3i Group Halves Debt, Remains Cautious

by admin on July 30th, 2009

Private equity outfit 3i Group PLC (III/LN) reports making progress:

“Our focus in the first quarter was on strengthening the balance sheet,” Chief Executive Michael Queen said in a statement.

“A substantial increase in liquidity and the reduction in net debt provide further resilience in what remains a fragile environment.”

Private equity firms have seen the value of their investments slump as falling revenues and shaky outlooks hit company valuations. And new deals have come to a virtual halt as debt to fund them has dried up.

3i has shrunk to the point of being one of my portfolio’s smaller positions. But I’m not quite ready to place it in the permanent loss of capital category like I have Media General (MEG). The company could make a nice comeback when the economy turns around.

That said, I didn’t take advantage of 3i’s recent rights offering, which was dilutive to existing shareholders.