Business Breakdowns 3i Group: Capital in Action - [Business Breakdowns, EP.180]
Aug 28, 2024
Luke Bridgeman, a partner and portfolio manager at Hosking Partners, shares insights on 3i Group, an investment company with a unique tale that dates back to pre-World War II England. He dives into how 3i's investment strategy centers around significant stakes, particularly in the Dutch retailer Action, which represents over 50% of its net asset value. Bridgeman discusses the company's evolution post-2008 financial crisis and highlights lessons in long-term investment success through innovative strategies and strong governance, positioning 3i as a resilient player in the investment landscape.
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3i's Early Days and Lehman Crisis
- 3i's unique origin dates back to pre-WWII Britain, addressing a funding gap for smaller companies.
- Initially funded by major banks, it evolved from local investments to buyouts and global expansion before facing a crisis during Lehman Brothers' collapse.
Simon Borrows' Transformation
- CEO Simon Borrows' arrival in 2011 marked a shift, ending third-party fundraising and prioritizing balance sheet investments.
- This change allowed 3i to focus on long-term compounding and avoid pro-cyclical investing pressures.
3i's Unique Funding Model
- Unlike traditional private equity, 3i utilizes its own balance sheet, similar to Berkshire Hathaway or insurance companies.
- This approach eliminates the need for rapid exits and enables a focus on long-term growth.