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3i returns boosted by falling pound

3i, Britain’s biggest listed private equity group, saw total return of 4.1 per cent in the quarter ending in June thanks partly to the drop in the pound against the euro following the UK general election last month.

In a performance update the company also posted an increase in Net asset value (Nav) – a key indicator of private equity performance.

Nav per share rose to 628 pence at the end of June from 604 pence at the end of March, said the buyout group, which is seen as a defensive stock because of its wide geographic spread and mid-market focus.

Shares in 3i rose 0.8 per cent to 934 pence in early trading.

The company said the”continued weakening of sterling against the euro” in June contributed to a total foreign exchange gain in the quarter of £68 million. Sterling has weakened 2.5 per cent against the single currency in the last two months, falling to a nine-month low.

“Based on the balance sheet at 30 June 2017, a 1 per cent movement in the euro and US dollar would result in a total return movement of £37 million and £7 million respectively,” 3i said.

The company saw “good investment” in private equity with £276m invested in optical retailer Hans Anders and lighting firm Lampenwelt. It also generated total cash proceeds in the quarter of £107m after selling builder MKM and Dphone.

“This was another good quarter for 3i and our portfolio of international investments is performing well against an improving economic backdrop,” said Simon Borrows, 3i’s chief executive.