Publicly traded private equity shop 3i Group plc (LSE:III) moved to shore up its balance sheet by acquiring and delisting its 3i Quoted Private Equity plc (LSE:QPE) affiliate. 3i had set up QPEP in June 2007 to take minority stakes in other public companies in a manner similar to private equity, but the ensuing credit crisis has left QPEP struggling.
The deal gives QPEP shareholders, excluding 3i, which owns 44.5% of the company, cash and shares worth 88.8 pence ($1.30) a share for their holdings, a premium of about 33% over the Feb. 19 closing price, according to Dow Jones. In return the London buyout shop will get QPEP's entire portfolio, valued at $185.0 million. In total the transaction put a value of roughly $521.2 million on QPEP.
After thriving as a publicly traded LBO and venture capital shop for years, the credit crisis has hit 3i particularly hard. The firm has already decided to exit the venture capital business, halting new investments in startups and selling its stakes on the secondary market. Meanwhile, the bone dry leveraged lending markets are hurting its ability to LBO deals. 3i's stock is also under pressure as rumors swirl that it may raise $1.02 billion in new shares to shore itself up. - George White
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See Dealscape post on PE fundraising
