UK's 3i offers Asia long-term finance

UK's 3i offers Asia long-term finance

SINGAPORE (Reuter): British investment company 3i Group Plc launched its Southeast Asian operations yesterday, promising long-term finance to growing firms across the region.

Announcing the opening of its first Asian office, regional managing director Jane Crawford said the company planned to spend Singapore $250 (US$174 million) over the next three to five years buying minority stakes in up to 50 firms.

These stakes would mainly be in companies from the information technology, telecommunications, manufacturing and distribution industries, she said.

"The businesses we're talking about have big ambitions and a management capable of growing in the region if not worldwide," Crawford told Reuters in an interview.

Set up by the British government in 1945 to support enterprising private companies which needed long-term rather than short-term finance, 3i was floated in 1994 as an investment trust and has retained its long-term investment goal.

About 90 percent of its investments are still in Britain, but the company has gradually expanded overseas and now has holdings in several European countries and a joint venture in Japan with the Industrial Bank of Japan.

The company has held many of its investments for 30 or 40 years and Crawford stressed it aimed to build long-term relationships with companies across the region.

"It is our intention to build teams in every country we invest in to (get) local knowledge and relationships," she said.

She said 3i's initial investments were expected to be made in amounts ranging from S$1.5 million to S$15 million.

Southeast Asian director Alastair Morrison told a news conference the company's planned initial investment in the region was tiny relative to its three billion sterling-worth (US$4.87 billion) of shareholders' funds worldwide.

But he said the Asian investments would eventually grow.

"Medium-term...we have got to have ambitions to invest more. If you want to have a five to 10-year view, I hope it would be a significant amount more," he said.

He said 3i would invest in any company with growth potential, except those involved principally in property, financial services or gambling. The property sector was too dependent on factors outside the control of management, he said.

For similar reasons, 3i would steer clear of major infrastructure investments, he added.

"But we do not sector pick. What we do is pick managements which we believe will allow the company to outperform others in the sector," he said.

Crawford said 3i would focus on two areas for special attention: management buy-ins, where 3i would provide the risk finance to allow new management teams to take over a company with growth potential, and management buy-outs, allowing existing management to buy their own company.