Queen bows to shareholder disquiet

Private equity firm 3i’s chief executive, Michael Queen, is to quit after nearly 25 years at the company following continued shareholder frustration over poor performance and lack of deal activity.

Queen, who took the helm in early 2009 after an eight-year stint as chief financial officer, was initially praised for tackling the group’s high debt burden, piled on during the credit boom.

He also shook up the structuring of deal teams, made moves to a broader asset management model and formalised a 15 per cent return target across all asset groups.

But the company has come under fire from shareholders for a share price that has trailed asset values. As it announced the departure of Queen yesterday, its stock was trading at less than a third of its 2007 peak following heavy write-downs on companies such as Enterprise Group, which it bought before the financial crisis.

Stephen Peters, an analyst at Charles Stanley, said: “3i has had a difficult few years and the company’s valuation suggested the market wanted something done so this news is positive.

“Some fresh blood, with fresh ideas should be good for this company.”

Shareholders have been unhappy with the firm’s share buyback policy, calling for it to take more aggressive steps to return its large cash reserves to them.

The firm – which has investments ranging from architecture group Foster & Partners to luxury lingerie retailer Agent Provocateur – said it had begun looking for a successor to Queen.

Simon Borrows, former chairman of investment banking firm Greenhill & Co, who joined 3i in October as chief investment officer, is a strong internal candidate, analysts said.

Borrows’ appointment was seen as strengthening the senior dealmaking team after a 2010 reshuffle that saw the departure of its long-time head of buyouts, Jonathan Russell.

However, some investors want an external appointment.

The company also said in a trading update that overall market conditions had improved since January, when 3i had warned of a challenging operating environment, and that it expected this to benefit its private equity portfolio.

Queen said: “We expect a more positive economic outlook to result in a stronger overall performance from our private equity portfolio, although the effect of this is unlikely to have an impact upon our results for the financial year just ending.

He added that 3i’s infrastructure and debt management businesses had continued to “perform well”.