3i Group PLC | Broadening Scope in the 1980s
Broadening Scope in the 1980s
Yet the vast majority of the ICFC's business lay in less glamorous investments with the nation's small business sector. Many of these relationships were extremely long-term, and the ICFC was credited with laying the foundation for the growth of a strong percentage of the United Kingdom's industry. Yet, as Business Week described the firm, the ICFC "grew into a sprawling bureaucracy with 14 offices responsible for lending in their regions. These regional groups gained a reputation for small, cookie-cutter deals, relying on legions of relatively junior managers to make decisions according to strict guidelines."
The ICFC began broadening its scope in the 1970s. An important moment came when the company acquired its sister corporation, FCI. Unlike ICFC, which had made thousands of deals by the early 1970s, the FCI's long-term, large-scale lending operations had rarely been used. The merged company, now called Finance for Industry (FFI), combined not only the ICFC's focus on the SME market, but also extended its brief to include investment in large corporations as well.
The arrival to power of the Conservative government led by Margaret Thatcher sparked a new era for FFI. The British economy began to grow again in the early 1980s after nearly a decade of economic recession. The resurgent economy, combined with the Thatcher government's support of entrepreneurism, stimulated a boom in the investment market. In response, FFI restructured its operations, adopting a division structure, and changed its name to Investors in Industry (or 3i) in 1983.
By then, 3i had expanded its range of operations to include an important and fast-growing segment of venture capitalism—the buyout market. The company also launched itself onto the increasingly international buyout market by adding its own international operations. In 1982, for example, the company opened an office in Boston. The following year, 3i moved into France, with the opening of its Paris office. By 1986, 3i had added an office in Frankfurt, Germany. The company's international growth culminated in its entry into Italy (Milan) and Spain (Madrid) in 1990.
3i also prepared to launch its own public offering—a rare move among venture capitalists—at the start of the 1990s. As the global economy slipped into recession, however, the company was forced to put off its listing. At the same time, 3i also launched a streamlining of its operations in order to maintain its profitability in the difficult market climate. This led the company to close its U.S. offices.