3i group plc annual results to 31 march 2008 – case studies .developments since...

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  • 3i Group plc Annual results to 31 March 2008 case studies

  • First investment3is Eurofund V invested 260m in December2007 to support the buyout, growth anddevelopment of Global Garden Products (GGP).

    Nature of businessGGP is Europes leading manufacturer ofpowered garden equipment, includinglawnmowers, ride-on tractors and handheldequipment.Results to 31 August 2007

    (audited)m

    Sales 547EBITDA 84Net assets 207

    Current tradingSales and EBITDA in the current financial year todate are performing ahead of previous yearsresults for the same period.

    Developments since 3i investedThe board of GGP has been strengthenedthrough 3is introduction of Paolo Antonietti asChairman. 3i is also supporting GGPs plans forgrowing the business, particularly in newgeographies. In January 2008, GGP announcedthe acquisition of Alpina Italia Spa, a companywith a turnover of around 17m and the maindistributor of GGPs Alpina brand in Italy.3i Group plcs investment March March

    2008 2007m m

    CostEquity and loan 104 n/a

    Valuation (cost basis)Equity and loan 116 n/a

    Equity interest 34% n/aIncome in the year 3 n/a

    First investment3is Eurofund V invested 164m in February2008 to enable the public-to-private buyout ofInspicio.

    Nature of businessInspicio is a market-leading global provider ofcommodity, food and environmental testing andinspection services.Results to 31 December 2007

    (audited)m

    Sales 218EBITDA 23Net assets 9*

    *Net of goodwill.

    Current tradingThe business continues to trade well, on theback of increased regulation and strong demandfor global commodities.

    Developments since 3i invested3i is applying its sector expertise to supportInspicios growth strategy. Since announcing anoffer for the business in December 2007, Inspicio has made four strategic bolt-onacquisitions, as well as committing to a furthercapital expenditure plan to accelerate laboratoryexpansion.3i Group plcs investment March March

    2008 2007m m

    CostEquity and loan 91 n/a

    Valuation (cost basis)Equity and loan 91 n/a

    Equity interest 38% n/aIncome in the year 4 n/a

    Buyouts Case studies

    Global Garden ProductsNew investmentLocation: ItalySector: ConsumerWebsite: www.ggp-group.com

    InspicioNew investmentLocation: UKSector: Business servicesWebsite: www.inspicioplc.com

    These case studies consist of the two largestinvestments and the two largest realisations (byvalue) completed in the year. We have also includedthe next largest investment in the portfolio.

    For new investments, cost and valuation may differdue to the application of different exchange rates.

    Where relevant, EBITDA represents operationalEBITDA, excluding non-recurring items.

    For further information on 3is portfolio and cases studies please visitwww.3i.com/investment-stories

  • First investment3is Eurofund IV invested 126m in February2006 to enable the buyout of Giochi Preziosi.

    Nature of businessGiochi Preziosi is one of the worlds leading toybusinesses.Results to 30 June 2007

    (audited)m

    Sales 723EBITDA 79Net assets 205

    Current tradingGiochi Preziosi has continued to improve itssales and profitability performance over the lastyear, building on its position as the marketleader in Italy with around one quarter ofmarket share.

    Developments since 3i invested3i has helped Giochi Preziosi make a number ofsenior appointments since investment throughits global network. The sale and leaseback ofthe properties of Giochi Preziosi was also drivenby 3is value plan, and returned a cash inflow of73m to enable the company to repay some ofits borrowings. The number of employees ofGiochi Preziosi has increased from 1,470 in2004 to 1,717 in 2007.

    In March 2008, an agreement was reached(subject to regulatory approval and a materialadverse change clause) to sell Giochi Preziosi.This transaction would return 290m to 3i andinvestors in Eurofund IV, representing a moneymultiple of 2.3 times and a 45% IRR.3i Group plcs investment March March

    2008 2007m m

    CostEquity and loan 63 63

    Directors valuation (imminent sale/cost basis)

    Equity and loan 151 63Equity interest 38% 38%Income in the year 0 0

    First investment3is Eurofund IV invested 54m in March 2005to enable the management buyout of CarePrinciples. 3i Group plc held a minority positionin the company since 1997.

    Nature of businessCare Principles provides specialist assessment,treatment and rehabilitation for adults withlearning difficulties, personality disorders andautistic spectrum disorders.Results to 30 April 2006(14 month period) (audited)

    m

    Sales 69EBITDA 14Net assets 44

    Developments since 3i invested3i used its sector knowledge and experience inHealthcare to assist in the development of CarePrinciples. We introduced Paul Preston as CEO,and Nick Irens, formerly of another successful 3i buyout Westminster Healthcare, asChairman. In 2005 3i helped Care Principlesacquire Ermine Care, a provider of community-based specialist services. The companyperformed strongly and ahead of plan, and inJuly 2006 Care Principles was re-capitalised,returning 32m to 3i and Eurofund IV investors.

    In July 2007, Care Principles was sold to Three Delta LLP for 275m, generating a 3.5 timesmoney multiple for 3i and investors in EurofundIV. Over 10 years, Care Principles has evolvedfrom a start-up operation to a company withover 1,400 employees.3i Group plcs return on investment

    March March2008 2007

    m m

    CostEquity and loan n/a 20

    Realised valueEquity and loan 111 23

    Unrealised valueEquity and loan n/a 44

    Equity interest 0% 43%Income in the year 1 4

    First investment3is Eurofund IV invested 58m in December2004 to enable the 131m buyout of Coorfrom Skanska.

    Nature of businessCoor is a provider of Total FacilitiesManagement in the Nordic region, with servicesincluding workplace support, property support,telephony and security and production support.Results to 31 December 2006

    (audited)SEKm

    Sales 3,745EBITDA 309Net assets 241

    Developments since 3i invested3is network has assisted Coor in winning anumber of significant contracts. The companyhas delivered on its plan to become the Nordicregion market leader through organic growthand the 56m purchase of Celero from Volvo in2005, which increased sales by more than60%. During the three years of 3is investment,the companys staff numbers grew from 1,800to 3,700.

    In December 2007, Coor was sold to Cinven,returning 370m to 3i and investors inEurofund IV. This represents a 6.3 times moneymultiple and an IRR of 82% over the investmentperiod.3i Group plcs return on investment

    March March2008 2007

    m m

    CostEquity and loan n/a 30

    Realised valueEquity and loan 158 0

    Unrealised valueEquity and loan n/a 72

    Equity interest 0% 38%Income in the year 2 2

    Giochi PreziosiInvestmentLocation: ItalySector: ConsumerWebsite: www.giochipreziosi.it

    Care PrinciplesRealisationLocation: UKSector: HealthcareWebsite: www.careprinciples.com

    Coor Services ManagementRealisationLocation: SwedenSector: Business servicesWebsite: www.coor.com

  • First investment3i and associated limited partners invested$429m for a combined 15% minority stake inQuintiles in January 2008. This was to supportthe companys continued growth as part of arecapitalisation of the company.

    Nature of businessQuintiles is the market leader in providingoutsourced product development andcommercialisation solutions and services to thepharmaceutical and biotech industries. Quintileshas played a role in developing each of theworlds top 30 best-selling drugs and nine ofthe top 10 best-selling biotech products. Results to 31 December 2006

    (audited)$m

    Sales 1,921EBITDA 243Net assets (448)

    Current trading Quintiles has performed to plan since 3iinvested in January 2008.

    Developments since 3i invested3i is actively involved in supporting Quintilesgrowth, utilising its strong global network andHealthcare sector expertise, as well as long-standing relationships with majorpharmaceutical and biotech firms. 3i Group plcs investment March March

    2008 2007m m

    CostEquity and loan 100 n/a

    Valuation (cost basis)Equity and loan 101 n/a

    Equity interest 7% n/aIncome in the year 3 n/a

    First investment3i initially backed Venture Production in 1997before its IPO and divested in 2002. Sincereceiving a minority stake as consideration onthe sale of CH4 to Venture Production in 2006,3i invested a total of 110m in VentureProduction plc during August 2007. The aim isto support development in the UK andNetherlands sectors of the North Sea.

    Nature of businessVenture Production is a UK North Sea oil andgas producer, focusing on development andenhancement of discovered and producing oiland gas fields.Results to 31 December 2007

    (audited)m

    Sales 358EBITDA 267Net assets 281

    Current trading During 2007, the company continued thedevelopment of its North Sea asset base,participating in the drilling of 11 new wells andbringing two new fields on stream.

    Developments since 3i investedSince the start of 2008, the company hasannounced seven acquisitions of which six havealready been completed.These include thecompanys first add-on deal following its entryinto the Dutch sector in 2006 and the acquisition of WHAM Energy plc, an AIM listedcompany, for 14m. Venture Productions debtfacilities have expanded to 585m, giving astrong base to consolidate the companysposition as a leading independent oil and gascompany in the North Sea.3i Group plcs investment March March

    2008 2007m m

    CostEquity and loan 111 0

    Valuation (quoted basis)Equity and loan 127 24

    Equity interest 23% 3%Income in the year 3 0

    Growth Capital Case studies

    QuintilesNew i