3i Group plc · LSE:III
3i — Debt Investor Presentation (June 2011)
48 slides from 3i's debt investor presentation, June 2011
Slide 1: 3i Debt Investor Update
3i Debt Investor Update June 2011 Julia Wilson – Finance Director Maureen Rawlins – Group Treasurer 1
Slide 2: Disclaimer
Disclaimer The distribution of this document may be restricted by the laws and regulations of certain jurisdictions. You should inform yourself of, and comply with, those restrictions. Failure to do so may be a breach of those laws or regulations. This document may only be issued to or passed on in
Slide 3: Contents
Contents • Business overview and strategy 4 • Financial results to March 2011 14 • Balance sheet update 24 • Appendices 33 3
Slide 4: Business overview and strategy
Business overview and strategy 4
Slide 5: 3i today - our business
3i today - our business 3i Group AUM £12.7bn Private Equity Buyouts Growth Capital Infrastructure Debt Management AUM £5.2bn AUM £2.4bn AUM £1.6bn AUM £3.4bn Investing in buyouts Minority investing in Investing primarily in Management of funds with an enterprise high-growth businesses utilities, tra
Slide 6: Our strategy
Our strategy Invest Grow our business • in growing companies that • in areas consistent with our skills fit with our values • by strengthening our • with management teams and international network and entrepreneurs, working with them building our sector capabilities to deliver their full potential •
Slide 7: Our model for returns
Our model for returns Private Equity Infrastructure Debt Management 20% 12% 10% Gross return objectives Fee income as a share of returns Reduced volatility Net return objectives 15% 15% 15% 7
Slide 8: Our market – Private Equity Europe
Our market – Private Equity Europe €bn 120 Funds raised 100 Investment 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: EVCA for 2007-2010, EVCA/Thomson Reuters/PwC for previous years 8
Slide 9: Private Equity contribution to 3i returns
Private Equity contribution to 3i returns Gross portfolio return objectives Net portfolio return objectives 20% 15% The performance of the Gross portfolio return Assets under management portfolio is derived from: plus/less: - realised profits from - fees from funds; the sale of investments; - carrie
Slide 10: Infrastructure at 3i – two investment vehicles
Infrastructure at 3i – two investment vehicles No direct on balance sheet investment Investment activity conducted through two investment vehicles 3i Infrastructure plc 3i India Infrastructure Fund 32.9% direct holding $250m commitment 12% Total return objective, net 18% Return objective, net 5% Yie
Slide 11: Infrastructure contribution to 3i returns
Infrastructure contribution to 3i returns Gross portfolio return objectives Net portfolio return objectives 12% 15% The performance of the Gross portfolio return Assets under management portfolio is derived from: plus/less: 3iN: - fees from funds; - dividends; and - carried interest from funds; - un
Slide 12: Debt Management
Debt Management Established a debt management capability in 2007 Focused on European mid-market credit Recognised opportunity and identified areas for growth Acquired Mizuho’s European debt management business Presently a team of ~30 executives managing eight funds 12
Slide 13: Debt Management contribution to 3i returns
Debt Management contribution to 3i returns Gross portfolio return objectives Net portfolio return objectives 10% 15% 3i managed vehicles Gross portfolio return Assets under management return: plus/less: - realised and unrealised - fees from funds; gains; and - carried interest from funds; - portfoli
Slide 14: Financial results March 2011
Financial results 31 March 2011 14
Slide 15: Key financials
Key financials Year to 31 March 2011 2010 Total return 10.6% 16.2% Net asset value per ordinary share £3.51 £3.21 Gross portfolio return 17.1% 20.9% Growth in portfolio earnings used for valuation 13% (8)% Uplift on realisations 26% 19% Fee income £67m £59m Assets under management £12.7bn £9.6bn Inv
Slide 16: Total return
Total return Gross portfolio return Net portfolio return Total return Realised profits £124m Gross portfolio return £601m Net portfolio return £449m Unrealised value movement £325m Fees receivable £67m Net interest payable £(127)m Portfolio income £152m Net carried interest £(38)m Exchange movements
Slide 17: NAV progression
NAV progression pence 400 63 16 (16) 375 34 (13) (4) 351 350 13 325 321 300 279 275 250 NAV at Opening Realised Unrealised Portfolio Net Funding Other Closing 31.3.09* NAV 1.4.10 profits value income operating costs NAV movement expenses 31.3.11 Gross portfolio return * Adjusted to reflect the impac
Slide 18: Gross portfolio return
Gross portfolio return As at 31 March 2011 (£m) Private Infrastructure Debt Total* Total year Equity Management to 31.3.10 Realised profits 62 - 24 124 218 Unrealised value growth 277 29 8 325 458 Portfolio income 123 16 7 152 167 Total 462 45 39 601 843 % opening portfolio value 16% 11% 52% 17% 21%
Slide 19: Unrealised profits on revaluation of investments
Unrealised profits on revaluation of investments Year to 31 March (£m) 2011 2010 Earnings growth 295 (171) Multiples (76) 536 Impairments (196) 47 Provisions (71) (24) Uplift to imminent sale 240 (28) Discounted cash flow 54 19 Quoted 23 74 Debt Management broker quotes 8 45 Other 48 (40) Total 325
Slide 20: Earnings and multiples used for valuations
Earnings and multiples used for valuations Earnings growth across the portfolio Only 12% of portfolio valued using current year forecast accounts Market multiples weakened Change in the 12 months to March 2011 to March 2010 % change Value impact % change Value impact Earnings 13% £295m (8)% £(171)m
Slide 21: Movement from £3.5 billion to £4.0 billion
Total portfolio value £m 4,800 4,600 325 (485) 4,400 719 4,200 (83) 3,993 4,000 3,800 3,600 3,517 3,400 3,200 3,000 Opening portfolio Investment Value movement Divestment at Other movement Closing portfolio value Movement from £3.5 billion to £4.0 billion 21
Slide 22: Portfolio analysis
Portfolio analysis By business line By geography Buyouts Continental Europe Growth Capital UK Infrastructure Asia Debt Management North America Non-core By vintage By sector Business Services Pre 2005 Consumer 2005 Financial Services 2006 General Industrial 2007 Healthcare 2008 Media 2009 Oil, Gas &
Slide 23: Investment
Investment As at 31 March 2011 (£m) Private Debt Total year Equity Infrastructure Management Total to 31.3.10 New investment 270 36 2 308 21 Supporting existing portfolio 80 - 47 127 99 Debt investment 110 - - 110 - Capital restructuring 16 - - 16 83 476 36 49 561 203 Capitalised interest 158 - - 15
Slide 24: Balance Sheet update
= Su Balance Sheet update
Slide 25: Balance sheet
Balance sheet 31 March (£m) 2011 2010 Investment assets 3,993 3,517 Other net liabilities (114) (191) 3,879 3,326 Gross debt 2,043 2,510 Cash (1,521) (2,252) Net borrowings 522 258 Equity 3,357 3,068 3,879 3,326 Gearing 16% 8% Liquidity £1.8bn £2.7bn NAV £3.51 £3.21 Conservative balance sheet manage
Slide 26: Funding profile
Funding profile • Conservative funding strategy 3i semi-annual debt repayment profile as at 31 Mar 2011 1000 RCF Draw ings USD MTN Private Placement 900 EURMTN Private Placement 800 GBP Bond EUR Bond 700 Amount / £m EUR FRN Target RCF 600 500 400 300 200 100 0 Ma Ma Ma Ma Ma Ma Ma Ma Ma r -1 r -1 r
Slide 27: Funding priorities
Funding priorities • Continue to extend the overall maturity profile – target maximum annual debt maturities of £350m – target broad spread of maturities to reduce refinancing risk • Funding across a range of currencies – provides natural hedge to underlying international portfolio –Provides diversi
Slide 28: Liquidity management
Liquidity management • Conservative approach – cash balances held in AAA rated liquidity – realisation flows only classified as funds and bank term deposits liquidity when cash received – liquidity planning assumes no refinancing – ability to adjust pace of investment and within the next financial y
Slide 29: Rating Agency update
Rating Agency update Moody’s: Baa1 (stable) S&P: BBB+ (stable) • “Factors underpinning Moody's current Baa1 • “Ratings on 3i Group PLC (3i)…supported by its ratings are 3i's solid franchise in private equity permanent capital base, conservative approach deal origination, its reference-player status
Slide 30: Summary
Summary Good underlying performance across the business lines Investment activity increasing Business model well positioned to manage through the cycle Growth from a conservative financial base Returns framework in place to guide future growth Take advantage of opportunities to grow in a measured wa
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Slide 32: Contacts
Contacts Julia Wilson Maureen Rawlins Finance Director Group Treasurer Email: julia.wilson@3i.com Email: maureen.rawlins@3i.com Direct line: +44 (0)20 7975 3285 Direct line: +44 (0)20 7975 3115 Investor Relations Douwe Cosijn Matt Shelley Corporate Affairs Director, Group Communications Deputy Group
Slide 33: Appendices
= Su Appendices
Slide 34: Investment assets
Investment assets Year to 31 March (£m) 2011 2010 Opening portfolio value 3,517 4,050 Investment 719 386 Value disposed (485) (1,187) Unrealised value growth 325 458 Exchange and other movements (83) (210) Closing portfolio value 3,993 3,517 34
Slide 35: Realisations
Realisations As at 31 March 2011 Private Debt Total year Equity Infrastructure Management Non-core Total to 31.3.10 Cash proceeds £372m £1m £145m £91m £609m £1,385m Uplift to sale 20% 0% 20% 69% 26% 11% 35
Slide 36: Buyouts - performance
Buyouts - performance Long-term performance – new investments made in the financial years ended 31 March Total Value Vintage investment1 Return flow remaining IRR to IRR to year £m £m £m 31.3.11 31.3.10 2011 251 - 269 n/a n/a 2010 - - - - - 2009 402 1 333 1% 9% 2008 825 144 463 (6)% (18)% 2007 714 3
Slide 37: Growth Capital - performance
Growth Capital - performance Long-term performance – new investments made in the financial years ended 31 March Total Value Vintage investment1 Return flow remaining IRR to IRR to year £m £m £m 31.3.11 31.3.10 2011 21 - 20 n/a n/a 2010 46 - 47 8% n/a 2009 208 45 140 (5)% (7)% 2008 1,061 447 592 1% (
Slide 38: Infrastructure performance
Infrastructure performance Contribution to Group results (£m) Year ended Year ended 31.3.11 31.3.10 Realised profits/(losses) - - Unrealised profits/(losses) 29 84 Portfolio income 16 16 Gross portfolio return 45 100 Fees receivable from external funds 25 20 Assets under management 1,636 1,627 38
Slide 39: Portfolio leverage – Buyouts and Growth Capital
Portfolio leverage – Buyouts and Growth Capital Debt repayment profile – Buyouts portfolio Debt repayment profile – Growth Capital portfolio Repayment index weighted by 3i carrying values at 31 March 2011 Repayment index weighted by 3i carrying values at 31 March 2011 % % 60 60 52 50 50 40 40 33 30
Slide 40: Ten largest investments at 31 March 2011
Ten largest investments at 31 March 2011 Company Business line Value at Value at 31.3.11 31.3.10 £m £m 3i Infrastructure plc Infrastructure 320 300 NORMA Group Holding GmbH* Buyout 197 97 MWM GmbH Buyout 191 127 Hyva Investments BV Buyout 181 98 ACR Capital Holdings Pte Ltd Growth 146 149 Foster + P
Slide 41: Assets under management
Assets under management % invested Gross money Original Original 3i at March multiple at Close date fund size commitment 2011 March 20111 AUM Private Equity 3i Eurofund III July 1999 €1,990m €995m 91% 2.1 €99m 3i Eurofund IV June 2004 €3,067m €1,941m 96% 2.3 €910m 3i Eurofund V Nov 2006 €5,000m €2,7
Slide 42: Largest investments
Largest investments NORMA Group Holding GmbH normagroup.com Provider of Business line: Buyout engineered Geography: Germany joining technology First invested in: 2005 Valuation basis: Sale Proportion of equity shares held: 29.2% Residual cost: £33m Valuation: £197m MWM GmbH mwm.net Provider of Busin
Slide 43: Largest investments
Largest investments ACR Capital Holdings Pte Limited asiacapitalre.com Reinsurance in Business line: Growth large risk Geography: Singapore segments First invested in: 2006 Valuation basis: Industry metric Proportion of equity shares held: 31.1% Residual cost: £105m Valuation: £146m Foster + Partner
Slide 44: Largest investments
Largest investments Mémora Servicios Funerarias memora.es Funeral service Business line: Buyout provider Geography: Spain First invested in: 2008 Valuation basis: Earnings Proportion of equity shares held: 38.1% Residual cost: £109m Valuation: £118m Quintiles Transnational Corporation quintiles.com
Slide 45: SMT
SMT Investment rationale • Deep sector experience having previously invested in Inspecta, Inspicio and Trescal • Classic buyout of a non-core division of Stork Valuation drivers • Strong underlying regulatory growth drivers • Highly fragmented market with opportunities for consolidation Other develo
Slide 46: Norma Group
Norma Group Investment rationale • Opportunity to transform the business into a global leader in joining technology • Clear strategic priorities to grow the business through acquisitions and organic growth Valuation drivers • International expansion including new manufacturing plants in China, Thail
Slide 47: Eversholt Rail Group
Eversholt Rail Group Investment rationale • Mature, profitable transport asset with stable contracted revenues and a strong market position • Positive fundamentals, with new rolling stock procurement restricted by budgetary constraints and fleets fully leased out Valuation drivers • Reduction of int
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