3i private equity has announced that it will cut more than a third of its workforce.
The move comes on the back of the appointment of Simon Borrows, a former Greenhill banker hired as CEO last month. In trying to lower the firm’s annual costs to below £45 million over the next two years, it was also announced that it will close offices in Spain, England, Holland, Hong Kong, Italy and China.
3i has undergone an intense transition since the financial crisis began at the end of 2007. Since then, Mr. Borrows is the third head of the company to try to turn things around with Michael Queen and Philip Yea both failing to do so.
The private equity firm targets mid-size businesses and boasts Giraffe restaurants and Agent Provocateur lingerie among its investments.
Its strategy left it heavily exposed at the market’s peak in 2008, and its investments in Western European economies, including but not limited to Spain and England have left it reeling due to the ongoing crisis in the Eurozone.
Consequently, the firm’s shareholders have voiced their discontent of the firm’s performance, demanding that more money be channeled back their way.
Indeed, its falling share price may have sparked an interest in a buyout of the firm itself, especially given that 3i’s estimation of the value of its owned assets now surpass the firm’s stock market valuation.
Private equity as an industry has been struggling since the crash, but 3i hopes it can salvage its recent performance with investments in infrastructure and debt management. Indeed, these two industries resemble classic counter-cyclical growth areas, and the firm’s choice to focus on the US and Brazil may have contributed to a brief rally in its share price, which was up 2.5 percent after the news.
Mr. Borrows also thinks that the fresh business approach might help to “remove bureaucracy and enable faster and more consistent decision making.”