British private equity firm 3i Group promoted investment chief Simon Borrows to the top job on Thursday, charging the career investment banker with turning around a business which has been hit by poor deals in recession-hit European markets.

The London-listed private equity firm said Borrows had assumed the role immediately, replacing Michael Queen who has been in the post for a little more than three years.

One of his first tasks will be addressing 3i's high operating costs and some people familiar with the group say he will not shirk from tough decisions on jobs and global ambitions.

"I am also going to determine the best shape and investment strategy for the business going forward," Borrows told reporters in a conference call.

3i's woes are more acute than many of its crisis-hit rivals, as it invested heavily in companies during the peak of the buy-out market, in regions mature or declining Western European markets such as Britain and Spain.

"This is a really tough situation. They need someone who really knows the organisation because it will require severe cost cutting. In particular, they will have to cut down on some of their global ambitions," a banker familiar with the group said.

Borrows, a former banker who was widely tipped as the next CEO after joining the group last year, has a mandate to address group performance.

He has already had a positive impact as chief investment officer, bringing more discipline to the group's investing process, 3i said in statement.

He is seen by analysts and bankers as someone with the experience of an external candidate, combined with the knowledge of someone of who has been close to 3i for many years, having worked on the flotation of the business in 1994.

Queen said in March he would quit following continued shareholder frustration at 3i's poor share price performance and weak results from its buyouts business.

"We think this early clarification of the new CEO and his mandate to address performance should be received well in share price terms," Oriel Securities analyst Iain Scouller said.

3i shares were 0.4 percent higher at 180.3 pence at 0945 GMT, despite another knock to net asset value - the key measure for valuing its portfolio of companies - in the six months to end-March.

Asset value per share was 279 pence, compared with 294 pence at the end of September and 351 pence a year ago.

But shareholders have been clamouring for more immediate action, with some, including activist investors Laxey Partners, asking for 3i to sell businesses and return them the proceeds.

3i set out of some measures designed to placate its owners, handing them up to 20 percent of the proceeds from company sales as long as leverage remains less that 20 percent of net asset value.

PLAYING TO STRENGTHS

Borrows said the future shape of 3i's global activities were a priority. In recent years, 3i has expanded beyond its core European market to the United States, Asia and more recently Latin America, setting up in Brazil just last year.

"We are, in the main, going to be playing to our more established strengths but we do have some very strong teams in one or two of those emerging markets," Borrows said.

However, Borrows said he had no plans to change the three-pronged business structure of private equity, debt management and infrastructure put in place by his predecessor Queen.

He said he would like to see debt management and infrastructure become larger parts of the group.

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