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3i Group Plc (III), one of Britain’s oldest private equity firms, said Chief Executive Officer Michael Queen will step down amid criticism he failed to step up the pace of investments and asset sales.
Queen, 50, will leave as soon as a successor is identified, the London-based company said in a statement today. He took up the job in January 2009.
He struggled to spend more money buying companies and reap profits from selling them as the financial crisis and European sovereign debt crisis crimped dealmaking. 3i dropped out of the benchmark FTSE 100 index in September. Two months later, Queen more than doubled the dividend to assuage shareholders, some of whom had pushed for buybacks as 3i’s cash reserves swelled.
“Over the past couple of years, the company has been wary of making investments, and realizations have been slow,” Iain Scouller, an analyst at Oriel Securities Ltd. in London with a buy rating on the shares said in a note to clients today. “A change of leadership allows some reassessment of strategy, which we view positively.”
3i shares climbed 2.8 percent in London trading. The stock has dropped 29 percent in the past year, paring the company’s market value to about 2.1 billion pounds ($3.3 billion).
Queen became CEO after the firm ousted Philip Yea after the value of the firm’s holdings slumped and debt surged. Within six months, Queen raised 700 million pounds in a rights offering.
“I absolutely make no apologies for the fact that I believe that the business should be run with a conservative balance-sheet and high level of liquidity,” he said in a telephone interview today. “Nine months ago, some shareholders were asking for share buybacks, but I was very resolute in saying that wasn’t the right thing to do.”
He combined 3i’s leveraged buyout team with its growth capital unit. The combination prompted Jonathan Russell, the firm’s head of leveraged buyouts, to leave. Queen also agreed to buy Mizuho Investment Management U.K. Ltd. to expand the firm’s investments in corporate debt. He cut 50 jobs, mostly in London, while opening an office in Brazil and adding employees in China.
Queen said he waited for 3i to get out of its turnaround phase before telling the board of his desire to step down in the past few weeks. He plans to take a few months off, before considering moving into a new executive role, he said today.
“What the company needs now is somebody to take it on to commit to five, six, seven years to take the business forward in that growth phase,” he said.
3i spent 623 million pounds on new investments in the 11 months through Feb. 29, up from 581 million pounds in the year- earlier period. It reaped 764 million pounds from asset sales, up from 491 million pounds.
Since January, “market sentiment has improved,” 3i said in a statement. “We expect a more positive economic outlook to result in a stronger overall performance from our private equity portfolio, although the effect of this is unlikely to have an impact upon our results” for the fiscal full-year.
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