Bloomberg News

3i Seeks $5 Billion U.S. Expansion to Double Credit Business

September 30, 2011

Sept. 30 (Bloomberg) -- 3i Group Plc, Britain’s biggest publicly-traded private equity firm, is seeking to double its credit business by expanding in the U.S. and Asia, according to Jeremy Ghose, chief executive officer of 3i Debt Management.

“We are actively looking at platforms of up to $5 billion in assets under management,” London-based Ghose said in an interview. “This turmoil has thrown up a lot of opportunities so we have a lot of choices. I won’t be surprised if we get something concluded in the next six to 12 months.”

Loan-backed investment vehicles are consolidating because funding has dried up as Europe’s spreading sovereign crisis prompts an exodus from riskier assets. Dallas-based Highland Capital Management LLP put its European collateralized loan funds up for sale, people familiar with the talks said Sept. 8.

In the U.S., the number of credit funds is about 200. In Europe, Ghose expects their number to shrink within five years to less than 35 from 70. Collateralized loan obligations pool high-yield, high-risk loans and slice them into securities of varying risk and return.

3i Debt Management hired Rob Reynolds from Resource Europe Management Ltd. this week to run the Credit Opportunity Fund targeting bonds, loans and floating-rate notes mainly in Europe. The fund has 50 million euros ($68 million) of seed capital from 3i Group.

Asian Plans

3i Debt Management also plans to tap into the Asian market with a debt fund of about $250 million to $300 million to provide senior and subordinated loans, according to Ghose.

The credit business started in October 2007 to buy high- yield debt from European companies at a discount to face value and now oversees $6 billion. It bought Mizuho Investment Management (UK) Ltd. in September last year, according to its website. It manages 10 funds including five CLOs under its Harvest program, delivering an annual yield of 11.2 percent.

3i said last week the value of its assets is likely to drop as stock markets decline, and is seeking to boost profit after the credit crisis froze dealmaking. Shares have fallen 42 percent this year to 189 pence.

“We have access to permanent capital because we are listed,” Ghose said. “This capital can be used for seeding new funds, acquiring portfolios and making strategic acquisitions in the U.S. and Europe. We are at the start of the transformation to be in the top 10 credit managers in the world.”

--Editors: Cecile Gutscher, Andrew Reierson

To contact the reporter on this story: Patricia Kuo in London at

To contact the editor responsible for this story: Faris Khan at

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