3i Group Private Equity Capital Markets Seminar 18 September 2019 - PowerPoint PPT Presentation

3i Group Private Equity Capital Markets Seminar 18 September 2019

Today’s seminar 2018 2018 Private label and contract manufacturing Global travel and loyalty company that connects producer of personal care products leading brands, travel suppliers and end consumers Residual cost: £135m Residual cost: £129m Valuation: £147m Valuation: £155m 2017 Value-for-money optical retailer Residual cost: £250m Valuation: £306m (at 30 June 2019) 2 As at March 2019, except where indicated

Today’s presenters Pieter de Jong Andrew Olinick Co-Head, Private Equity Partner, Managing Director North America Joined 3i in 2004 and has been Managing Director of 3i Joined 3i in 2007 and is Co- Head of 3i’s North America Private Benelux since 2011, and Co-Head of Private Equity and a Equity team and the Global Head of Business & Technology member of the Executive Committee since 2019. He is Services. He is based in New York. based in Amsterdam. Boris Kawohl Partner, Global head of Consumer Joined 3i in 2005. He is the Global Head of Consumer and is based in Amsterdam. 3

Royal Sanders Pieter de Jong Co-head, Private Equity

3i in the Benelux • Amsterdam office since 1998 • Invested €1.9bn of equity in 20 deals in the Benelux • 11 investment professionals Previous investments Current portfolio 5

Royal Sanders Leading European producer of personal care products Company overview Deal metrics • Private label and contract manufacturing • Revenues of c€225m • Production facilities in the • £135m 3i investment Netherlands, UK and Belgium producing c370m+ units and c3,500 • Announced February 2018 SKUs each year • Best-in-class operator • Industry-leading margin profile 6

Why we like “value” as an investment theme Why we like value Investment track record • Attractive offering to consumers • Polarisation • Increased price transparency • Travels well internationally • Clear differentiation • Defensive in economic downturn 7

Why we like private label personal care Why we like private label Attractive private label category for personal care retailers to differentiate • Value theme Typical personal care category • Resilient end-market €3.40 / Premium 100ml • Low private label penetration Delta: €0.65 / • Long-term relationships with Mid-range 100ml €3.30 / 34x winning retailers and brands • Fragmented competitive landscape €0.10 / Budget 100ml 8

Our private label track record Refresco: created winning global platform through M&A in low-growth industry Refresco development 2010 2011 2012 2013 2015 2017 Review product portfolio and closing of 3 plants two add-ons Acquisition of Cott’s 3i investment $136m Operational Merger with Gerber IPO on Euronext financing package put $746m Bond Issue bottling activities improvement Emig Amsterdam in place ($1.2bn) Revenue (€ bn) 3.7 IPO 2.3 2.1 2.0 2.0 1.6 1.5 1.5 1.2 1.1 1.0 0.7 0.6 0.6 0.5 0.5 0.3 0.3 0.1 ’0 ’1 ’2 ’3 ’4 ’5 ’6 ’7 ’8 ’9 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 9 Note: highlighted bars show impact of acquisitions one year after announcement

Origination Acceleration in a competitive auction process Key success factors 2011: Spotted Sept-Dec 2017: ✓ Links with 3i company Met management 15 Jan 2018: portfolio generated through quick numerous times Process start significant scan ahead of process credibility towards management and ability to diligence the business 2011-2015 2017 2018 ✓ Strong support from experts in 3i’s Business Leaders 2015: Initial Jan 2018: Network 8 Feb 2018: management Accelerated due Signing ✓ Buying decision meeting diligence made ahead of the process 10

What attracted us to Royal Sanders • Strong cost-focused culture delivers industry-leading margins Best-in-class • Consistent growth track record, significantly outgrowing the market operator • Longstanding partnerships with winning customers for >5-10 years Winning with the • Mutual dependence with customer base winners Platform for • Highly attractive platform in the European market at the early stages European of consolidation consolidation • Non-cyclical and defensive industry growing in line with GDP Defensive end markets with • Focused on growing customer segments (value-for-money drugstores, discount retailers, niche brands) limited cyclicality • Strong and profitable historical growth track record Attractive • High cash conversion and ROCE financial profile 11

High degree of customer retention and loyalty Longstanding partnerships with winning customers Development of sales to a typical key Selection of key customers customer Note: March year-end 12

Platform for European consolidation Tier-1 M&A targets Overview of European personal care PL / CM players Identified in 2017 Currently under review Top-5 player in fragmented European market Acquired (end of 2017) Liquids personal to date care division Successful track record from Royal Sanders UK turnaround ✓ Acquired plant in FY12 ✓ c10% sales CAGR since investment ✓ EBITDA margin improved from loss making to mid teens Note: March year-end 13

McBride personal care sites Highly complementary geographic footprint, customers and product portfolio Bradford, UK (c€30m sales) Ieper, Belgium (c€25m sales) Product categories Product categories Mouthwash Hand wash Bath & shower Bath & shower Shampoo/conditioner Shampoo/conditioner Other Hair care Selected customers Selected customers 14

Acquisition of McBride personal care sites Significant value creation potential Investment thesis • Highly complementary geographic footprint, customers and product portfolio Create leading European platform • Doubling the number of sites from 2 to 4 • Clear plan to transform loss-making sites into a profitable Realise operational improvement business • Purchase price attractive compared with sales level and Buy well asset value 15

Royal Sanders ready to drive further consolidation Preston, UK Vlijmen, NL Ieper, BE Bradford, UK Key market presence Core markets of Key regions for M&A acquired plants at entry Netherlands, UK, Germany, CEE UK, France, Germany, CEE UK, France, Belgium 16

ICE Andrew Olinick Partner, Managing Director, North America Global Head of Business & Technology Services

3i in North America • 12 Private Equity investment professionals in the New York office • Focus on Business & Technology Services, Healthcare and Industrials Five add-on acquisitions Three platforms in the last two years in the last two years Previous investments Metrigraphics 18

ICE is a market leader in closed-user group travel-based loyalty and membership programs • Founded in 1997 by technologists (and travel enthusiasts), John and Marcia Rowley, with no external capital • No readily available solution to exchange vacation ownership vacations for cruise. They built a solution • Cruise lines wanted an opaque channel to fill their ships early with great consumers. All major cruise lines signed on as suppliers • Expanded into setting up turnkey loyalty solutions for large membership organisations, focusing first on vacation ownership • Set up closed-user groups, where consumers can purchase travel at below market rates behind a log-in and using ‘points’ on the ICE platform • Business model has now grown into other industries, expanded internationally and added new products • Acquired by 3i in June 2018 in a primary buyout. The two founders re-invested alongside 3i • Acquired SOR Technology in February 2019, a highly complementary platform focused on hotel and digital subscriptions 19

Compelling proposition ICE operates closed-user groups that allow consumers to purchase travel at below publicly available market rates while protecting travel supplier pricing Example of how ICE saves Example ICE closed-user group consumer money For an example $2,000 product Suppliers • Publicly available market Best available 2,000 rates as baseline to market rate • Provide preferred-rate demonstrate value inventory to receive consumers via ICE closed-user group • Value back to consumers ICE savings to 400 through the use of self- consumer funded rewards points Brand Partner • Consumers pay cash for ICE gross 1,600 remaining cost after revenue discount Branded as USAA Travel • ICE receives an attractive ICE payment to preferred rate from 1,330 supplier suppliers without any Consumers volume commitments or inventory risk • Improve consumer satisfaction; • ICE retains a percentage 270 • Members of Brand ICE net revenue receive profit share of sale Partner have access to lower cost travel, within a closed-user group 20