3i cuts back on investments in a 'fragile environment'

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New chief executive Michael Queen said major private-equity firms like his are operating in a "fragile environment".

For the three months to the end of June, new investments slumped more than 80% to £76 million from £328 million.

The firm, the grandaddy of the London buyouts scene, said new investments were outstripped by realisations in the quarter, which came in at £163 million, but that is barely half the £301 million realised in the equivalent and equally depressed period last year.

"Our focus in the first quarter was on strengthening the balance sheet," said Queen. He replaced Philip Yea who quit in the spring as it became apparent that, after years of borrowing to fund dividend giveaways, 3i would be forced into a hugely discounted £700 million rights issue to raise money.

Debts have now been cut from £1.9 billion to £961 million.

"The reduction in net debt provides further resilience in what remains a fragile environment," said Queen.

Shares in 3i, down 21⁄4p at 2241⁄2p, collapsed last year and are still 60% down on last summer's highs.