3i Group Plc · LSE:III

3i — Investor Day (September 2022)

75 slides from 3i's investor day presentation, Sep 26, 2022

  1. Slide 1: Private Equity Capital Markets Seminar

    Private Equity Capital Markets Seminar 26 September 2022

  2. Slide 2: Agenda and introduction

    Agenda and introduction Simon Borrows Chief Executive

  3. Slide 3: Agenda

    Agenda 14.00- Agenda and introduction Simon Borrows 14.10 Chief Executive 14.10- BoConcept Boris Kawohl 14.50 Q&A Partner, Managing Director Benelux, Head of Consumer 14.50- Healthcare sector update Richard Relyea 15.30 and Cirtec Medical Partner, Managing Director North America, Head of Healthcare

  4. Slide 4: Portfolio update

    Portfolio update • Investment portfolios continue to make good progress in challenging markets • Private Equity portfolio: – Assets in value for money consumer, healthcare, specialty industrial and business and technology services have generated strong earnings growth and have good momentum as we he

  5. Slide 5: Today's seminar

    Today’s seminar 2016 2017 Urban living designer Outsourced medical device manufacturing 2021 Global winner in talent solutions 5

  6. Slide 6: Today's presenters

    Today’s presenters Boris Kawohl Richard Relyea Partner, Managing Director Benelux, Head of Consumer Partner, Managing Director North America, Head of Healthcare Joined 3i in 2005 and is responsible for 3i’s global Consumer sector. Joined 3i in 2007 and is responsible for 3i’s global Healthcare secto

  7. Slide 7: BoConcept

    BoConcept Boris Kawohl

  8. Slide 8: 3i in the Benelux

    3i in the Benelux 3i Benelux - overview 3i Benelux - current portfolio • Core market for 3i • Office in Amsterdam since 1998 • 11 investment professionals • Invested c.€2.4bn of equity in 24 deals in the Benelux since 2001, generating >€15bn in value (8.7x1 Money Multiple) and a >40% IRR • No loss o

  9. Slide 9: Consumer is a key sector for 3i

    Consumer is a key sector for 3i Investment focus Strong growth in value of 3i’s consumer investments • Winning propositions Value of 3i stake in £m (FY 2012 / 2022) • Structurally differentiated 7,165 • International growth as key value driver - organic and inorganic • Capital-efficient business mod

  10. Slide 10: BoConcept today

    BoConcept today Global interior design brand Purpose Vision Grow the business by bringing inspiration and a better Transforming spaces into extraordinary places living experience to people’s homes, leisure and workspaces around the world 70 years 316 c.140 67 Brand stores Franchisee Brand heritage C

  11. Slide 11: BoConcept today (cont'd)

    BoConcept today (cont’d) Global interior design brand Products1 Channels2 Geographies1 Accessories Online B2B 2% Americas 6% 10% 14% Chairs 16% Upholstery Own 2021-22 stores 24% 2021-22 64% 2021-22 59% 48% 27% APAC 31% Franchisee EMEA Board stores Berkeley, USA Kurura, Japan Accessories Upholstery C

  12. Slide 12: BoConcept transaction highlights

    BoConcept transaction highlights Transaction highlights • Public to Private in 2016 - 3i invested c.£130m in BoConcept • Value drivers - Operational upside - Cash generation - International growth 12

  13. Slide 13: VIDEO

    VIDEO 13

  14. Slide 14: Key investment highlights

    Key investment highlights A Global affordable premium furniture brand ✓ B Best-of-breed franchisor with globally proven appeal ✓ C Stable, low-risk and highly cash generative model ✓ D Asset-light and highly scalable ✓ E Large and growing addressable market ✓ F Strong management team with proven gro

  15. Slide 15: The leading global affordable premium furniture franchisor brand

    KEY ASSET HIGHLIGHTS A B C D E F G A The leading global affordable premium furniture franchisor brand Contemporary Danish design with a tailored offering unique at its price point Collaborating with world-class Premium tailored products Unmatched furniture designers at affordable prices service Mort

  16. Slide 16: Trustworthiness

    KEY ASSET HIGHLIGHTS A B C D E F G A The leading global affordable premium furniture franchisor brand Consumers rank BoConcept as the number one affordable premium furniture brand 1 #3 #2 Truly global Best-in-class performance on Strong customer NPS and repurchase footprint key purchase criteria int

  17. Slide 17: Best-of-breed franchisor with globally proven appeal

    KEY ASSET HIGHLIGHTS A B C D E F G B Best-of-breed franchisor with globally proven appeal ✓ Regionally exclusive brand sales rights of #1 consumer ranked affordable premium furniture brand ✓ Proven model globally FOR ✓ Best-in-class tools and support to drive performance FRANCHISEE ✓ Low up-front in

  18. Slide 18: Stable, low-risk and highly cash generative model

    KEY ASSET HIGHLIGHTS A B C D E F G C Stable, low-risk and highly cash generative model 1 Global diversification with sales from 67 countries 2 Focus on well-off customer base 6 Minimal NWC requirements due to prepayments and no inventory 3 Franchise business model with strong partners 5 4 Made to or

  19. Slide 19: Asset-light and highly scalable

    KEY ASSET HIGHLIGHTS A B C D E F G D Asset-light and highly scalable Mainly in-house Mainly outsourced or in partnership Value chain Collection Retail format Retail Design Production management and marketing execution 120%+ <1% of sales <3% of sales ROCE1 Maintenance Capex Growth Capex per year per

  20. Slide 20: Large, global market – providing significant white space

    KEY ASSET HIGHLIGHTS A B C D E F G E Large, global market – providing significant white space Spending on furniture is growing. Premium is Significant penetration opportunity in all regions outperforming the overall market CAGR by 0.4-0.5pp Global furniture market (in EURbn) Premium furniture market

  21. Slide 21: Strong management team and board

    KEY ASSET HIGHLIGHTS A B C D E F G F Strong management team and board Mikael Kruse Darren Bett Peter Linnet Michael Paula Sanna Suvanto- Anders Moberg Jensen Linander McGuinness Harsaae Chief Executive Chief Financial Chief Operating Chief Retail Chief Marketing Chairman of the Non-Executive Officer

  22. Slide 22: Long-term growth track record

    KEY ASSET HIGHLIGHTS A B C D E F G G Long-term growth track record Revenue (in € millions) investment 200 Strong growth coming from US and Japan 154 CAGR 2018-22 15% 14% 122 2011 2016 2022 22

  23. Slide 23: Fundamental changes realised since investment, showing in NPS scores

    Fundamental changes have been realised since investment, which is showing in global NPS scores 1 Experienced global Built well performing Fundamental changes management team franchisee base are showing in NPS scores +22 49 2 Strengthened retail proposition through 27 tools and processes 3 4 Enhanced

  24. Slide 24: Growth driven by new stores from multi-unit franchisees

    1 Growth is mainly driven by the opening of new stores by multi-unit franchisees Focused on building base of successful multi-store Stores by franchisee type (#) franchisees committed to growth Upgrade franchisee base Scale up and grow  Change leadership and approach to  Roll-out across the world

  25. Slide 25: Stronger retail proposition through tools for franchise partners

    2 Created stronger retail proposition by providing the right tools to our franchise partners 25

  26. Slide 26: Consistent omni-channel experience

    3 Created a consistent omni-channel experience aimed to increase conversion and leverage global scale Website Instagram Opportunity to plan a designer appointment Curated product feed to drive sales Curated product feed to drive sales Directly showing cost of full room designs Live chat • Website :

  27. Slide 27: Enhanced store format for omni-channel consumer

    4 Enhanced store format to support today’s omni-channel consumer Focusing on co-creating extraordinary spaces using IDS and inspirational guidance 27

  28. Slide 28: Clear strategic priorities going forward

    Clear strategic priorities going forward Scale with strong Create and Raise our retail Strengthen our Unlock B2B partners incentivising maintain fans proposition making affordable through our Haworth and helping franchisees through a modern our store staff, interior premium offering partnership serv

  29. Slide 29: ESG is at the heart of BoConcept

    ESG is at the heart of BoConcept Environment Suppliers, customers and society ✓ High-quality, custom made products ✓ All suppliers need to adhere to BoConcept’s code of conduct ✓ Scope 1 and 2 reporting in place, ambition to reduce emissions by 25% - KPI and audit structure in place to by 2030 revie

  30. Slide 30: Strong recent results…

    Strong recent results… • Positive year with good momentum in rollout of the global business - 316 stores in 67 markets on 6 continents • FY2021/22 (Apr FYE) - Highest revenue, earnings realised (sales DKK 1,490m (+23% y-o-y), EBITDA DKK 275m (+8% y-o-y)) • Successfully completed strategic initiative

  31. Slide 31: …but also challenges ahead

    …but also challenges ahead Challenges Mitigants • Globally diversified sales • Remaining Covid impact (largely overcome) • Virtual selling tools, fast management reactions - Potential for isolated store closures • Diversified supplier base (Eastern Europe, China, Mexico) - Supply chain bottlenecks a

  32. Slide 32: BoConcept Q&A

    BoConcept Q&A

  33. Slide 33: Healthcare sector update and Cirtec Medical

    Healthcare sector update and Cirtec Medical Richard Relyea

  34. Slide 34: 3i in the US

    3i in the US • 3i Private Equity has been investing in the US for c.15 years • 16 investment professionals • Focus on Healthcare, Business & Technology Services and Industrials 34

  35. Slide 35: 3i Healthcare – primary areas of focus

    3i Healthcare – primary areas of focus Focused efforts in targeted segments with long-term secular tailwinds Target segments Segment themes • Increased outsourcing Pharma Services Pharmaceuticals & • Shift to biologics Supply Chain Biotech • Growing regulatory complexity Processing Products • Increa

  36. Slide 36: 3i approach – Healthcare ecosystems

    3i approach – Healthcare ecosystems Pharmaceutical & life science supply chain Medical technology & device supply chain Single-use bioprocessing Biologics CDMO Devices and components Silicone components and catheters Biofluid Focus EPS Clamps c.$675m of capital deployed* currently marked at 3.0x as

  37. Slide 37: Market updates – Pharma services/CDMO/Bioprocessing

    Market updates – Pharma services/CDMO/Bioprocessing Sustained growth in biologics and regenerative medicines Market update Trading/recent comps Outlook and drivers 35.0x EV/LTM EBITDA Bioprocessing • ~8% biologics growth; 10+% growth in CDMO (contract 30.0x 5YR Avg.: 24.1x development and manufactur

  38. Slide 38: Innovative and emerging technologies

    Innovative and emerging technologies 3i focus on serving fast-growth pharma subsegments Viral vector therapies mRNA Bispecific mABs Viral-vector gene therapies mRNA teach cells how to An antibody that can bind to use modified viruses as drug- make a protein that triggers two different antigens at th

  39. Slide 39: Market updates – Medical device/MDO

    Market updates – Medical device/MDO Normalised procedure volumes, continued focus on minimally invasive surgery Market update Trading/recent comps(1) EV/LTM EBITDA Outlook and drivers 30.0x • ~5-6% medtech growth, LDD growth in select markets Medical Device/MDO (structural heart, neuromodulation); 1

  40. Slide 40: Innovative and emerging technologies

    Innovative and emerging technologies 3i focus on serving fast-growth medtech subsegments Neurostimulation Structural heart Robotic surgery Implantable pulse Heart valve Minimally invasive generators replacement surgery Product platforms Example indications: Example indications: Example indications:

  41. Slide 41: 3i approach

    3i approach A Maintain focus on targeted areas, expand sub-segments B Leverage existing portfolio/network to build within our desired ecosystems C Invest organically and inorganically to support strategic evolution D Provide support where needed to help scale operations and systems Develop ownership

  42. Slide 42: Building market leaders

    Building market leaders 3i has invested organically and via acquisition to expand capabilities, footprint and market exposures as we build market leaders in target segments FTEs Facility square feet Capabilities and exposures @ Acq. Current @ Acq. Current @ Acquisition Additions + Nitinol tubing + P

  43. Slide 43: Add-on acquisition activity

    Add-on acquisition activity Adding capabilities and market exposures, expanding geographic footprint 2017 2019 2021 GLE Distribution Cardea NovelCath Engineering Channel Swissfillon July 2021 December 2020 December 2021 December 2021 October 2021 IPG IP 2014 March 2020/ Metrigraphics EPS Clamps IP B

  44. Slide 44: Cirtec overview

    Cirtec overview Business snapshot Company overview Select target end markets • Outsourced manufacturing for complex medical devices • Leading management team including CEO Brian Highley • Focus on active implantable devices and interventional therapeutics • 8 acquisitions completed since 2017 • 10 s

  45. Slide 45: Cirtec is exposed to fast-growing niche therapeutic areas

    Cirtec is exposed to among the fastest growing, niche therapeutic areas of the medical device market End-market growth Cirtec’s key end-markets are driven by the increased adoption of its customers’ products due to their ability to treat serious illnesses in new innovative ways 25% 24% Weighted aver

  46. Slide 46: Building a market leader – Cirtec

    Building a market leader – Cirtec Under an experienced management team led by CEO Brian Highley, Cirtec has grown into a global market leader. 3i has partnered with the team over our ownership to significantly expand the company’s capabilities, end market exposures and geographic footprint, enabling

  47. Slide 47: Cirtec's growth momentum and resilience through Covid

    Cirtec’s growth momentum and resilience through Covid Cirtec has grown at a double digit CAGR from 2019 despite the broader macro environment Market challenges Cirtec response • Robust pipeline of innovative products coming to market during this 2020: Covid impact on elective time drove strong growt

  48. Slide 48: Cirtec investment thesis and journey

    Cirtec investment thesis and journey Cirtec has significantly progressed a number of aspects of the investment thesis developed by the leadership team and 3i. Cirtec continues to build on these initiatives to better serve the market and customers. Executed on significant customer programme launches,

  49. Slide 49: Expanding exposures to complementary high growth markets

    Expanding exposures to complementary high growth markets Continued expansion into the most innovative segments within medtech @ Acquisition Under 3i ownership Neuromodulation Micro stent Structural heart Neurovascular Continuous glucose Electrophysiology monitoring Example indications Chronic back p

  50. Slide 50: Interventional strategy update

    Interventional strategy update Organic and acquisition investment driving significant momentum STRATEGY END MARKET EXPOSURES • Complement and diversify areas of strength ‒ Expand portfolio of minimally invasive therapeutics • Focus on high growth minimally invasive segment: Structural heart Electrop

  51. Slide 51: Case study – neurostimulation end-to-end capabilities

    Development of most comprehensive capabilities Case study – neurostimulation end-to-end capabilities Engineering Vertical capabilities Assembly and supply chain Proprietary platform/IP c.100+ Vertical Full device assembly IP for complete FDA engineers capabilities and supply chain approved system ma

  52. Slide 52: Case study – Costa Rica site

    Expansion of footprint, capacity and capabilities Case study – Costa Rica site VALUE TO CUSTOMERS • Local to many medical device OEMs • Experienced and educated labour pool CAPACITY • 30,000 sqf facility • Class 7 and 8 cleanrooms • ISO 13485:2016 CAPABILITES • Coil winding • IPG leads assembly • De

  53. Slide 53: 3i partnership

    3i partnership Supporting Cirtec in implementation of investment thesis • Clear strategic alignment with CEO Brian Highley and the leadership team Strategic from the outset regarding a future vision for Cirtec and the industry alignment • Nimble approach to evolving in advance of market trends and c

  54. Slide 54: ESG and sustainability

    ESG and sustainability • The medical devices industry places a substantial focus on ESG throughout the value chain of OEMs and suppliers • By nature of its products, Cirtec and its customers have a daily impact on saving or improving lives – Products address several of the most challenging and impac

  55. Slide 55: Future goals

    Future goals • Provide our customers with market leading MDO services and products • Enable cutting edge technologies to come to market faster and more cost effectively • Support program lifecycles from engineering/development through commercial • Continue to vertically integrate to provide enhanced

  56. Slide 56: Healthcare sector update and Cirtec Medical Q&A

    Healthcare sector update and Cirtec Medical Q&A

  57. Slide 57: Investment overview

    Investment overview Rahul Lulla

  58. Slide 58: WilsonHCG is a market leader in end-to-end talent solutions

    WilsonHCG is a market leader in end-to-end talent solutions Company overview Transaction highlights • Founded in 2002 • First meeting with management in 2017 • End-to-end talent solutions – Talent strategy and consulting • Relationship built with CEO and – RPO (majority of revenue) founder over four

  59. Slide 59: Our investment thesis

    Our investment thesis Double-digit market growth driven by 1 secular tailwinds 2 Leading player with track record of growing ~2x market growth Scalable business with strong culture, 3 processes and systems 4 Founder-led company with commitment to excellence and strong ambition 59

  60. Slide 60: Human Capital (HCM) is an industry with significant opportunity

    1 Human Capital (HCM) is an industry with significant opportunity Evolving employee Shifting labour Skills gaps expectations supply Digitisation of HR Outsourcing Elevation of the Increasing HR HR leader budgets 60

  61. Slide 61: Identifying RPO as an attractive market in 2016

    Within HCM, we identified Recruitment Process 1 Outsourcing (RPO) as an attractive market in 2016 Recruiting and onboarding Source/ screen Hire candidates RPO industry 10-15 years ago 61

  62. Slide 62: Identifying RPO as an attractive market in 2016

    Within HCM, we identified Recruitment Process 1 Outsourcing (RPO) as an attractive market in 2016 Recruiting and onboarding Cultivate Source/ Interview Manage Extend talent screen and Q&A and Hire Analytics offer pool candidates assess onboard RPO industry over the last 7-9 years 62

  63. Slide 63: Identifying RPO as an attractive market in 2016

    Within HCM, we identified Recruitment Process 1 Outsourcing (RPO) as an attractive market in 2016 Talent strategy and consulting Recruiting and onboarding Cultivate Source/ Interview Manage Gain market Design Implement Extend talent screen and Q&A and Hire Analytics intelligence programme tech stack

  64. Slide 64: The RPO market has grown double-digits over the last decade

    The RPO market has grown double-digits over the last decade with 1 growth reverting to historical levels coming out of the pandemic Global RPO Market ($ billions) Market drivers Specialisation +14% $6.7 +14% Digitisation $5.4 transformation $4.6 $3.9 $4.0 Employee churn $3.3 $2.9 $2.5 $1.9 $2.1 Rece

  65. Slide 65: Wilson has developed into a leading player

    Through expansion of offerings and geographic footprint, 2 Wilson has developed into a leading player…. Global HQ (Tampa, FL) Office footprint Americas: Tampa, New York, Toronto EMEA: Manchester, Krakow, Belfast, Vilnius, Bucharest APAC: Hong Kong, Shanghai, Beijing, Singapore, Tokyo Other: Cape Tow

  66. Slide 66: Revenue growth ~2x market growth

    2 …and has driven revenue growth that is ~2x market growth ~30% 2014 2015 2016 2017 2018 2019 2020 2021 2022 Growth drivers 1 Acquisition of new clients 2 Scope expansion with existing clients 3 Employee churn/growth in headcount 4 Cross selling various talent offerings 66

  67. Slide 67: Wilson's success and culture recognised by industry

    Wilson’s success and high-performing culture are well 2 recognised by industry participants Industry Star Performer in "Leader" in Named to HRO Highly Forbes named recognition Everest Group's NelsonHall's RPO Today's Baker's Commended as WilsonHCG as one Global RPO PEAK NEAT Vendor Dozen list for th

  68. Slide 68: Key elements of Wilson's RPO model

    3 Key elements of Wilson’s RPO model C-level High degree of Thought partner Proprietary relationships client trust on technology analytics Long-term Defined processes Customer and contracts with Customer-centric with commitment employee-driven fixed and variable flexible approach to excellence refer

  69. Slide 69: Founder-led team with deep experience

    Founder-led team with deep experience 4 and commitment to excellence 20 12 4 13 John Wilson Kim Pope Ken Bowles Craig Sweeney CEO and founder COO CFO EVP, Sales Industry recognition: Industry recognition: Industry recognition: Industry recognition: • Profiles in Diversity Journals' CEO • Forbes HR c

  70. Slide 70: Excellence in ESG is core to how Wilson operates

    4 Excellence in various areas of ESG is core to how Wilson operates Young workforce that is passionate about Flexible hours and remote-working sustainable business practices and DE&I supported well before 2020 Diverse senior leadership team and employee base Leadership in veteran and veteran spouse

  71. Slide 71: 3i tracked Wilson since 2017 and closed investment in Q1'21

    Process: 3i had tracked Wilson since 2017 and closed the investment in Q1’21 Early 2017: 3i meets Wilson mgmt. Q3 2020 - Q1 2021: Our conviction in the business and market team following kicking-off coverage led us to proactively approach mgmt. and Wilson’s lead investor. of the RPO market in 2016 W

  72. Slide 72: First eighteen months of our ownership

    First eighteen months of our ownership Business • Business performance ahead our investment case performance • Outperformance across nearly all KPIs • More than doubled headcount to support new and existing accounts People • No changes to the senior leadership team (SLT) • Developed a plan for a mul

  73. Slide 73: We share management's ambition to build the market-leading provider

    We share management’s ambition to build the market-leading provider of total talent solutions 1. Capitalise on current momentum 2. Expand footprint in certain lower cost locations 3. Strengthen “top-of-the funnel” strategy and consulting offerings to feed RPO and other business lines 4. Expand bread

  74. Slide 74: WilsonHCG Q&A

    WilsonHCG Q&A

  75. Slide 75: Closing remarks and final questions

    Closing remarks and final questions Simon Borrows Chief Executive

3i Group — Investor Day (September 2022) on 6ix