Backers of 3i set for bonanza

VENTURE capital giant 3i is returning £500m of cash to shareholders - far more than expected - after a bumper year for the group.

The company sold £1.3bn of assets in the last financial year in deals including the £525m sale of its Westminster Healthcare nursing homes group.

Chief executive Philip Yea said he was confident he could safely carry out the massive cash return to shareholders without jeopardising his pot for investments in the coming year.

Half the £500m will be returned to shareholders with a special dividend of 40.7p while the rest will be paid out through share buybacks that will start in July. Analysts had previously expected only about £300m to be returned.

'It's just down to maths,î said Yea, explaining that after returning £500m, 3i's debt gearing will move from 14% to a more orthodox position slightly above 30%.

Yea, who replaced Brian Larcombe as chief executive last July, said the current market for deals was mixed. 'There is a hesitancy in financial markets, with no clear direction at the moment,' he said.

He also revealed that 3i has cut its investment portfolio from 1700 to 1500 companies in the past six months, with 800 further small and minority investments identified for disposal. Yea wants to focus on fewer, bigger investments.

3i's portfolio increased in value in the year to 31 March by £512m, or 15.9%. It invested £755m in new deals.

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