As we reported earlier in the week, the UK based private equity group 3i is undertaking a period of rapid cost-cutting. With around a third of its workforce due to be laid off in the coming quarters, the firm is also selling offices around the world.
Further news this week suggest 3i are wasting no time, and have decided to sell their stake in the Finnish power network LNI.
The stake was acquired just six months ago. At 5.7% of LNI’s total value, one would be tempted to view the move as insignificant. However, the sale, to The Teachers Insurance and Annuity Association of America, was worth €36 million.
3i felt comfortable in retaining diversity in their investment portfolio due to their existing commitment to the infrastructure sector through its in-house sector 3i Infrastructure.
The move is part of a wider attempt under newly-instated CEO Simon Borrows, of Greenhill fame, to reduce the company’s gross debt position to below the £1 billion mark by the end of June 2013.
3i has also sold the European rubber component manufacturer Novotema to Axa Private Equity, and has dealt with its 49% stake in the Finnish outdoor clothing brand Halti Oy.
Similarly, 3i has been fairly quiet on the acquisition front. Its last major market move came in February of this year, as it completed the purchase of a majority sharehold in Geka, the German cosmetic packager.
At the end of this plan, it is anticipated that the firm will retain offices in London, Paris, Frankfurt, Amsterdam, Stockholm and Sao Paolo, leaving the firm heavily skewed towards a European footing.
Given the Eurozone crisis, analysts have every right to question this particular distribution of decision-making power given their current global base that includes centres in China, India, Singapore, and, of course, New York. While the New York offices may still be able to execute deals in exceptional circumstances, the redistribution leaves little doubt as to where the company’s leadership expects growth to come from in the near future.