Were 3i a normal investment company, its directors would be laughed off the board if they proposed raising new equity at a whacking great discount to net asset value.
Upbeat noises about a strengthened balance sheet, future access to the debt markets (sic) or the glittering new investment prospects ahead wouldn’t make a blind bit of difference. The board would have to go.
Fortunately for chairman Sarah Hogg and newly-promoted chief executive Michael Queen, 3i long ago stopped looking like a normal investment company, preferring the excitement of private equity, gearing up and returning capital to shareholders.
So they will get away with what is, in effect, a rescue from those shareholders who haven’t taken the money and run. At ruinous cost in fees (32 million pounds) and dilution (39.8 percent discount to the theoretical ex-rights price) they are invited to put up 732 million pounds by buying nine new shares for every seven they own, at 135 pence apiece.