Private Equity 18 September 2017 Introduction Simon Borrows, Chief - PowerPoint PPT Presentation

3i Capital Markets Seminar Private Equity 18 September 2017

Introduction Simon Borrows, Chief Executive

Clear and consistent strategy Grow investment portfolio earnings Realise investments with good cash-to-cash returns Maintain an operating cash profit Use our strong balance sheet Increase shareholder distributions 3

Our Private Equity investment approach Targeting mid market investments in sectors with inherent growth and opportunity Three core • Focused origination Business sectors Consumer Industrial Services – Northern Europe, North America – Sector discipline Polarisation Testing, • Development of Automotive inspection components sector insight and and certification Examples knowledge of industry of sub-sector Demographics best practice themes • Targeted use of White collar Filtration Business Leaders services Lifestyle Network Core objective: generate >2x cost from our investments 4

Our approach is producing good results Proprietary capital invested in each vintage c£2bn invested £100m £265m £328m £352m £471m £515m since FY2013 FY2013-FY2017 Cirtec Q/Degania MM of 1.7x 1 Ponroy Formel D Santé Audley Christ Travel Lampen- Scand- Schlemmer welt lines Q Holding Euro-Diesel Basic-Fit Aspen Hans Oticas Carol Pumps ATESTEO Blue WP Anders BoConcept Dynatect Geka JMJ FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 1 Excludes new investments made in YTD FY2017 but includes the further investment in Q/Degania. Sterling MM 5 5

Today’s seminar 2015 2013 Manufacturer of pumps and accessories for the air International transmission testing specialist conditioning, heating and refrigeration industry Original cost: £64m Original cost: £74m Residual cost: £80m Residual cost: £39m Valuation: £92m Valuation: £172m 2017 2014 Manufacturer of natural healthcare and cosmetics Manufacturer of precision elastomeric components products Original cost: £122m Original cost: £162m Residual cost: £124m Residual cost: £162m Valuation: £121m Valuation: £238m As at 30 June 2017. Residual cost includes capitalised interest and is net of proceeds received through the life of the investment. Original cost includes further 6 investments for ATESTEO and Q Holding.

Today’s presenters Pete Wilson Ulf von Haacke Partner Partner, Managing Director, Head of Industrials UK Germany Joined 3i in 2006 and was appointed Partner in 2014. Joined 3i in 2001 and was appointed joint Managing Director and Co- head of Germany in 2009. Rémi Carnimolla Richard Relyea Partner, Managing Director Partner, Managing Director France North America Joined 3i in 2007 and was appointed co- head of 3i’s North America Joined 3i in 2003 and was appointed Managing Director of France in 2011. Private Equity team in 2015. 7

Aspen Pumps Pete Wilson Partner, UK

3i in the UK • Investing in UK growth business for 70 years+ • 9 investment professionals 9

Aspen is the global leader in condensate removal pumps to the HVAC/R industry • Global leader in design, manufacture and assembly of pumps to remove condensate water for air conditioning and refrigeration • Global business, selling into 100+ countries • Strong mega-trends underpinning market growth • 3i invested £64m in a management buyout in Feb 2015 EV of £105m • Strong financial performance: – EBITA CAGR of 23% 2015-17LTM – ROCE of 90% – Operating cash conversion of 75% 10

How a condensate removal pump works 11

Pumps are the core of the business, which is highly international Sales by geography Sales by product 9% 14% 3% 19% 39% 8% 9% 72% 27% Pumps Western Europe UK Big Foot (Rooftop support systems) North America Eastern Europe Xtra (accessories) South America Rest of the World 12

We acquired Aspen in a process that played to our strengths • Early Identified Aspen as part of sub-sector work in flow control • identification Tracking the business a number of months ahead of sale • Existing relationship with Chairman providing early access 3i network • Accelerated 3-4 weeks ahead of competitors • Sector we knew through former investment in Jung Sector Pumpen (2.5x MM in 2007) knowledge • Strong track record in industrial sector • Fit with 3i Management team focused on finding the right partner to strategy deliver international growth 13

Our investment case Structural growth 1 drivers Strong, proven 6 2 Market leadership management team Attractive financial 5 M&A opportunity 3 profile Strength 4 in channel 14

Strong structural growth and product penetration drivers Technology driving Global growth Trend towards ‘split’ systems in use of air greater number of ( vs. ‘ducted’) units per system conditioning Increase in Increased Increased number volume of AC likelihood pump of pumps per AC units sold will be needed system Increased size of after-market, with replacement opportunity 15

Market leader with significant penetration opportunity Aspen share of pump volumes by geography vs. competitors 100% 80% 60% 40% 20% Other Aspen 0 Australasia UK & GSE & France Southern Eastern Europe North South India ROW Ireland Benelux Europe America America 16

Consistently strong growth, increased since our investment Annual volume of pumps sold, 2010 – 2017 LTM 2010 2011 2012 2013 2014 2015 2016 2017 17

Channel position further strengthened by M&A May 2017 JAVAC UK April 2017 Salina May 2016 M&S July 2015 Pro Pipe 18

Strong management team, well aligned with 3i Strong CEO Aligned with 3i Experienced chairman • Significant re- Adrian Thompson Richard Connell • 10 years at the investment of • Introduced by 3i proceeds into the company from BLN 3i buyout • Strong track • Sector relevance record of growth (Ideal Stelrad) • Relevant • Significant PE experience (ex experience Aliaxis, Multikwik) 19

How have we driven value since investment?  Global programme rolled out Salesforce  Sales growth in all key territories effectiveness  Increased focus on core pumps Organisation design  Further recruitment of high quality talent  Built out pipeline M&A  3i resource internationally to execute deals  Two significant product launches of new pumps Investment into NPD  Strategic relationships developed and new pumps 20

Clear opportunities for future value creation Further M&A Marketing New product launches Ongoing investment into IP/ technology 21

ATESTEO Ulf von Haacke Partner, Managing Director, Germany

3i in Germany • Frankfurt office since 1984 • 13 investment professionals • Strong core team with recent new hires • Market reputation as one of the oldest PE houses in Germany 23

ATESTEO – a global leader in drivetrain testing services • Global market leader in independent automotive drivetrain testing services with over 3x more capacity than next competitors and a Opportunity to significant share of OEMs in customer base invest into a • Prime objective is to ensure durability of transmissions and other primary transaction drivetrain components through lab-based tests and drive the transformation • Operates 134 test labs across five locations in Germany and one from a Mittelstand site in China company to a • Unique modular test lab setup with proprietary equipment & global product software quality testing company 3i Investment Paper 24

Our investment in ATESTEO From an owner-managed diversified engineering 2x company to a world leading testing and inspection Doubled adj. EBITDA in 2013-2017 specialist for the automotive industry >30% increase in testing capacity International expansion, especially in China 25

Unique origination process Sector track record Local network & personal relations Strong BLN network a) China b) Germany Long-term vision 26

Why 3i decided to invest 1 Fundamental qualities of business  Market leadership  Attractive margins and high cash conversion 5 Primary transaction 2 Market growth  Professionalisation leading to  Underlying growth trends efficiency gains  Outsourcing opportunity  Multiple arbitrage from repositioning 4 3i track record 3 Internationalisation potential  Experience in automotive and TIC  Organic potential in China and USA  Strong BLN network  Add-ons in adjacent areas 27

The automotive industry is undergoing fundamental change Electrification Connectivity • Electrification of the • Increasing communication powertrain at the expense of abilities of cars due to the internal combustion High level implications: internet access, WLAN and engine (ICE) other technologies • Shifting markets and revenue pools • Changes in mobility behaviour • Diffusion of advanced technology Autonomous driving Ownership • New competition and • Development of vehicles that • Ownership model of cars cooperation can navigate without keeps evolving from “physically owning” to human input “renting and sharing” 28