3i Group Plc · LSE:III
3i — Shareholder Meeting (July 2013)
42 slides from 3i's shareholder meeting presentation, Jul 18, 2013
Slide 1: Annual General Meeting
Annual General Meeting Private Equity Infrastructure Debt Management 18 July 2013
Slide 2: Sir Adrian Montague, Chairman
Sir Adrian Montague Chairman 2
Slide 3: Today's agenda
Today’s agenda Introductory remarks – Sir Adrian Montague Review of the year – Simon Borrows Q&A Formal business including Resolutions 3
Slide 4: The Board of Directors and General Counsel
The Board of Directors and General Counsel 4
Slide 5: Martine Verluyten
Martine Verluyten 5
Slide 6: Willem Mesdag
Willem Mesdag 6
Slide 7: Richard Meddings
Richard Meddings 7
Slide 8: Simon Borrows
Simon Borrows 8
Slide 9: Julia Wilson
Julia Wilson 9
Slide 10: Jonathan Asquith
Jonathan Asquith 10
Slide 11: Alistair Cox
Alistair Cox 11
Slide 12: Kevin Dunn
Kevin Dunn 12
Slide 13: Slide 13
Slide 14: Materially improved performance
Materially improved performance “I am pleased to announce a strong set of results showing improved performance across our business. FY13 has been a year of significant change for 3i. We have made substantial and rapid progress and this has established solid foundations for the next phase of our stra
Slide 15: Year to March 2013 performance highlights
Year to 31 March 2013 Performance highlights Significantly outperformed £51m cost savings cost saving target Gross debt reduction 44% gross debt reduction achieved ahead of schedule to 30 April 2013 Strong Private Equity 49% uplift to opening value realisations 2.1x Money multiple Growth in assets 2
Slide 16: A strong start to the current financial year
A strong start to the current financial year Share price performance since the 2012 AGM NAV per share at 30 June 2013 326p Share price performance since 2012 AGM 99% TSR since 2012 AGM 104% Share price performance since 31 March 2013 20% TSR since 31 March 2013 22% Note: all figures as at market clo
Slide 17: Distribution
Distribution Proposed final dividend of 5.4p per share brings total dividend for FY13 to 8.1p per share, in line with the rebased dividend policy Our enhanced distribution policy Aggregate shareholder distributions to be 15-20% of gross cash proceeds from realisations, provided that: – Gearing <
Slide 18: Simon Borrows, Chief Executive
Simon Borrows Chief Executive 18
Slide 19: Strategy update
Strategy update 19
Slide 20: A clear vision and strategy
A clear vision and strategy Focused mid-market Private Equity Class-leading Infrastructure Growing Debt Management 20
Slide 21: The 3i Value Build
The 3i Value Build An attractive, multi-year value proposition Grow Private Equity investment Grow NAV portfolio earnings Realise investments at good uplifts to Optimise value of existing book value and strong cash-on-cash portfolio and enhance P/NAV multiples rating Generate a sustainable annua
Slide 22: Key phases of organisational change and strategic delivery
Key phases of organisational change and strategic delivery FY2013 FY2014 - 15 FY2016+ Transition and Restructuring Strategic goal delivery We have delivered all of our FY2013 strategic priorities We are already making strong progress towards the next phase of our strategic plan: “Transition and de
Slide 23: Our strategic priorities in FY2013
Our strategic priorities in FY2013 FY2013 FY2014-2015 FY2016+ We have delivered against all of the immediate priorities and targets for FY2013: 1 Reduce operating costs - fitter and more efficient 2 Reduce gross debt and funding costs materially 3 Achieve greater central control and business foc
Slide 24: Significantly reduced operating costs
1 Significantly reduced operating costs Met or exceeded FY2013 targets announced on 29 June 2012 Key targets announced on Progress in FY2013 29 June 2012 Reduce staff Headcount reduction Net headcount reduction of 168 of over 160 staff by 31 March 2013 Consolidate Reducing the total All office c
Slide 25: Significantly reduced operating costs (cont.)
1 Significantly reduced operating costs (cont.) Met or exceeded FY2013 targets announced on 29 June 2012 Key targets announced on Progress in FY2013 29 June 2012 Operating £40m to be achieved £51m at 31 March 2013, 28% ahead cost by 31 March 2013 of original £40m target savings Substantially outpe
Slide 26: Significantly reduced operating costs
1 Significantly reduced operating costs Base-line operating Run-rate cost savings cost base (like-for-like basis) +28% +33% £180m £185m £40m £51m £45m £60m FY12 Annualised 31 March 2013 31 March 2014 actual run-rate at Run-rate cost savings Cumulative run-rate cost reported 31 March savings 2012 Ori
Slide 27: Substantially reduced gross debt - ahead of schedule
2 Substantially reduced gross debt - ahead of schedule Gross debt progression (£bn) Exceeded original target to reduce 2.5 gross debt to below £1bn by June 2013 Target of gross 2.0 £1.6bn debt below £1bn achieved early 1.5 -44% £1.1bn £1.0bn By 30 June 2013, 1.0 £0.9bn gross debt reduced by 44
Slide 28: Achieved greater central control and business focus
3 Achieved greater central control and business focus Rationalised existing committee structures; ‘de-layering’ Removal of of organisation organisational One Private Equity business complexity and bureaucracy Formed new Executive Committee as principal day-to-day business and operational decis
Slide 29: Improved consistency and discipline
4 Improved consistency and discipline Private Equity investment and asset management In June 2012, we announced six asset management initiatives: 1. Investment review process 2. People: governance and resourcing 3. Operational capabilities, knowledge management and networks 4. Monitoring and perform
Slide 30: Re-focused and re-shaped Private Equity
5 Re-focused and re-shaped Private Equity New investment principally focused in Northern Europe, North America and Brazil Tighter focus on new investment Suspended new investment in Asia and Spain; focusing on portfolio management Continuing to manage intensively our existing portfolio and see
Slide 31: Key realisations as part of well constructed exit plans
5 Key realisations as part of well constructed exit plans Total Private Equity realisations of £575m in FY2013 – Realised profit over opening value of £190m in FY2013 vs £22m in FY2012 – Uplift over opening value of 49% and money multiple of 2.1x 31
Slide 32: Key realisations: momentum continuing in FY14
5 Key realisations as part of well constructed exit plans: momentum continuing in FY14 Notable realisations in FY2014 to date: Investment Calendar year Cash Uplift to opening value Money realised invested proceeds (31 March 2013) multiple1 Xellia 2008 £143m2 43% 2.3x Civica 2008 £124m 48% 2.1x Tresc
Slide 33: New approach to compensation – key principles
6 New approach to compensation – key principles Fair and transparent split of returns Closely aligned with key strategic objectives Focused on creating shareholder value New compensation arrangements aligned with key strategic objectives and with creating shareholder value 33
Slide 34: Next phase of our strategic plan
Next phase of our strategic plan “Transition and delivery” FY2013 FY2014-2015 FY2016+ 1 Cover operating costs with annual cash income On track Grow third-party income and generate a sustainable 2 annual operating profit from our fund management On track activities Improve capital allocation strategy
Slide 35: Cover operating costs with annual cash income
1 Cover operating costs with annual cash income £m 200 + Reduction in operating costs 150 + Growing third-party 100 income, particularly in Debt Management and 50 Infrastructure - ─ Private Equity AUM and (50) third-party fee income (100) reducing over time (150) ─ Current challenging Private Equity
Slide 36: More balanced contribution of our three businesses to income
2 More balanced contribution of our three businesses to income over time Third-party fee income1 (% of total) Strong and growing contribution from Debt Management 100% 80% Steady contribution from 60% Infrastructure 40% Reflects current focus on 20% realisations in Private Equity and selective
Slide 37: Grow third-party AUM and fee income: Private Equity
2 Grow third-party AUM and fee income Private Equity Selective and measured investment through proprietary capital and third-party co-investment In March 2013, completed second Brazilian investment Established framework arrangements with a number of leading investors to invest alongside 3i in mi
Slide 38: Grow third-party AUM and fee income: Infrastructure
2 Grow third-party AUM and fee income (cont.) Infrastructure Strategic acquisition of Barclays’ infrastructure fund management business AUM of c.£780m Manages number of unlisted funds investing in UK and European Overview PPP and renewable energy projects of business Investment team based in L
Slide 39: Grow third-party AUM and fee income: Debt Management
2 Grow third-party AUM and fee income (cont.) Debt Management Significant momentum Significant momentum since acquisition of MIM platform in 2011 Substantial increase in third-party AUM over last year from £3.3bn to £6.4bn Objective to grow materially third-party AUM, fee revenue and profits 39
Slide 40: Implement our revised capital allocation policy
3 Implement our revised capital allocation policy Enhanced capital distribution policy Aggregate shareholder distributions to be 15-20% of gross cash proceeds from realisations, provided that: – Gearing < 20% – Gross debt is on target to be < £1bn by June 2013 Realisations since 31 March 2013: Tre
Slide 41: Clear strategic priorities for FY2014
Clear strategic priorities for FY2014 FY2013 FY2014-2015 FY2016+ Deliver further Private Equity realisations to support an enhanced shareholder distribution in FY2014 Realise fully the benefits from the Private Equity asset management improvement initiatives Continue to grow Debt Management and Infr
Slide 42: Slide 42