3i Group Plc · LSE:III
3i — Investor Day (September 2020)
57 slides from 3i's investor day presentation, Sep 23, 2020
Slide 1: 3i Capital Markets Seminar
3i Capital Markets Seminar 23 September 2020
Slide 2: Agenda and introduction
Agenda and introduction Simon Borrows Chief Executive 2
Slide 3: Indicative agenda
Indicative agenda 14.00- Agenda and introduction Simon Borrows 14.10 Chief Executive 14.10- Our approach to ESG and Simon Borrows 14.50 Responsible Investment Chief Executive Q&A 14.50- Evernex Rémi Carnimolla 15.30 Q&A Partner, Managing Director France 15.30- SaniSure (Bioprocessing platform) Richa
Slide 4: 3i's approach to ESG and responsible investment
3i’s approach to ESG and responsible investment Simon Borrows Chief Executive 4
Slide 5: Our sustainability strategy is defined by three key priorities
Our sustainability strategy is defined by three key priorities 1. Invest responsibly 2. Recruit and develop a diverse pool of talent For more information: 3i.com/sustainability/sustainability-reports- 3. Act as a good corporate citizen library/2020/ 5
Slide 6: Our values are at the core of how we operate
Our values are at the core of how we operate Ambition Rigour and energy Focus on generating value for all our Clarity of vision supported by practical execution stakeholders Thorough analysis leading to clear decision Strive for excellence and continuous making and effective implementation improveme
Slide 7: Our sustainability strategy is supported by robust governance
Our sustainability strategy is supported by robust governance Board of Directors Oversight and overall responsibility for our sustainability strategy Chief Executive Day-to-day responsibility exercised through a number of committees Executive Committee Overall approach and people management Investme
Slide 8: Transparency and disclosure are important to our approach
Transparency and disclosure are important to our approach Disclosures since 2017 Disclosures since 2006 Rated ‘B’ in 2019 assessment Signatories since 2011 Member of several sustainability indices Rated ‘A’ in the 2020 assessment 8
Slide 9: Approach to responsible investment
Approach to responsible investment Our Reponsible Investment Policy has been in place for over a decade Our RI policy applies to all investments. We invest only in businesses which are committed to: Fair and safe The environment working conditions Business integrity Good governance Specific exclusio
Slide 10: Approach to responsible investment
Approach to responsible investment Focus on strong governance to drive best practice across “E” and “S” • Defined purpose aligned with strategy, values and culture • Clear accountability and Board terms of reference Board and • Senior 3i executive or independent chairman culture • Balance of execs a
Slide 11: Approach to responsible investment
Approach to responsible investment Systematic ESG screening of the portfolio pre and post investment Proprietary ESG assessment tool provides framework to consider ESG risks and opportunities in each potential investment and to develop detailed remediation and value creation plans. ESG assessment re
Slide 12: Approach to responsible investment
Approach to responsible investment Typical factors assessed in pre-investment and ongoing screening E Eg: pollution, waste, loss of diversity or habitat • Environmental • Energy / carbon management management system • Land impacts / quality • Compliance • Climate change / extreme Example ESG risk su
Slide 13: ESG as an investment opportunity
ESG as an investment opportunity Renewable power generation has been an important focus for 3iN Total installed capacity of 993MW across three investments, set to grow with long development pipeline Energy from waste and Generator of electricity Renewable energy waste management from landfill gas an
Slide 14: ESG as an investment opportunity: ESVAGT
ESG as an investment opportunity 3iN: ESVAGT is supporting the growth of the offshore wind industry Emergency rescue and response vessels for offshore energy industry and service operation vessels for offshore wind industry We have supported ESVAGT to become market leader in the offshore wind segmen
Slide 15: ESG as an investment opportunity: ATESTEO
ESG as an investment opportunity 3i: ATESTEO and the electrification of the drivetrain International transmission testing specialist, realised for a 4.8x cash return in 2017 During our period of ownership, we supported investments that led to a more than fivefold increase in the share of e-mobility
Slide 16: ESG as an investment opportunity: Scandlines
ESG as an investment opportunity 3i: Scandlines has invested in a modern and clean fleet Ferry operator between Germany and Denmark 3i has supported investments to reduce Scandlines’ impact on the environment, including • Hybrid propulsion system on all passenger ferries • State-of-the-art scrubbers
Slide 17: ESG as an investment opportunity: plastics roundtable
ESG as an investment opportunity Synergistic management of risks and opportunities: plastics roundtable Product manufacturers Retailer Forum for portfolio companies to discuss plastics circular economy strategy and to share ideas for innovative solutions. Packaging Waste management Knowledge sharing
Slide 18: Good corporate citizenship
Good corporate citizenship Our £5m Covid-19 charitable fund • Funded from carried interest and performance fees payable to staff • Additional to regular charitable giving Objective • Alleviate poverty and its consequences Areas of • Charities dedicated to: food provision, education, domestic violenc
Slide 19: Today's speakers
Today’s speakers Rémi Carnimolla Richard Relyea Partner, Managing Director Partner, Managing Director France North America Joined 3i in 2003 and was appointed Joined 3i in 2007 and was appointed co-head of 3i’s Managing Director of France in 2011. North America Private Equity team in 2015. Based in
Slide 20: Our approach to ESG and Responsible Investment Q&A
Our approach to ESG and Responsible Investment Q&A 20
Slide 21: Evernex
Evernex Rémi Carnimolla
Slide 22: 3i in France
3i in France • 3i has been investing in France for 30+ years (1984) • 8 investment professionals • Core expansion country for Action, Basic-Fit, BoConcept, Lampenwelt, and other 3i portfolio companies Current portfolio Selected previous investments 2011- 2018 Fastening 2010 - 2013 systems manufactur
Slide 23: Update on Havea (ex Ponroy)
Update on Havea (ex Ponroy) Sales x 2 3 acquisitions since 3i’s investment: 7% organic growth, 10% organic EBITDA growth Backed by solid LT trends (naturality, well being etc) Resilience during the Covid-19 situation 23
Slide 24: Evernex, a "3i deal"
Evernex, a “3i deal” Long-term • Angles built over several years with the current management team and origination Evernex’s founder: 3i was invested in Evernex company in the 90’s Sector • Identification of “Third Party Maintenance” as a white spot by the 3i B&TS team knowledge and 2 targets had bee
Slide 25: What we like in Evernex
What we like in Evernex Consolidation High growth platform & on a global resilient market scale Most global player in “3rd party” maintenance of Superior Tech-enabled enabled critical IT equipment business model business with compelling financials 25
Slide 26: What is the IT hardware maintained by Evernex?
What is the IT hardware maintained by Evernex? Backbone of IT infrastructure & critical for business continuity Servers Storage Network Unit value up to €1m Unit value up to €1.5m Variable 26
Slide 27: Data centre infrastructure is complex and multi-OEM
Data centre infrastructure tends to be complex, multi-OEM and with different generations of equipment interconnected Example of data centre infrastructure maintained by Evernex All physical equipment Storage infrastructure Server infrastructure unit value: up to €1.5m Network infrastructure needs to
Slide 28: What is the solution offered by third-party maintainers (TPM)?
What is the solution offered by “3rd Party” maintainers (TPM)? Data centre equipment typical lifecycle 1 to 3 years 3 to 5 years 5 to 10 years After end of life Maintenance Collection, OEM Warranty by TPMs for recycling warranty extension the period by TPMs remaining & disposal asset lifetime by TPM
Slide 29: "Insurance" like revenue model
“Insurance” like revenue model • “Insurance coverage”, guarantee of intervention, for a pre-defined — Portfolio of IT equipment; option to extend the perimeter as asset goes off OEM warranty — Defined response time and service level (SLA) – whether remotely or on site — Multi-geographic coverage — M
Slide 30: What are the key capabilities to deliver the service?
What are the key capabilities to deliver the service? Faults predictability Rare spare analytics parts sourcing & shipping 360 Forward Same quality of service Stocking everywhere in the world Locations 24/7 worldwide 220k systems maintained + emergency 160 countries Largest deployment inventory of 6
Slide 31: Growing installed base and addressable market
Growing installed based and addressable market... DC hardware annual spending by deployment model USDbn CAGR 146 +6% Increasing 139 123 131 installed base 116 on traditional IT & 53 57 +9% 44 49 private cloud 40 20 22 24 27 29 +10% All types of technologies 58 59 60 require IT hardware 55 57 +2% mai
Slide 32: Low penetration of TPM that is rapidly gaining market share
…with still a low penetration of the TPM solution that is rapidly gaining market share Post-warranty maintenance spending USDbn CAGR • Overall post-warranty Penetration rate maintenance spending ~20% ~15% expected to grow by 13.1 13.5 +4% 4% p.a. 12.6 12.0 9.9 • TPM market worth 8.7 8.9 +2% c$3.6bn
Slide 33: TPM's value proposition is highly relevant in economic downturns
TPM’s value proposition is highly relevant in economic downturns Impact on IT spending Prioritise IT expenses / software etc Rationalise IT capex Delay refresh cycles to optimise useful life of IT equipment Evernex allows to: 1 Extend IT equipment refresh cycles… ✓ Less capex 2 …with the same qualit
Slide 34: Superior business model and attractive financial profile
Superior business model and attractive financial profile 13% organic CAGR in TPM over 16-19 Strong visibility on revenues & High margins re-occurrence & high level of (2% churn on variable costs sales) 80% cash-flow generation & capex-light model 34
Slide 35: A tech-enabled company to enhance productivity and customer experience
A Tech-enabled company to enhance productivity and customer experience / entrenchment ANALYTICS AT CORE OF BUSINESS ENHANCED CUSTOMERS EXPERIENCE • “Client 360” • Live inventory • “Advanced Asset • Open Platform for • Sales live dashboards management Management Portal” integration • Pricing modellin
Slide 36: Customers value Evernex's sustainable end-to-end service
Customers increasingly value Evernex’s sustainable end-to-end service from extending lifecycle to recycling equipment Manufacturing process of a single server => 660 trees necessary to absorb the CO2 emission produced E-waste produced globally per year => 50 million tons / weight of 5,000 Eiffel tow
Slide 37: Evernex is the most global player
Evernex is the most global player with established leadership in Europe, Latam & MEA EUROPE #1 position c. 475 Ops with strong NORAM local presence in 360 stocking each country locations Regional position APAC LATAM Regional position #1 position MEA allowing to serve #1 position blue chip global all
Slide 38: Consolidation platform on a global scale
Consolidation platform on a global scale 2013 2014 2016 2017 2018 2019 Phoenix DCS Services Customer TPM Expertise in HP TPM Leading portfolio presence Systems (Carve-out presence in TPM in Brazil Leading in TPM in Italy of TPM division) Spain TPM in Hispanic Latam IT equipment leasing Expertise in
Slide 39: Two strategic acquisitions since 3i's entry in October 2019
We have accelerated with two strategic acquisitions since 3i’s entry in October 2019 A first bolt-on in South Africa… followed by a transformative acquisition during lockdown 2020 Leading TPM in South Africa Leading TPM in DACH Blue chip clients and 1/3 of Evernex size relationships with large OEMs
Slide 40: Evernex moved from #4 to #3 within a year
Evernex moved from #4 to #3 within a year after our entry and we plan to accelerate further TPM landscape TPM landscape Top TPM world players, global revenues Top TPM world players, global revenues Park Place Park Place Curvature Curvature Service • #3 in sales Express Evernex Evernex • # 2 in Servi
Slide 41: Looking forward
Looking forward 10% organic growth Pursue buy & builds / - Global accounts consolidation - SMBs Extract operating and Pursue “Tech-enabled commercial synergies digital” roll out & with Technogroup Active Partnerships levers 41
Slide 42: Evernex Q&A
Evernex Q&A 42
Slide 43: SaniSure
SaniSure Richard Relyea “a oS
Slide 44: 3i in the US
3i in the US • 12 Private Equity investment professionals in New York office • Focus on Healthcare, Business & Technology Services and Industrials 44
Slide 45: Overview
Overview Company overview Example products • Manufacturer and integrator of single-use fluid management products and systems used in bioprocessing of biologics and vaccines • Built through the merger of four businesses: Cellon, TBL Performance Plastics, Silicone Bottles / caps / Mixing equipment / A
Slide 46: Rapidly growing end-markets
Rapidly growing end-markets Market Overview TAM Growth • Biological based drugs produced from a living cell culture Biologics • Treating an increasing number of complex diseases with greater precision and often an ability to address a wider variety of (or more narrow) patient populations c.$300bn c.
Slide 47: Serving quality sensitive, complex production processes
Serving quality sensitive, complex production processes Upstream process Downstream process MEDIA PREPARATION BUFFER PREPARATION SaniSure Products WFI POWDER WFI TRANSFER LIQUID TRANSFER LIQUID TRANSFER Bags/Bottles Tubings Bioreactor FILTER FILTER MIXER TRANSFER VESSEL MIXER TRANSFER VESSEL BUFFER
Slide 48: Overview of SUT production
Overview of SUT production Transitioning to flexible single-use solutions Market is transitioning from “MUT” or multi-use technologies / production in stainless steel to “SUT” or single-use technologies / production in plastics due to the number of advantages they offer Total mammalian cell culture
Slide 49: Platform history
Platform history • Developed expertise in bioprocessing and related subsectors (fluid management, filtration, laboratory products) carves-out and merges • Built BLN relationships in direct (bioprocessing) acquires and adjacent markets (pharma, contract manufacturing) • Established relationships with
Slide 50: SaniSure investment highlights
SaniSure investment highlights • Overall SUT market expected to grow mid-teens due to 8%+ biologics growth p.a. Capitalise on SUT and mix-shift from MUT (stainless steel) to SUT (thermoplastic consumables) market growth production methods • One of few independent bottle assemblers in the SUT market
Slide 51: Positioned to win and deliver strong value to customers
Positioned to win and deliver strong value to customers ✓ Strong brand, one of the largest independent players in the industry ✓ Top player in key proprietary product categories (bottles, tubing, components) with strong product differentiation ✓ Industry leading product cleanliness with lowest parti
Slide 52: High value assemblies & vertical integration
High value assemblies & vertical integration providing greater control of supply chain Representative SaniSure specs Tubing Connectors/Valves Bottles Caps Assembly These types of assemblies are used in the process of manufacturing vaccines or other biological drugs. The image on the right shows the
Slide 53: Broad portfolio of critical components & subassembly solutions
Broad portfolio of critical components & subassembly solutions Bottles Tubing Components • Used primarily in • Range of product types • Easy installation fill & finish and (TPE, PTFE, PFA, PVDF, fittings / connectors sampling FEP, braided silicone) • Integrated gasket applications for • Extremely hi
Slide 54: International opportunity
International opportunity Go-to-market opportunity Capabilities BioProcessing is a global market… SaniSure has European bottle, extrusion and assembly capabilities… Luxembourg Stapleford, UK 54k sqft with 2k sqft of ISO7 20k sqft with 3 cleanrooms primarily cleanroom primarily for bottle mfg for ass
Slide 55: Strong organic growth trajectory
Strong organic growth trajectory Revenue $ 2016A 2017A 2018A 2019A 2020B Consistent strong double-digit revenue CAGR, including through 2020 55
Slide 56: Priorities for the near / medium future
Priorities for the near / medium future Capitalize on market growth • Support significant number of drug candidates through commercialization of high value products • Support transition to single use solutions • Focus on high growth cell & gene therapy and vaccine markets Synergy capture • In-sourci
Slide 57: SaniSure Q&A
SaniSure Q&A 57