3i in £732 million rights issue

3i Group, Britain's biggest listed private equity group, launched a £732 million rights issue yesterday, saying it would use the money to pay down debt and bolster its balance sheet.

The company said it would issue just over 542 million new shares at 135 pence each, which is a 60 per cent discount on Thursday's closing price of 339 pence and a 39.8 percent discount on the theoretical ex-rights price.

3i Group, which had net debts of ?1.1 billion at the end of March, also said it believed the underwritten nine-for-seven rights issue would improve its access to financing.

"This rights issue builds on a number of actions we have been taking," chief executive officer Michael Queen said in a statement.

"It will strengthen not only our balance sheet but also our market position and will position us well to take advantage of investment opportunities as they emerge."

J.P. Morgan Cazenove and Merrill Lynch are acting as joint co-ordinators, bookrunners and sponsors of the issue.

Highlighting the headwinds 3i is facing, the company said in a separate statement on Friday that its net asset value per ordinary share slid to £4.96 in the year to the end of March 2009 from £10.77 a year earlier.

Total assets under management fell to £8.02 billion from £9.79 billion a year earlier.

The company said that given the rights issue it would not be paying a final dividend.