Optimising performance: the General Industrial sector

For 3i, the General Industrial sector encompasses a diverse range of activities, from chemicals and aerospace through to transport and logistics. Our experience is equally broad: from our investment in Radius Systems (a market leading UK manufacturer of thermoplastic pipe systems) to our recent exit from ABX Logistics (one of Europe’s largest freight forwarding businesses).

We invest globally within eight General Industrial sub-sectors:

• Aerospace and defence;
• Automotive;
• Chemicals;
• Construction and building products;
• Electronic and electrical equipment;
• Industrial engineering;
• Paper, packaging and print; and
• Transport and logistics.

As a FTSE 100 company with over 60 years’ experience of working in close partnership with ambitious managers and entrepreneurs, we bring a wealth of sector experience enabling us to proactively contribute to business strategy. Our relationships with the world’s leading companies, industrialists and thought leaders mean that when you partner with us you have unprecedented access to: 

• Dedicated investment professionals in 12 countries, each with in-depth knowledge of local business and markets;
• Our specialised sector team with unrivalled experience in assisting outsourcing and penetration of new and emerging markets; and
• Leading industrialists – we will introduce you to highly capable and experienced entrepreneurs who advise (and often join) the businesses we partner.
• Our partnership approach is individual and ersonal. It starts before we invest and continues through our equity participation up to eventual exit. At every stage we work to build a healthy, successful business with sound financials and an exciting future.
  

Turbulent times present particular challenges for the general industrial sector: demand is uncertain, energy and raw material costs fluctuate, and the outlook for exchange rates and inflation is unclear. All of this impedes the longterm planning that more capital intensive businesses typically require.

At the same time, turbulence presents opportunities. The best run industrial businesses will emerge from this period of change with lean cost structures, finely tuned customer propositions and enlarged market shares. Because industry cycles vary significantly between sub-sectors, the businesses that encountered slowdowns early on may also be among the first to emerge.

At 3i, we believe that the following fundamentals set apart those companies that are well placed to strengthen their position during turbulent times:

• First and foremost, capable, decisive management teams that can seize the opportunities presented by challenging times and weaker competitors;
• Products and services that fulfil unique roles – either through their nondiscretionary nature, or through intellectual and technology leadership;
• A customer base within sectors that are more resistant to recession, such as the healthcare, food, infrastructure and government sectors;
• An international presence that mitigates over reliance on a single country, and includes a strong weighting towards faster growing emerging markets; and
• A proven ability to generate cash, offsetting the impact of a high fixed cost base and weak capital markets.

These characteristics are typical of our partnerships with a range of leading industrial companies, including AES Engineering, a provider of essential mechanical seals, Motoren-Werke Mannheim GmbH (MWM GmbH), a world leader in environmentally friendly energy generation, and Radius Systems, a manufacturer of thermoplastic pipe systems for the infrastructure sector.

By working closely with management teams, we can apply the value of 3i’s knowledge and global networks to help companies streamline their operations, identify and execute value creation opportunities, and diversify their international presence. In this way, businesses will not only survive these difficult times but will emerge from this period leaner and fitter, with a robust platform for future growth.