3i is paying £18.3m for Mizuho Investment Management (MIM), which was founded in 2005 by the Japanese bank to invest third-party money in senior and subordinated corporate debt, including collateralised loan and debt obligations (CLOs and CDOs).

Jeremy Ghose, chief executive of MIM and the first non-Japanese board member at Mizuho, is joining 3i with his 28-person team to become managing partner and head of the newly created 3i debt management business.

MIM operates a number of funds, including the Harvest and Windmill CLOs in Europe, a mezzanine loans fund and private equity fund of funds. Mr Queen said its �??provision rate and loss rate is significantly lower than the average�?�.

3i has already invested about £500m in debt of other private equity-owned companies with funds from its own balance sheet and loans from Lloyds Banking Group.

After suffering an unrealised loss of £112m in the year to March 2009, 3i�??s debt business last year generated £50m of realised profits, a £45m jump in unrealised value, and £10m in fees and income.

Mr Queen said 3i planned to expand MIM by raising fresh debt funds and moving into new geographic markets, such as India. �??This is really the next step for our growth plans,�?� he said. �??We see great opportunities for growing this business.�?�