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3i stages relief rally
by Laurence Fletcher on May 15, 2003 at 13:02
Shares in venture capital giant 3i are up sharply today after its full-year results proved better than expected, but given the tough economic outlook, the shares are still not attractive.
The £5 billion Footsie group , the biggest listed venture capital company in Europe, delivered a fall in net asset value (NAV) of 23.7% for the year to March, compared with a 29.8% drop in the FTSE All Share, including dividends.
Merrill Lynch analyst Philip Middleton, who rates the shares a buy, said the result was above his estimate of between 450p and 460p.
Also encouraging for the market is the lower-than-expected £379 million of provisions for companies that may fail.
These provisions, which are largely due to the falling value of early-stage technology companies, are up on last year, but again they are better than expectations of £400 million or more.
In March 3i's shares tumbled after the group surprised analysts with news provisions were likely to be higher in the second half.
The market has responded to today's news by marking the shares 41p up at 523.75p. In 2000, near the height of the tech boom, the shares reached £18.
3i also announced today it had invested £931 million over the year, while realisation profits from the sale of assets were £184 million. However, investors should note than half of this comes from the sale of budget airline Go to easyJet.
A final dividend of 8.6p per share will be paid, representing a total dividend increase of 3.8% to 13.5p over the year.
3i's falling net asset value has largely arisen from its early-stage technology investments, which have more than halved in value over the year.
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