3i Quoted Private Equity Limited
21 September 2007
3i Quoted Private Equity Limited
21 September 2007
Re-classification of Listing
3i Quoted Private Equity Limited ('3i QPE' or the 'Company') announces that,
with effect from 28 September 2007, its listing will be re-classified from that
of an overseas investment company with a secondary listing under Chapter 14 of
the Listing Rules of the Financial Services Authority to that of an investment
company with a primary listing under Chapter 15 of the Listing Rules.
At the time of the Company's admission to trading in June 2007 ('Admission'), it
was unable to apply for a listing under Chapter 15 of the Listing Rules
principally because the investment policy includes the potential to acquire
controlling stakes in relation to certain of its investee companies.
The final text of the revised Chapter 15, set out in the FSA Consultation Paper
07/12 at the end of June 2007, no longer contains this prohibition. In light of
this and the other changes to the rules set out in Chapter 15, the Board
concluded that it would be in the best interests of the Company and Shareholders
as a whole to move its listing from Chapter 14 to Chapter 15.
Accordingly the Company has requested and the UKLA has granted authority for the
re-classification of its listing with effect from 28 September 2007.
Effects of the re-classification
The effect of the re-classification is that the provisions of Chapters 7 to 13
(inclusive) and the revised Chapter 15 of the Listing Rules will apply to the
Company. In summary, these requirements relate to the following matters:
• the application of certain generic 'Listing Principles' (Chapter 7);
• the requirement to appoint a sponsor in certain circumstances (Chapter 8);
• various continuing obligations imposed on a listed company, including
specific contents requirements for circulars issued by the Company
(Chapters 9 and 13);
• the requirement to announce or obtain shareholder approval for certain
transactions (depending on their size and nature) and for certain
transactions with 'related parties' (Chapters 10 and 11);
• certain restrictions in relation to the Company dealing in its own
securities and treasury shares (Chapter 12); and
• certain requirements which are specific to investment entities, including
in relation to corporate governance, investment policies and investment
diversification (Chapter 15).
3i QPE has already been in compliance, on a voluntary basis, with certain of the
Listing Rules set out above (details of which are set out in the Prospectus of
the Company dated 26 June 2007). However, from the date of reclassification, the
Company will also comply with the following:
• Listing Rule 15.2.3. 3i QPE will avoid cross-financing between the
businesses forming part of its investment portfolio and the operation of
common treasury functions;
• Listing Rule 15.2.4. 3i QPE and its subsidiaries (other than businesses
forming part of the investment portfolio) will not conduct any trading
activity which is significant in the context of its group;
• those rules not already complied with relating to continuing obligations
set out in Chapter 9 of the Listing Rules as modified by Listing Rule 15.4;
• Listing Rule 15.4.2(2). 3i QPE will, at all times, invest and manage its
assets in accordance with its investment policy which is set out below in
• the rules relating to further issues set out in Listing Rule 15.4.11 such
that the Company will not issue any further shares for cash at a price
below the net asset value per Ordinary Share;
• the rules relating to related party transactions set out in Chapter 11
of the Listing Rules as modified by Listing Rule 15.5.4; and
• the rules relating to significant transactions set out in Chapter 10
of the Listing Rules as modified by Listing Rule 15.5.2.
The Company's broad policy is to acquire influential or controlling stakes in
small and mid-cap quoted companies primarily in the UK and continental Europe
which it believes could benefit from strategic, balance sheet, operational and/
or management initiatives.
3i QPE's investment strategy is to obtain, in a cost-effective manner, the level
of influence over each investee company necessary to implement its
value-creation strategy and achieve significant growth in the earnings of its
investee companies. As 3i QPE has flexibility in the size of its equity
investment, it will aim to avoid competing on price with traditional buyout
funds or other buyers seeking 100% ownership.
The Company has considerable flexibility in executing its investments. Its broad
policy is to acquire influential or controlling stakes in investee companies
without necessarily acquiring 100%. There may be occasions in which 100% of an
investee company is acquired (particularly where 3i QPE is required to make a
general offer for a company) but it is not a requirement of 3i QPE's investment
policy that it do so. Depending on the level of ownership acquired, 3i QPE
investee companies may be de-listed after acquisition.
3i QPE also has flexibility in how it pays for its investments, through its
ability to issue its own equity and to utilise other forms of non-cash
consideration. This would allow shareholders in target companies to retain an
interest in the Company's portfolio (including their own acquired company) and
thereby share in the value that may be created by enhancement of performance,
and should also assuage concerns that exiting shareholders may be selling out at
an undervalue. Where investee companies make acquisitions, they may also have
flexibility to use their own equity as acquisition consideration.
The Company may invest in any business sector, other than infrastructure.
In the absence of unforeseen circumstances, it is anticipated that the Company
will have invested (or committed to invest) substantially all of the net
proceeds of its placing in June 2007 within 18 months from Admission. However,
quality of opportunity is paramount. The Company then intends to utilise
appropriate gearing to fund further investments over the remainder of the
initial investment period. The Company anticipates that, by the end of the
initial investment period, its portfolio is likely to include investments in 8
to 12 companies in the UK and continental Europe. In order to ensure the
diversity of its portfolio, the Company will target a maximum investment size of
25% of the value of the Company's assets measured on an unconsolidated basis
before the deduction of the Company's liabilities ('Gross Assets') at the time
of investment (which may be exceeded on a short-term basis); however this is
subject to an absolute cap on any single holding of 50% of the value of the
Company's Gross Assets at the time of investment.
The Company expects that, by the end of the initial investment period, its
portfolio will be geographically weighted in favour of continental Europe (by
number of investments). However, the Company expects that its initial
investments will be UK focused. 3i QPE may ask 3i Investments at a later stage
to consider the viability (from a commercial, legal, tax and regulatory
perspective) of applying the Company's investment strategy to countries outside
of the UK and continental Europe.
The Company believes that, consistent with its strategy of investing for long
term capital growth, it will typically hold investments for an average of around
three to five years. 3i QPE has, however, no pre-defined constraints on the
holding period for its investments, but will instead consider potential
divestments on a case-by-case basis. In cases where realistic value-creation
plans are likely to take significant time to implement, the Company will hold
investments for a longer period.
The Company anticipates that, in certain circumstances, building a significant
stake in a company may give rise to competing interest in the investee company
from other parties. Where this is the case, the Company may be unable to carry
out its original investment intention in relation to the investee company and
may then sell its stake by accepting a third-party offer, if one materialises.
In due course, the Company intends to borrow money to leverage its Shareholders'
equity. The Board believes that in the medium-term average borrowings are likely
to be around 40% of the Company's Gross Assets.
It is possible that, in order to take advantage of specific investment
opportunities, the Company's borrowings may exceed these levels on a short-term
basis, subject to an absolute maximum of 50% of the Company's Gross Assets.
This gearing would be in addition to any debt in the investee companies and any
non-recourse debt taken on by special purpose vehicles formed and owned by 3i
QPE to make acquisitions.
The following specific investment restrictions apply to the Company's investment
• no single holding will account for more than 50% of the value of the
Company's Gross Assets at the time of investment;
• the Company may only borrow up to 50% of the Company's Gross Assets
(measured when new borrowings are incurred) for investment purposes
(excluding non-recourse debt taken on by special purpose acquisition
• the Company will not invest in Buyouts, Growth Capital, Infrastructure
or Venture Capital. For the purpose of this restriction:
o Buyouts are transactions that would generally be regarded as being
either management buy-outs or management buy-ins of unlisted companies or
businesses, or of listed companies which are at the outset intended to
be taken private;
o Growth Capital is typically minority investments in unquoted companies
to enable the investee company to grow, enter into acquisitions or joint
ventures, be rescued or restructured or to facilitate a change in major
o Infrastructure is generally defined as asset-intensive businesses
providing essential services over the long-term, often on a regulated
basis or with a significant component of revenue and costs that are
subject to long-term contracts and where primary value creation is
through optimisation of capital structure with less of a focus on
planned transformational and operational change than would typically
be seen with a private equity asset; and
o Venture Capital is investments in technology-related businesses which
have not yet reached the stage of sustained profitability.
Information about the Company
The Company aims to achieve absolute growth in the capital value of its
investments over the medium-term by working with the management of the investee
companies and applying private equity techniques and expertise to those
companies. 3i Investments plc, a subsidiary of 3i Group plc, is investment
adviser to the Company.
For further information please contact:
3i Investments plc
Bruce Carnegie-Brown (Managing Partner, QPE) Tel: +44 (0)20 7975 3465
3i Quoted Private Equity Limited
David Tyler (Chairman) Tel: +44 (0)1534 711 445
Gary Gould Tel: +44 (0)20 7678 8000
Lydia Pretzlik Tel: +44 (0)20 7379 5151
This information is provided by RNS
The company news service from the London Stock Exchange