £92 million of which was included in Growth Capital as at 31 March 2006.
Geographically, significant growth in investment in Asia led to an increase in the proportion of the portfolio value in that region, rising from 4% to 9% during the year. The continental European portfolio now represents 43% (2006: 46%) of total value with the UK representing 41% (2006: 42%) and the US portfolio 6% (2006: 7%).
The Group also increased its investment in private equity funds. As a consequence, the value of this portfolio of investments at 31 March 2007 was £64 million (2006: £25 million). These investments are included within the respective business line totals in table 6 and geographies in table 7.
Assets managed and advised by 3i
These assets principally relate to Buyouts, where there are three current funds in operation, and to Infrastructure, where our investment in 3i Infrastructure Limited includes the provision of advisory services to the company on an exclusive basis.