3i chairman quits after flotation postponed: Wheatley to leave at end of month after shareholders decide against selling stakes 'for time being'

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The Independent Online
ALAN WHEATLEY, chairman of 3i, Britain's biggest venture capital group, yesterday quit in a huff after a decision to postpone indefinitely a planned stock market flotation.

Mr Wheatley decided to leave at the end of the month after 3i's shareholders, the clearing banks and the Bank of England, came down against selling their stakes to the public 'for the time being'.

He was hired to promote the flotation and run 3i as a listed company, but the organisation will for the moment retain its protected status, outside the reach of takeover bidders, so the job has become lower profile.

The postponent and the loss of the chairman, after a series of top management changes over the past two years, is a severe embarrassment for 3i. The on-again, off-again flotation plans have become one of the longest- running City sagas.

Peter Brown, company secretary, said: 'Mr Wheatley would say that he came here to spearhead the flotation. In view of what has now been said that is not the role. He has a lot of other outside interests.'

Mr Wheatley is a director of British Steel, Babcock International, Legal & General and Forte. Although he will leave the 3i board he will remain a consultant. Sir Max Williams, deputy chairman, will take on the top job until a successor has been found.

The company refused to comment on whether Mr Wheatley would be entitled to compensation now the promised float has been put off. A spokesman said this was a matter for Mr Wheatley, the board and the shareholders.

Both NatWest - speaking for all the banks - and the Bank of England denied that the flotation was cancelled and said the eventual intention was to sell their shares. The Bank said it was a matter of getting good value for the shares, and professional advice was that there should be a deferral.

NatWest said there was no immediate need for any single shareholder to raise money. There would also be better value for the shareholders in deferring a float to a future date.

Midland was originally the most enthusiastic backer of a sale, which could raise pounds 1bn in total, but since it was taken over by HSBC Holdings it has much less need to raise capital to boost its own business.

There have been differences of style between Mr Wheatley and the executive directors since he became non-executive chairman last summer. But the shareholders' decision is understood to have been the main factor behind his departure, rather than day- to-day friction.

The flotation has been steadily slipping for two years, and no date has been set for another review. A 3i statement said the shareholders were 'unable to be more definitive about their intentions'.

NatWest said: 'We do not believe we need to set a timetable. It is never going to be off the agenda but there is not going to be a formal review.'

A drastic reorganisation and redundancy programme is now bearing fruit in the 3i results. The second half year just ended is understood to have shown significant improvement. In the first half, net assets fell 6 per cent to pounds 1.19bn, and the interim dividend was unchanged.

But City investors appear to have been unconvinced by the new management's track record, and advisers also found they failed to appreciate the structure of the flotation, which would launch 3i on the market as an investment trust with substantial tax benefits. It bears little resemblance to other trusts and is more like a merchant banking operation that invests in its clients.

Uncertainty in the stock market was one of the earlier reasons for deferring the float, but this is no longer the main problem.