Newspaper article The Evening Standard (London, England)

3i Shares at Lowest since Floating as Deals Dry Up

Newspaper article The Evening Standard (London, England)

3i Shares at Lowest since Floating as Deals Dry Up

Article excerpt

Byline: MICKEY CLARK

SHARES in private-equity giant 3i hit the skids for the second day in a row, tumbling to their lowest since floating 14 years ago.

The firm's debts are growing as the portfolio of companies it is invested in struggle to find an exit, leaving 3i's share price to taking a battering. It fell a further 26p to 252'p today, but only two million shares changed hands in what is known to be a notoriously thin market. As recently as August, the shares were changing hands at 956'p.

The sums 3i has invested in these companies is dropping and, at some stage, provisions will have to be made in order to reflect their lower value.

Arbuthnot Securities says 3i's gearing is around 50%, which is by far the highest of any company in the sector and will continue to grow as portfolio assets are marked down.

"Other cash-rich private equity companies are trading at a very large discounts compared to 3i, whose share price is falling to reflect this", adds Arbuthnot.

There was not a lot else to cheer in the financial sector, either. Man Group, the UK's largest hedge-fund manager, fell 13'p to 240-p, reeling from the Bernard Madoff fall-out. One of Wall Street's best-known names, Madoff has been accused of a [pounds sterling]33 billion "Ponzi fraud", using funds from new investors to finance payouts for existing clients.

HSBC, which may have lost up to a billion dollars with Madoff, fell 16-p to 7073/4p. Inter-dealer broker Icap was another weak market, losing 17'p at 277-p. The price has collapsed from a peak of 728p since the start of the year, reflecting a slump in business levels.

Schroders firmed 5p to 850p, after touching 808p in a thin market. Credit Suisse has downgraded shares in the asset manager from outperform to neutral because it reckons they are fully valued. Any further strong showing by the shares will be driven by merger and acquisition activity. The outlook for sales in mutual funds remain uncertain.

According to the number-crunchers, turnover yesterday on the London stock market slumped to its lowest in two years, with a total of fewer than 1. …

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