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3i's £630 million debt boost

By Paul Driscoll on May 06 2008

In the midst of a deepening credit crisis private equity firm 3i plc has risen to the challenge shirked by traditional lenders. The buy-out firm is set to provide up to €800 million (£630 million) of debt to other private equity houses in a bid to profit on the burgeoning gap left by UK banks.

The company has agreed a package with Lloyds TSB, leveraged with €200 million (£157.6 million) of equity from 3i’s balance sheet late last year. The upshot is the €800 million lending facility, of which €350 million (£275.8 million) has already been handed over to other buy-out houses to fund primary and secondary buy-outs.

3i decided last October to set up the debt facility and formed a team from its banking department to implement it. The shift in strategy follows the group’s decision to close down its early-stage investment division in March this year and focus on less risky, more established enterprises.

Last week Indian energy company Adani Power said it expects to raise more than $1 billion with an IPO, following a $227 million (£115.2 million) investment from 3i last October.

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