3i boss bows out with £531m profit

'YOU always want to go out at the top,' Brian Larcombe declared today, presenting his final set of figures as chief executive of 3i, Europe's largest quoted private equity house.

Larcombe, who stands down at July's annual meeting, declared the first rise in 3i's net asset value since 2000. In the year to end-March, it grew 15% to 553p a share from 480p. The total return on shareholders' funds for the year was 18.1%, producing a gain of £531m.

The hunt for Larcombe's successor has already started, with internal candidates Chris Rowlands, who heads the growth capital division, and finance director Michael Queen the front-runners. The appointment is expected by the annual meeting.

Larcombe said the last year had started slowly in the private equity markets but had gathered momentum, producing a very strong second half, and that has continued into the new financial year.

He said: 'The strategy we have followed over the last two or three years is now delivering, particularly the decision to focus on three divisions; buyouts, growth and venture capital. We have seem some very good realisations of investments, and the scale of provisions we have made against poorly performing investments is down very sharply.'

In recent weeks 3i has sold the Early Learning Centre to Tim Waterstone for £62m, floated its 60% stake in Pinewood Shepperton film studios making it £50m, and sold its 41% holding in pollster Mori to other venture capitalists. In February it successfully floated Cambridge Silicon Radio, valuing it at £240m.

Larcombe said the latest Economic Barometer measured across 500 3i companies was showing firms at their most optimistic for a long time. He added: '3i has withstood some of the most volatile market conditions that I have seen in my 30 years in the industry and come through strongly. The general macroeconomic drivers look more favourable and the business model is delivering in each of our key areas of activity.'

The group cut its headcount by 13% last year from 858 to 750.

The overall return in 2003 was 18.1% against an average from European venture capital and private equity funds of minus 1.4%.

Comparison with the 25.7% return on the FTSE 100 or the 31% return on the FTSE All-Share is not so flattering, but Larcombe pointed out that the private equity market lags the stock market largely because the former's valuations are based on historic earnings multiples and the share market's on prospective earnings multiples.

The dividend rises 3.7% to 14p.