The team will aim to generate private equity-style returns by applying private equity management skills to the small and mid-cap companies in which it will invest, initially with a focus on industrial and consumer sectors.
Douwe Cosijn, head of investor relations at 3i, said that the firm will “bring the private equity toolkit to help businesses drive their corporate agenda, be that strategic guidance, supplementing management, helping them to access new markets. Where 3i can differentiate itself is that it operates on a truly international basis.”
According to Cosijn, there are approximately €65bn of under-researched largely illiquid small to mid-cap companies in Europe, but he adds that 3i’s approach will not be purely about underperforming businesses: “This is about taking significant equity stakes in publicly-quoted companies on an aligned basis. People talk about activist investing but that comes in many guises and we are looking to invest with and alongside management teams to improve the companies or help them reach certain strategic objectives.”
While Cosijn admitted that success rates for take-privates in Europe were extremely slow, he said that this wasn’t the reason for the new 3i initiative: “The capital markets are less good at exploring new opportunities for businesses to create value or looking at changes in direction and new initiatives and strategies, which is what private equity is good at. As we operate in 14 countries, we can introduce lots of contacts and resources – there is no reason why we can’t take a UK quoted business and introduce it to our network in China and help move its manufacturing facilities there.”
The team will be headed by managing partner Bruce Carnegie-Brown, an independent non-executive director of Close Brothers Group and chief executive of Marsh from 2003 to 2006. He also held senior roles at JP Morgan Chase and Bank of America.
Other founding partners are Stephen Hill, former chief executive of Betfair, the Financial Times Group and chief executive in residence at Permira Partners; Richard Segal, chief executive of PartyGaming and former chief executive of Odeon, previously owned by Rank Group, where he also held several senior management positions; and Alan MacKay, a senior partner in 3i’s European leveraged buyout business and global lead partner for 3i in healthcare.
MacKay also sits on the strategic advisory board of SVG Investment Advisers, the fund advisory arm of UK investment group SVG Capital.