Britain's oldest private equity group 3i is parachuting in a former Barings banker to boost performance amid investor anger over its share price.
Simon Borrows who moved from Barings in 1994 to set up the European operations of Greenhill, a US investment bank, is joining the 3i board as chief investment officer this autumn.
Shareholders, thought to include Schroders and Scottish Widows, are unhappy with the underlying performance of 3i's corporate investment portfolio. The firm was recently forced to take a £200m hit on its investment in Enterprise, the waste services group. But shareholder frustration bubbled over into a rebellion over the renewal of a share bonus plan when some 40% of investors failed to back its reintroduction at annual meeting. But 93% of investors voted for the re-election of chief executive Michael Queen and a large majority also backed the remuneration report
Viewed as one of the City's leading dealmakers, Borrows replaces Ian Nolan, who is moving to a new job within the group which was founded in 1945. Borrows, who will relinquish his role as chairman of Greenhill International, acted for 3i when it floated in 1994, and has held advisory roles ever since.
3i has been rocked by investor discontent because its stock price has been trading at a discount to its net asset value. At the end of March, 3i's NAV stood at 351p against close of 287p on Wednesday.
One analyst suggested chairman Sir Adrian Montague, a former boss of British Energy and Crossrail, had promised to look at shareholder concern before the annual meeting, defusing a possible row – at least temporarily.
Montague, told the meeting he would "take account and think about" demands by some investors for a share buyback rather than reinvesting some of its £1.9bn cash.
Borrows's reputation as a dealmaker indicates Montague believes the time is ripe for further investment, although that doesn't preclude the possibility of a share buyback of up to £300m this year.
Share buybacks are one way for management to strengthen a company's stock price.
Iain Scouller, analyst with Oriel Securities said that the appointment of Borrows was positive, and it was a "good move" to appoint an outsider to the board.
In a separate statement, 3i said investments in the quarter were £233m, more than double the same period last year as buyouts and deals for minority stakes in companies picked up.
Realisations from sales of investments rose to £337m as the firm banked proceeds from the sale of hydraulic pumps maker Hyva and the IPO of vehicle clamp manufacturer Norma.
With new deals for 3i picking up, echoing a wider rebound in private equity mergers and acquisitions(M&A), observers said it is a good time for 3i to have cash to invest.
3i has been selected to take part in a pilot programme by the Shanghai government, allowing it to convert up to $100m (£62m) into renminbi to invest in China.