3i joins big issue club for £380m

VENTURE capitalist 3i today launched a £380m convertible bond issue, making it the fourth major issuer of exchangeable debt in recent weeks.

The launch follows big convertible issues from Cable & Wireless and Scottish Power. Shares in 3i slipped 15 1/2p to 580 1/2p as investors digested the news.

Convertible bonds can be swapped later for shares and are regarded as a cheap way of raising cash, but many investors dislike the way they dilute the number of shares in issue in years to come.

Meanwhile, at 3i's annual general meeting today, chief executive Brian Larcombe warned shareholders that 3i's investments in businesses would be lower in the first half of the current year than in the first six months of 2002.

'We believe this is because macroeconomic and political uncertainty earlier in the year resulted in business decisions being deferred,' he said.

However, the market for realising its investments, primarily through selling them on at a profit, had continued to be fairly robust in recent weeks.

Proceeds from today's convertible bond issue will go towards 3i's pot of funds for its investments, replacing part of its current debt facilities, and for other corporate uses.

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