3i Group Plc · LSE:III
3i — Shareholder Meeting (July 2008)
64 slides from 3i's shareholder meeting presentation, Jul 9, 2008
Slide 1: Annual General Meeting
Annual General Meeting 9 July 2008 1
Slide 2: Safety announcement
Safety announcement • In the event of an emergency, a two-tone fire alarm will commence • An announcement over the public address system will follow; it will ask you to listen for further instructions • Take a look now for your nearest fire escape sign • Should an evacuation become necessary, instru
Slide 3: Baroness Hogg, Chairman
Baroness Hogg Chairman 3
Slide 4: The Board of Directors
The Board of Directors 4
Slide 5: Willem Mesdag
Willem Mesdag ry
Slide 6: Robert Swannell
Robert Swannell } = \ or
Slide 7: Oliver Stocken
Oliver Stocken lt ‘\
Slide 8: Simon Ball
Simon Ball 8
Slide 9: Philip Yea
Philip Yea g as
Slide 10: Kevin Dunn
Kevin Dunn 10
Slide 11: Lord Smith of Kelvin
Lord Smith of Kelvin Sy,
Slide 12: Michael Queen
Michael Queen 12
Slide 13: Christine Morin-Postel
Christine Morin-Postel fe y) 4
Slide 14: Fred Steingraber
Fred Steingraber ’ De RY
Slide 15: Key themes
Key themes • Good performance in more challenging markets • Realistic in outlook – debt markets – M&A markets – global economic conditions; portfolio performance • Confident in strategy – further progress to report – setting new targets for the future 15
Slide 16: Share price and NAV per share since flotation
Share price and NAV per share since flotation 1800 3i Group 1600 FTSE All Share 3i Group Diluted NAV 1400 1200 1000 800 600 400 200 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 16
Slide 17: Growth in net asset value
Growth in net asset value 1077p 932p • Final dividend per ordinary share 10.9p 739p (2007: 10.3p) 603p • Total dividend per ordinary share 17.0p 535p (2007: 16.1p) 2004 2005 2006 2007 2008 17
Slide 18: Valuation methodology
Valuation methodology • Enhanced disclosure • A new two-page accessible guide to our valuation methodology (pages 106/7 of annual report) • Valuation bases listed for major investments (pages 108-109 in annual report) 18
Slide 19: New Corporate Responsibility website – 3iCR.com
New Corporate Responsibility website – 3iCR.com Objectives • Increase accessibility to the extensive CR information we already had available • Increase disclosure • Support our awareness and internal communication objectives on CR issues 19
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Slide 21: Chief Executive's review
Chief Executive’s review Philip Yea 21
Slide 22: Financial performance headlines
Financial performance headlines 2008 2007 Investment £2,160m £1,576m Realisation proceeds £1,742m £2,438m Realised profits on disposal £523m £830m Gross portfolio return 23.9% 34.0% Total return £792m £1,075m Return on opening equity 18.6% 26.8% Net asset value per ordinary share (diluted) £10.77 £9
Slide 23: Our vision and strategy
Our vision and strategy Vision Strategy • To be the private equity firm of choice • To invest in high-return assets • Operating on a world-wide scale • To grow our assets and those we manage on behalf of third parties • Producing consistent market-beating returns • To extend our international reach,
Slide 24: Confident in our strategy
Confident in our strategy • Total return strong at 18.6% • Growth in AUM of 37% – 3i QPE Limited listed, funded and 26% invested – 3i Infrastructure Limited performing very strongly – India Infrastructure Fund exceeds target size ($1.2bn) • Geographic expansion and increased deal size delivering – U
Slide 25: Growth in assets under management
Growth in assets under management £9.8bn €12.3bn* • 37% growth in assets under £7.1bn management for 2008 €8.9bn* • Direct investment driven by £5.7bn average size €7.2bn* • Funds advised/managed driven by Infrastructure and QPE • Target AUM of c.€20bn by 2010 2006 2007 2008 Direct Funds advised/man
Slide 26: Portfolio at March 2008: analysis by geography
Portfolio at 31 March 2008 Analysis by geography 3i portfolio value £6,016m 8% <1% 3% 2% 3i value Number of 43% £m businesses 6% Continental Europe 2,573 193 UK 2,250 183 India 334 12 China 171 9 Other Asia 174 13 US 497 73 Rest of World 17 4 38% QPE 26
Slide 27: Portfolio at March 2008: analysis by sector
Portfolio at 31 March 2008 Analysis by sector 3i portfolio value £6,016m 2% 3i value 8% 14% £m Business Services 819 Consumer 703 11% Financial Services 415 12% General Industrial 1,423 Healthcare 572 Media 455 5% Oil, Gas and Power 316 Technology 670 7% Infrastructure 501 8% Quoted Private Equity 1
Slide 28: Strategy in action in today's markets
Strategy in action in today’s markets • Progress in all business lines • Portfolio performing well • 3i’s market position plays to the current conditions 28
Slide 29: Gross portfolio return
Gross portfolio return 2008 2007 Gross portfolio return 24% 34% Buyouts 57% 54% Growth Capital 21% 48% Infrastructure 14% 16% Quoted Private Equity n/a n/a SMI 0% 13% Venture Capital (2)% (6)% 29
Slide 30: Buyouts
Buyouts Strategic progress • New team in Asia – first buyout closed in April • Central and Eastern Europe team – EDS closed May 2007 • Debt management opportunity Market positioning • Well positioned as the leading European mid-market buyout firm • Long-term banking relationships delivering Portfoli
Slide 31: Growth Capital
Growth Capital Strategic progress • Move to higher average deal size - £37m (2007: £26m) • Geographical extension – US Growth Capital – four investments in the year totalling $489m – continued development in Asia Market positioning • Well positioned as the leading international growth capital busine
Slide 32: Infrastructure
Infrastructure Strategic progress • 3i Infrastructure Limited (£700m listed fund) • 3i India Infrastructure Fund ($1.2bn fund announced on 16 April 2008) • Capabilities in Europe, US and Asia now in place Market positioning • 3i’s track record in infrastructure, government relationships and FTSE 100
Slide 33: QPE
QPE Strategic progress • 3i Quoted Private Equity Limited launched on the London Stock Exchange in June 2007 • New investments made – Jelf and Phibro Market positioning • Value add partner for smaller quoted companies • Differentiated by 3i’s resources and brand Portfolio • Active partnership in pla
Slide 34: A selection of case studies from our annual report
A selection of case studies from our annual report 34
Slide 35: Confident in our positioning
Confident in our positioning Opportunity Outlook/key differentiators Buyouts Mid-market Banking relationships Growth Capital Origination pipeline Suitability for LP funding Infrastructure Performing; funded Non-correlated QPE Funded Pricing attractive 35
Slide 36: Total return analysis
Total return analysis 2008 2007 £m £m Gross portfolio return 1,041 23.9% 1,406 34.0% Net carried interest (92) (61) Operating expenses less fees from external funds (214) (218) Net portfolio return 735 16.9% 1,127 27.2% Net interest payable (16) (9) Movement in the fair value of derivatives 158 (29)
Slide 37: Group – gross portfolio return
Group – gross portfolio return 2008 2007 £m £m Realised profits 523 830 Unrealised profits 291 323 Portfolio income 227 253 Gross portfolio return 1,041 1,406 Realised uplift on opening book value 43% 52% 37
Slide 38: Unrealised profits
Unrealised profits 2008 2007 £m £m Earnings multiples (162) 5 (EBITDA multiples 15% lower in 2008) Earnings 307 142 First time uplift 154 142 Provisions (188) (71) Up rounds 7 15 Uplifts to sale 83 139 Other movements on unquoted investments 26 (12) Quoted portfolio 64 (37) Total 291 323 38
Slide 39: Operating expense five year trend
Operating expense five year trend £m 300 6.0% +7.5% +20.9% 250 +22.7% 5.0% • Net costs flat 200 4.0% +5.5% • Cost ratio 5% 150 3.0% • Expected to be below 4% 2008/09 100 2.0% 50 1.0% 0 0.0% 2005 2006 2007 2008 2009 Fees Net operating expenses Cost ratio 39
Slide 40: Balance sheet
Balance sheet March Sept March 2008 2007 2007 £m £m £m Investment assets 6,016 5,130 4,362 Other net liabilities (321) (143) (114) 5,695 4,987 4,248 Net borrowings/(surplus) 1,638 1,143 (1) Equity 4,057 3,844 4,249 5,695 4,987 4,248 Gearing 40% 30% 0% 40
Slide 41: Convertible bond, liquidity and funding
Convertible bond, liquidity and funding • Existing €550m convertible bond matures August 2008 • New £430m convertible bond – 60% effective conversion premium – three year maturity • Liquid resources and undrawn facilities > £1bn 41
Slide 42: Strategy delivering
Strategy delivering • Last four years have delivered a reshaped business • Growth in assets under management – diversified by geography and type – selective investment; fewer companies – improved capital and cost efficiency • Group resources redirected to attractive areas – headcount flat over four
Slide 43: Update since results announcement
Update since results announcement • Good level of new investment at £428m for three months to 30 June • Realisations stronger than anticipated at £301m for three months to 30 June • Uplift over opening value of 26% We remain highly selective with respect to new investment, and continue to monitor cl
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Slide 45: The Resolutions
The Resolutions 45
Slide 46: Resolutions commentary
Resolutions commentary • AGM – 15 resolutions – ‘political donations’ – issue of shares – purchase of shares – B shares – Articles of Association 46
Slide 47: Questions
Questions 47
Slide 48: Poll card
Resolutions For Against Abstain 1 To receive and consider the Company's Accounts for the year to 31 March 2008 and the Directors’ and Auditors’ reports. 2 To approve the Directors’ remuneration report for the year to 31 March 2008. To declare a dividend. To reappoint Mr W Mesdag as a Director of the
Slide 49: Resolution 1: Receive accounts and reports
Resolution 1 Proxy votes lodged for this Resolution: 99.16% For, 0.14% Discretionary, 0.34% Abstain and 0.36% Against “THAT the Company’s Accounts for the year to 31 March 2008 and the Directors’ report, the Auditors’ report and the auditable part of the Directors’ remuneration report be and they ar
Slide 50: Resolution 2: Directors' remuneration report
Resolution 2 Proxy votes lodged for this Resolution: 92.48% For, 0.50% Discretionary, 5.21% Abstain and 1.81% Against “THAT the Directors’ remuneration report for the year to 31 March 2008 be and it is hereby approved” 50
Slide 51: Resolution 3: Final dividend of 10.9 pence
Resolution 3 Proxy votes lodged for this Resolution: 99.62% For, 0.14% Discretionary, 0.23% Abstain and 0.01% Against “THAT a final dividend of 10.9 pence per ordinary share be and it is hereby declared, payable to those shareholders whose names appeared on the Register of Members at close of busine
Slide 52: Resolution: Reappoint Mr W Mesdag
Resolution 4 Proxy votes lodged for this Resolution: 98.37% For, 0.15% Discretionary, 0.26% Abstain and 1.22% Against “THAT Mr W Mesdag be and he is hereby reappointed as a Director of the Company” 52
Slide 53: Resolution: Reappoint Mr S P Ball
Resolution 5 Proxy votes lodged for this Resolution: 98.13% For, 0.50% Discretionary, 0.26% Abstain and 1.11% Against “THAT Mr S P Ball be and he is hereby reappointed as a Director of the Company” 53
Slide 54: Resolution: Reappoint Lord Smith of Kelvin
Resolution 6 Proxy votes lodged for this Resolution: 98.34% For, 0.15% Discretionary, 0.26% Abstain and 1.25% Against “THAT Lord Smith of Kelvin be and he is hereby reappointed as a Director of the Company” 54
Slide 55: Resolution: Reappoint Mr O H J Stocken
Resolution 7 Proxy votes lodged for this Resolution: 98.32% For, 0.16% Discretionary, 0.26% Abstain and 1.26% Against “THAT Mr O H J Stocken be and he is hereby reappointed as a Director of the Company” 55
Slide 56: Resolution: Reappoint Ernst & Young LLP as auditors
Resolution 8 Proxy votes lodged for this Resolution: 98.89% For, 0.50% Discretionary, 0.24% Abstain and 0.37% Against “THAT Ernst & Young LLP be and they are hereby reappointed as Auditors of the Company to hold office until the conclusion of the next General Meeting at which Accounts are laid befor
Slide 57: Resolution: Fix auditors' remuneration
Resolution 9 Proxy votes lodged for this Resolution: 98.95% For, 0.50% Discretionary, 0.25% Abstain and 0.30% Against “THAT the Board be and it is hereby authorised to fix the Auditors’ remuneration” 57
Slide 58: Resolution 10: Authority to incur political expenditure
Resolution 10 Proxy votes lodged for this Resolution: 98.25% For, 0.14% Discretionary, 0.44% Abstain and 1.17% Against To renew the authority to incur political expenditure (The full text of this Resolution is set out in the Notice of AGM) 58
Slide 59: Resolution 11: Authority to allot shares
Resolution 11 Proxy votes lodged for this Resolution: 98.26% For, 0.14% Discretionary, 0.26% Abstain and 1.34% Against To renew the Directors' authority to allot shares (The full text of this Resolution is set out in the Notice of AGM) 59
Slide 60: Resolution 12: Authority to allot shares for cash
Resolution 12 Proxy votes lodged for this Resolution: 99.24% For, 0.15% Discretionary, 0.39% Abstain and 0.22% Against Special Resolution To renew the Directors' authority to allot shares for cash (The full text of this Resolution is set out in the Notice of AGM) 60
Slide 61: Resolution 13: Authority to purchase own ordinary shares
Resolution 13 Proxy votes lodged for this Resolution: 99.57% For, 0.14% Discretionary, 0.24% Abstain and 0.05% Against Special Resolution To renew the Company’s authority to purchase its own ordinary shares (The full text of this Resolution is set out in the Notice of AGM) 61
Slide 62: Resolution 14: Authority to purchase own B shares
Resolution 14 Proxy votes lodged for this Resolution: 98.81% For, 0.14% Discretionary, 0.25% Abstain and 0.80% Against Special Resolution To renew the Company’s authority to purchase its own B Shares (The full text of this Resolution is set out in the Notice of AGM) 62
Slide 63: Resolution 15: Adopt new Articles of Association
Resolution 15 Proxy votes lodged for this Resolution: 97.70% For, 0.17% Discretionary, 0.53% Abstain and 1.60% Against Special Resolution To adopt new Articles of Association (The full text of this Resolution is set out in the Notice of AGM) 63
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