1. Intouch3i International Magazine Autumn/Winter 2008-09
BUSINESS LEADERS NETWORK
Applying the right chemistry
to form a winning combination
ACTIVE PARTNERSHIP
Realising companies’
full potential
A CLEAR VIEW FOR EUROPE
3i’s Jonathan Russell becomes
EVCA Chairman
SOUTHEAST ASIA
Partnering with the region’s
best companies

2. 3i is a world leader in private equity.
We focus on Buyouts, Growth Capital,
Infrastructure and Quoted Private Equity
and invest across Europe, North America
and Asia.
Intouch leverages the knowledge of 3i
and its relationships to provide insight into
important private equity and industry
themes and trends.
Contents
02Making the case for private equity
Jonathan Russell becomes EVCA Chairman at a time of
real challenge to the industry.
04Harnessing the power of partnership
Offering systematic access to leading management practice
and expertise.
08Diagnosing a route to better healthcare
Labco is pursuing an acquisitive growth path in Europe's
fragmented medical diagnostics market.
10Hooked on gas
The need for new, efficient and clean power plants is
driving Europe’s ‘dash for gas’.
12Opening the door to Southeast Asia
Partnering with the best local companies gives access to
exciting expansion prospects.
14A winning combination
Business Leaders Network makes a vital contribution to
portfolio companies’ success.
18Taking advantage of testing times
Ad Verkuyten, a 3i business leader, develops a testing,
inspection and certification sector.
20International news
A round up of 3i appointments, awards, investments and
realisations.
22Boosting Chinese energy
Don Bai, a 3i business leader, sees opportunities emerging
as China seeks fresh energy supplies.

3. At 3i, we have been building our capabilities to transform
businesses over many years. The articles in this edition of
Intouch provide some insights into how we partner the boards
we back, and how we are refining the ways we help them.
As Warren Buffet once said: “In a bull market, one must avoid
the error of the preening duck that quacks boastfully after a
torrential rainstorm, thinking that its paddling skills have
caused it to rise in the world. A right-thinking duck would
instead compare its position after the downpour to that of the
other ducks on the pond.”
It is clearly easier for us all to be successful in thriving
economic conditions, but it takes high quality management
and the right strategy to succeed as growth slows.
Our job at 3i is to create value for our shareholders and the
investors in the funds that we manage whatever the economic
conditions. To do this depends on backing the right people
and working with them actively to create value.
Philip Yea
Chief Executive, 3i Group
Tough markets but private equity
01
Executive summary
T
here is no doubt that the current economic
backdrop is challenging in many regions and
markets around the world. As an investor, creating
value in such an environment depends not simply upon
making the right investment choices but also upon
actively helping the management teams we back to
turn their value creation plans into a reality.
thriveson change

4. making the
02
Intouch
Q: How do you view your task as
Chairman of the European Private
Equity & Venture Capital Association
(EVCA) at a time when the private
equity industry faces the prospect
of new legislation?
A: This is a very interesting time to be
Chairman because EVCA has a role to
play like never before. People think the
economic crisis has been caused by the
financial services industry, which means
they are searching for answers and
saying: “Who do we need to look at?”
On top of that, a segment of the
European Union is very anti-private
equity. A German politician famously
referred to us as locusts, and the
2006 acquisition of TDC, the Danish
telecommunications company, was
widely criticised – ultimately leading
to legislation in that country.
On the back of this, it is no surprise that
Europe-wide private equity regulation
has been proposed by a Dane and a
German. So, for the first time, the Brussels
machine of the European Parliament
and Commission is presenting a focused,
determined and real legislative threat to
private equity.
I am not saying that legislation would
be an absolute disaster. But legislation
without full consideration of the
consequences is potentially dangerous
to the economic and social development
of Europe.
Therefore EVCA has a vital role to play
to ensure that whatever the outcome is,
it satisfies the public institutions without
leaving the industry hamstrung.
Q: Why is Europe moving
toward legislation?
A: Some people are deeply worried
about private equity, but most of their
concerns are driven by a lack of
information. The industry has been
guilty of not explaining what it is and
how it does business. The other driver
is the trade union movement which is
worried about the impact of private
equity on employment.
Q: What does private equity
contribute to the European economy?
A: Private equity is a highly effective and
proven ownership structure for many
businesses. It is a force for efficiency and
growth across Europe.
No one disputes the contributions of
venture capital and growth capital as
sources of funding and innovation. Really,
the questions are about buyouts and,
particularly, big buyouts. If you study
the evidence, there is no doubt that
businesses grow faster, export more and
are more fit-for-purpose under private
equity than other types of ownership.
The big issue is around employment.
If you look at private equity ownership,
employment tends to drop at first and
then grow to exceed original
casefor
JONATHAN RUSSELL
Jonathan Russell became Chairman
of the EVCA in June 2008 and
will hold his post for one year.
He heads a body based in Brussels
that represents the interests of
1,200 private equity and venture
capital firms across 53 countries.
Jonathan sits on 3i’s Management
Committee as Global Head of Buyouts.

5. 03
EVCA
private
Jonathan Russell assumes Chairmanship of EVCA in its
25th year and at a time of real challenge to the industry,
with pressure from Brussels for far-reaching changes to
regulation, interest deductibility and capital requirements.
equityemployment levels after the first one
or two years. There are many reports
that show this. The issue is that there
is no one definitive study.
Q: What exactly is being proposed
and what is the timetable?
A: Most of the actions being discussed
are suggested in the Rasmussen and
Lehne reports, which are ‘thought’ papers
at this stage. They include transparency
recommendations, restrictions on the tax-
deductibility of interest, leverage limits
and capital adequacy requirements for
underlying investment vehicles. All of
these counterproductive regulations have
been tabled for discussion in Brussels.
I do not think that this will blow over
easily because the European Parliament,
an elected body, is demanding regulation
on the back of these two reports. The
European Commission, therefore, has to
create proposals that satisfy Parliament
on the one hand, but are enforceable and
do not create pockets where competition
will suffer on the other.
By the end of next summer, the
Commission will have decided what will
be included in its next legislation agenda
and, in 2010, whatever it suggests may
pass into law.
Q: What actions will EVCA need
to take?
A: The first thing we really need to
understand is what the European
Commission wants to do. Then, we have
to get the private equity industry – which
is very diverse by geography, type,
size and style – to agree upon a single,
clear view.
EVCA is a representative body tasked
with representing its members at
European level. To succeed in our
task, our industry must speak with
one voice in Brussels through EVCA.
We need definitive data that everyone
recognises as accurate and reliable.
We have to start from a bedrock of solid
information in order to present our case.
The industry has to co-operate to gather
this information. If the industry does not
want to face up to this issue, we can’t do
anything about it. But I think that doing
nothing is not an option.
Doing nothing is not an option. By the
end of next summer the Commission
will have decided what goes on its next
legislation agenda. In 2010 whatever it
suggests may pass into law.
Q: When your tenure comes to
an end next June, what would you
hope to have achieved?
A: I would like to think that by then
we would be well on the way to creating
that definitive information, that we would
have entered into a dialogue with the
Commission and would be discussing
the real issues. We need to satisfy the
concerns of the public and policy bodies,
without diluting what the industry does
to the point that it harms the industrial,
corporate and economic structure
of Europe.
The UK’s Walker Report is a wonderful
example of government and industry
working together to produce a clear set
of self-regulatory guidelines that deal
with all the information flows. As a result
of this, the industry in the UK completely
bought into a balanced set of transparency
guidelines and the government did not
have to waste time with legislation.

6. 3i has always worked closely with
the companies it backs to help
them achieve growth objectives.
But now, with the development
of Active Partnership, it can offer
more support to improve
performance through systematic
access to leading management
practice and expertise.
04
Intouch
partnership
of
T
hirty-five CEOs and other senior
executives from 3i-backed companies,
ranging from hedge fund administrators
to ladies’ lingerie retailers, met for two days
in Geneva’s Le Richemond Hotel at the
end of October 2008.
harnessing the
power

7. As is often the case with private equity-
backed companies, all were introducing
considerable change in their businesses,
seeking better ways to deliver growth,
and the gathering in Geneva provided
an opportunity to learn from each other.
The 3i hosted event was opened by
Michael Queen, 3i's Managing Partner
for Infrastructure. Queen talked about
how he has led and influenced change
programmes in both his career at 3i and
in other organisations such as the NHS.
He also drew upon his financial sector
experience and led discussion on the
impact of the current financial crisis on
the wider economy. Other CEOs shared
their similar experiences and goals –
relating key lessons learned.
"We have an unrivalled network of
people across 3i and our portfolio of
companies," says Queen. "There is real
value in harnessing the power of that
network by making connections between
our CEOs. The 3i Change Leaders Forum
is an excellent example of this, where
participants are getting together to share
their experiences of leading and
delivering change, discussing what has
worked and, importantly, what hasn’t."
The forum is one of the first high-profile
signs of the development of Active
Partnership. The initiative, which is
helping portfolio companies to implement
the changes needed to realise their full
potential, includes strategic, commercial
and operational elements. And, of course,
organisational change, as discussed at
the forum, is always critical to ensuring
value creation.
There is real value in harnessing
the power of 3i’s network by
making connections between
our CEOs. The 3i Change Leaders
Forum is an excellent example
of this, where participants are
getting together to share their
experiences of leading and
delivering change, discussing
what has worked and,
importantly, what hasn’t.
Michael Queen
Managing Partner, 3i Infrastructure
05
Active Partnership
Generating sustainable value
The initiative builds on the ways in
which, for many years, 3i has worked in
partnership with its portfolio companies,
combining its strategic expertise in
specific sectors with on-the-ground
international knowledge. In real terms,
this has translated into assisting with
strategy planning, recruitment of key
non-executive and executive staff, M&A
advice and setting up overseas
Civica’s Simon Downing and 3i’s Liz Sands

8. operations. What’s new is that 3i is now
giving far more practical and systematic
assistance – both through encouraging
the sharing of knowledge throughout
the companies it backs and through its
ready access to relevant experts.
The aim is to improve managements’
ability to build strong, growing
businesses; creating sustainable value.
This means developing or supporting
strategies that will enable faster growth
and backing them with stronger, more
flexible organisations. Successfully
implemented, there are benefits for all
stakeholders – equity shareholders,
management, employees and customers.
Civica: growth at the double
For public sector software and services provider Civica,
an ambitious drive to double revenues in four years is being
helped not only by 3i’s investment but also by practical
support, expertise and ideas.
06
Intouch
Planning for growth
3i aims to raise the ambitions of its
portfolio companies. Active Partnership
is designed to assist in implementing
growth strategies to help companies
achieve their full potential. For example,
at public sector software and services
group Civica, 3i is helping to support
plans to double revenues in four years,
building on the already successful growth
of the company in software to help
establish a complimentary services and
outsourcing-led business.
Across its portfolio, 3i is involved in
helping to solve a range of key practical
issues – all of which involve a degree
of change. It is also introducing training
for investment professionals in order to
improve their ability to contribute in
Just a few months after 3i backed
Civica in its £190m public-to-private
transaction in April 2008, it is helping
the provider of software and services
for the public sector to implement a
strategy designed to double revenues
within four years. Achieving this will
reinforce Civica’s position as a market
leader in its sector.
3i’s main role is to support key elements of
Civica’s planning and delivery as it seeks to
build on existing relationships and a strong
market position, to target larger service
and outsourcing opportunities.
Saving money and improving quality
“Our customers are under pressure to
improve services while making ambitious
cost savings,” says Simon Downing,
Civica’s CEO. “With our experience and
expertise there is a real opportunity to
demonstrate how re-engineered processes
coupled to effective, and often outsourced,
IT systems can help achieve this.
The combination of professional advice,
technology and management services in
order to respond to broader improvement
programmes is central to our strategy
for growth.”
The company aims to introduce this change
in its business model throughout its
international markets of the United
Kingdom, Australia, Asia Pacific and the
United States. It already sells services and
outsourcing to some clients but plans to
make this a structured proposition that its
clients need and understand.
Outsourcing in Singapore
In Singapore, for example, the Ministry of
Education has outsourced library services for
365 schools to Civica. Under the agreement
– the first time that a completely outsourced
model has been used in a library setting –
Civica provides and manages library staff
together with all the library systems, as
well as helping to define and manage the
curriculum, buying and distributing electronic
content and books. “Combining Civica’s
business process and operational expertise
Successfully implemented,
there are benefits for all
stakeholders – equity
shareholders, management,
employees and customers.

9. 07
Active Partnership
with core business systems means we can
help the customer to achieve improvements
in service delivery along with greater
efficiency by managing the business process
from end-to-end,” explains Downing.
Practical help and new ideas
Liz Sands, Director, and Simon Freer, the
3i Partner who leads the technology
practice and sits on Civica’s board, are
working alongside Downing and other
members of the management team to
develop and test the extended services
and outsourcing proposition. Sands is also
analysing how Civica’s skills can be developed
to support a broader service-led organisation.
Downing emphasises the value of hands-on
help from a partner that can offer new ideas,
and the resources to structure new initiatives.
He also believes that a fellow shareholder
has far greater alignment of interest than
an external consultancy receiving a fee.
“The last thing we need is another set of
slides and theory – Liz helps us with the
practical challenges we’re facing and
ensures we maintain our focus and pace.”
For Downing and the Civica management
team, this capability differentiates 3i.
“The combination of a strong private equity
backer that also has the resource and
commitment to support the development
of the business is ideal. For our customers,
challenged to deliver better services with
greater efficiency, it helps to have an
experienced partner. At Civica, we also
recognise the benefit of practical external
help to support us in achieving our objectives.”
For our customers, challenged to deliver
better services with greater efficiency,
it helps to have an experienced partner.
At Civica, we also recognise the benefit
of practical external help to support us
in achieving our objectives.
Simon Downing
CEO, Civica
the boardroom. This encompasses a
range of strategic and operational areas,
including working capital management,
sales strategy, pricing strategy and
lean operations.
Active Partnership has been in
development for some time. But with
the economic environment deteriorating,
the competitive advantage it will give
3i-backed companies will be more
important than ever. “The current market
climate is reinforcing our thinking that
we need to work harder to maximise the
potential of our portfolio companies,”
says Jonathan Russell, 3i’s Global Head
of Buyouts. “We need to engage in
practical improvement programmes
that protect our downside in the current
economic environment and will accelerate
value creation when the cycle turns.”
Managing change
The success of the Geneva event
places Active Partnership under the
spotlight. The large number of
companies attending illustrates quite
how many are undertaking significant
change as they seek to increase their
value. In the case of hedge fund
services company Butterfield Fulcrum
Group, 3i-backed Fulcrum Group has
recently acquired the much larger
Butterfield Fund Services, creating the
challenge of integrating two businesses
and the opportunities of far greater scale.
For Agent Provocateur, the luxury lingerie
group, change stems from opening new
stores in their existing markets and
expanding elsewhere.
It is the job of 3i’s investment
professionals to help companies such
as these reach their full potential.
“We are seeking to help companies
successfully lead and deliver change
in a challenging environment,”
says Liz Sands, 3i’s Director running
the Geneva event. “My personal
measure of success is to help these
companies achieve extraordinary
results in difficult times.

10. 08
Intouch
For Dr Eric Souêtre, CEO of the rapidly
expanding Labco network of clinical
laboratories, this fragmentation spells
opportunity. “The prospects for
consolidation are extremely good,” he
says. “The reason this has not happened
before is that complex regulations in
many countries mean you have to own a
lab jointly with a biologist or a clinician.
This has deterred a lot of players and
acted as a barrier to entry.”
Labco has developed a business model
that meets this challenge, enabling
it to bring together laboratories to
create distinct advantages for patients
throughout Europe, as well as
generating synergies, improving
quality and delivering economies of
scale. This helps make new diagnostic
technologies available to patients early,
ensures the quality of testing and
enables labs to remain profitable in
spite of tough tariff regimes.
Healthcare professionals as partners
All of Labco’s 250 laboratories – which
make it Europe’s largest clinical
laboratory network – are managed by
independent healthcare professionals.
They are partners in the group and
have an interest in its success. Since
starting in France in 2003, this structure
has helped Labco grow quickly by
acquisition. It is now also present in
Spain, Germany, Italy, Portugal and
Belgium. Between 2004 and 2007,
ebitda (earnings before interest, taxes,
depreciation and amortisation) grew
by more than one-and-a-half times to
€46.5m and revenues by more than
two-and-a-half times to €222.1m.To take
Labco through its next phase of growth,
it raised €728m of funding in July 2008.
This has taken the form of equity, debt
and mezzanine financing. 3i was the
lead equity investor, and also helped
the company negotiate with the providers
of debt and mezzanine finance.
Partnership with 3i
According to Souêtre, an important
reason for selecting 3i was its ability
to work in a partnership-style business
model that meant no single entity could
be a majority investor. “3i’s ability to
work effectively as a minority investor
is very unusual,” he explains. “Many of
the other private equity firms that invest
as a minority partner find it difficult not
to behave like a majority investor.”
The size of Labco has allowed it to
establish centres of excellence for
different types of medical diagnostics.
For example, the July 2008 acquisition
of Sampletest, a key player in the
Spanish and Portuguese diagnostics
market, brought a Madrid-based lab
with specific expertise in the advanced
technology of predictive testing. This
means, for example, that healthy women
can be screened to test the likelihood
of their developing breast cancer. If the
risk is high, they can be checked for
tumours on a regular basis.
Scale also improves the service to
physicians. Labco can now give them
direct online access to test results,
together with explanatory notes that
help them reach a diagnosis.
Labco has grown quickly to become Europe’s
largest network of clinical laboratories. In order
to continue that growth, and the benefits it
brings for patients, it turned to 3i – for funds,
fundraising support, and for help identifying
further opportunities around the world.
E
urope’s expanding medical
diagnostics sector is highly
fragmented. Across the continent,
there are tens of thousands of privately
owned clinical laboratories testing
blood and tissue samples, as well as
conducting radiology scans.
diagnosing a
routeto better

11. 09
[insert title]
€15bn market for blood testing
Labco’s laboratories currently focus on
testing blood, a market that is worth
approximately €15bn annually in
Europe. This is growing quickly as new
technology means that blood testing
can be used to test for an ever greater
spectrum of disorders, including the risk
of developing psychological illnesses,
such as depression and schizophrenia.
Blood testing can also now be used to
predict the reaction of tissue to specific
drugs. This is especially useful for
tailoring the drugs to the patient in
some cancer treatments.
“A clear advantage of the network is
that it allows us to promote these new
technologies,” explains Souêtre.
In the future, Souêtre – who has a PhD
from Paris University in Neuroscience,
an MBA from France’s HEC school of
management and was a practicing
psychologist – sees the possibility of
expanding beyond blood testing. The
other two areas of medical diagnostics,
radiology scanning and tissue testing,
are similarly fragmented. These, he says,
could double the size of the market
Labco addresses.
Investing more than money
When Labco raised €728m of equity, debt and mezzanine financing in July 2008,
having 3i as a lead equity investor was a great help, says CEO Dr Eric Souêtre.
“3i has a very good reputation, with lots of experience in healthcare,” he says.
“This clearly is reassuring for financial institutions.”
In the few months since its investment, 3i has used a combination of this expertise
and its network to identify acquisition targets in Germany and the United States.
It has also helped Labco to structure its organisation to ensure that management
is strong enough to control rapid growth, by introducing Daniel Bour, former CEO
of General de Santé, as Non-Executive Director – bringing seasoned Healthcare
market knowledge and in-depth expertise of a build-up growth story. 3i’s
European Head of Healthcare for Growth Capital and a member of the Quintiles
Board, Denis Ribon, and Partner Richard Bishop, have also joined the board.
healthcareExpanding into North America
In the meantime, he is planning
acquisitions in Germany, Eastern Europe
and the United States. 3i’s international
network is helping him identify
opportunities. “We know that we have
opportunities to continue growing at a
rate of more than 50% per year, which is
our target for the next few years,” says
Souêtre. In so doing, Labco will not
only generate strong returns for its
family of minority shareholders, but also
help patients across Europe by making
the latest diagnostics technology more
readily available.

12. Europe’s need to replace ageing, inefficient
power plants and to control carbon
emissions, is generating fresh opportunities
to back innovative power-plant developers
and supply-chain companies.
Yet with clean coal technology still in its
infancy, nuclear power carrying political
risks and long development timeframes,
and with renewable energy sources not
sufficiently scalable, the threat of
a potential capacity gap is emerging.
This threat will become more apparent
as many of Europe’s coal and nuclear
generation plants are retired over the
next 10–15 years due to age and, in the
case of coal, non-compliance with new
emission regulations.
Efforts to close this gap are starting
to be addressed by entrepreneurial
independent power generation developers.
“We believe there is a lot of opportunity
and requirement for new-builds,” says
Martin Giesen, CEO of 3i-backed
Advanced Power, a power plant developer
that is developing plants in Belgium,
Germany, Spain and the US using
modern combined cycle gas turbine
(CCGT) technology.
“Utility companies in Europe have been
slow to realise there is a large gap opening
up, starting with the Netherlands, the UK,
and then spreading into Germany. Spain
has a large requirement to switch over
from coal and oil to gas-fired plant,
while Italy will also shift from oil to gas.
”Growing competition for gas supplies
and gas-fired generation equipment has
brought opportunities to back supply-chain
companies and niche operators too.
Last year 3i backed the €360m buyout of
German generator-set maker Motoren-
Werke Mannheim, which supplies highly
efficient gas-powered solutions to
commercial and industrial users.
Gas fills the energy gap
In the long-term most observers believe
Europe’s power needs will be met by a
mix of gas, coal, nuclear and renewables
suited to both security and emissions
requirements. However, right now,
modern CCGT technology – which is
far cleaner than the average European
power plant – is the most practical
energy source. German-headquartered
power group RWE estimates that nearly
50 gigawatts (GW) of gas-powered
capacity will be constructed by 2012,
compared with 25GW of coal and 6GW
of nuclear. The IEA is forecasting that
gas will power a third of all European
capacity by 2030 – up from 20% today.
“The simple need for more power is
the principal driver of the current
investment phase,” explains Ian Russell,
Sector Adviser at 3i and former CEO
of Scottish Power. “Due to the problems
with constructing nuclear and coal plant,
and because renewables do not provide
enough reliable volume, gas is seen as
the only way to fill the gap.”
10
Intouch
gas
hooked
A
45% increase in
capacity – an extra
300 gigawatts of
power – will be required
across the European Union
(EU) by 2030, according
to the International
Energy Agency (IEA).
on

13. The troubles with gas
Yet even for gas there are difficulties.
In particular, the rush to add capacity
is creating supply chain shortages.
Engineering, procurement and
commissioning prices have risen 50%
in the last 12 months, and there is a
shortage of key components. RWE’s
prediction for new construction of
nearly 50GWs is far more conservative
than the 90GWs in planning.
Security of supply at reasonable prices
is also an issue with almost a quarter
of the EU’s gas coming from Russia.
And there are lower emitting fuels than
gas as the European Union’s 27 member
states strive to reduce emission levels
by 80% by 2020 (using 1990 as a base).
Back in the 1990s, the first major dash
for gas left investors wounded. Industry
deregulation, plentiful supplies of North
Sea gas and new turbine technology
encouraged utilities and independent
developers in the UK to build mainly
gas-fired plants. The subsequent over-
capacity led to a halving of wholesale
electricity prices earlier this decade.
But the boom-and-bust cycle is unlikely
to be repeated this time around because
the drivers of investment are different,
according to Mark Kerr, a Director of 3i’s
Oil, Gas & Power team. “This time the
absence of utility-scale alternatives to
gas coming on-stream in the near term
and meeting emission reduction targets
will mean we have a big reliance on gas.
This also then brings security of supply
challenges,” he says.
Due to the problems with
constructing nuclear and
coal plant, and because
renewables do not provide
enough reliable volume,
gas is seen as the only
way to fill the gap.
Ian Russell
Sector Adviser,
3i and Non-executive
Chairman of Advanced Power
2008 2010 2015 2020
61
68
43
-4
5% = minimum
reserve capacity
10% = desirable
reserve capacity
Source: RWE Fact Book (2007) – Generation Capacity in Europe
Reservecapacityingigawatts
Severe capacity shortage by 2020
11
Dash for gas
Building a diversified supply
If Europe is to avoid becoming over-
dependent on gas, certain renewable
technologies will have to play a much
larger role in power generation mix.
Solar is looking highly promising in
certain geographies. “With increased
energy prices and improvements in the
supply chain, solar is becoming more
competitive against conventional fuels
and can be constructed on a larger scale
than previously,” says Andrew Cox,
a Director in 3i’s Infrastructure team.
Offshore wind is likely to eventually
deliver power on a utility scale but needs
to overcome technical and logistics
challenges which are likely to take
another 10 to 20 years to fully resolve.
Onshore wind is already proven and
is expanding rapidly to fulfil its role.
These are areas where 3i has made a
number of investments including current
investment GES, a global leader in wind
farm construction and maintenance and,
until recently, Electrawinds, the Belgian-
based wind turbine developer and
operator. Electrawinds’ management
re-purchased 3i’s shareholding in
August 2008 after a successful capital
development phase was achieved.
However, it is unrealistic to expect even
proven renewables to fill the potential
generation gap. A robust power grid
in Europe needs a diversified energy
portfolio – ranging across gas, clean coal,
nuclear and renewable technologies.
Achieving this will take a concerted
effort on the part of governments, utilities,
independent developers and investors.
In the meantime, this new dash for gas
is creating plenty of opportunities for
entrepreneurs and investors.
To download our
Gas and Power thought
leadership publication
please visit:
www.3i.com/publications
Thought Leadership: Gas and Power
The last dash for gas?
Keeping Europe out of the darkness

14. Across Indonesia, Malaysia, The
Philippines, Singapore, Thailand and
Vietnam, they expanded at GDP rates
ranging from 4.8% to 8.5% in 2007.
Even with the current global slowdown,
forecast growth rates range from 4.4%
to 8.0% over the next four years1.
Attracted by this growth, private equity
investment has increased from almost
nothing in 1997 to peak at US$12.9bn
in 20072, with minority investments
dominating. In 2008, however, activity
levels have declined and are forecast
to end the year considerably lower at
US$6.6bn, reflecting the harsher climate
in markets globally.
“When I first came here in 2000, a friend
of mine said to me that the key to Asia is
flexibility,” explains Mark Thornton, the
Partner who co-heads 3i’s Asia business
from Singapore. “This has played to our
strengths, because with our different
business lines such as buyouts, growth
capital and infrastructure we can apply
our capital to different situations.”
Within the past four years, for example,
3i’s deals have included three growth
capital investments, Franklin Offshore,
Pearl Energy and Salamander Energy;
the funding of Asia Capital Re, a
reinsurance start-up; the buyout of
LHi Technology, a medical component
manufacturer; and the infrastructure
investment in Oiltanking Singapore,
an oil tank storage services company.
Even so, making these investments is
far from straightforward. Private equity
investing in the region is less than
10 years old, and the flow of potential
deals is less predictable than in the
established US and European markets.
There have been many examples of
private equity firms waiting years to find
investments, and of deals turning sour.
Other challenges stem from the fact that
minority investments are still the most
common, meaning that private equity
firms must form strong partnerships with
local entrepreneurs. Furthermore, with the
exception of Singapore-based companies,
publicly available financial information
regarding companies is less plentiful
and less reliable than in more developed
markets. “Beyond Singapore it is virgin
territory,” remarks Thornton. “There is a
huge track record of people trying to do
business and finding it too difficult.”
Singapore mitigates risk
Every private equity company has its own
methods of operating in this environment.
3i has tended to invest in well-managed
Singapore-based businesses that benefit
from growth across the region. For
example, Pearl Energy, an oil exploration
and production company that 3i invested
in for two years until 2006, was managed
from Singapore, but owned drilling rights
in Indonesia, the Philippines and Thailand.
3i also focuses on the sectors where it
has specialist sector expertise and there
are good prospects for growth. In oil and
gas, high commodity prices have boosted
local exploration and production activity.
In financial services – such as asset
management and insurance – Asia’s
increasing wealth and Singapore’s
strategy of becoming a neutral financial
12
Intouch
door
opening
to Southeast Asia
the
F
uelled by a growing young middle class, their
desire to buy houses and consumer goods, to
use banking facilities, to eat out at restaurants
and generally to indulge in the trappings of 21st
century affluence, the Southeast Asian economies
are growing – and maturing – fast.

15. We are most interested in dealing with
the companies that can see the benefit of
our international network and experience,
and how it can help them.
Mark Thornton
Partner & co-head of 3i’s Asia business
13
Southeast Asia
1
According to the Economist Intelligence Unit database
2
According to the Asia Venture Capital Journal
Despite high rates of growth, investing in
Southeast Asia takes flexibility and an eye for risk.
But partnering with the best local companies
provides access to exciting expansion prospects.
services centre (the Switzerland of Asia)
is paying off. Healthcare, similarly, is
benefiting from greater affluence, with
increasing demand for medical devices
and provision of healthcare services.
Finally, consumer-related products as
a whole are natural beneficiaries of
the region’s swelling middle class and
changing spending habits.
Additionally, 3i’s Singapore team
intentionally seeks out investments where
it can provide more than just capital.
“We are really most interested in
dealing with the companies that can see
the benefit of our international network
and experience, and how it can help
them,” says Thornton. For example, 3i’s
oil and gas expertise and strong network
have helped Franklin Offshore to
expand its international client base.
Youthful potential
The matching of private equity capital to
business need is far less straightforward
in Southeast Asia than in more
developed markets. Yet, as their healthy
growth rates demonstrate, and with
many of the region’s 500 million people
enjoying increasing wealth and
spending more on goods and services,
it is such young markets that sometimes
offer the best opportunities.
3i EXPANDS IN ASIA
19973i opens Singapore office, its first in Asia
2001Hong Kong office opens
2004–07Completes key investments including
Asia Capital Re, Franklin Offshore, Little
Sheep, Pearl Energy and Salamander
2005Mumbai office opens and makes
an initial investment in India’s
Nimbus Communications
2006Singapore office leads IndiaREIT
investment, 3i’s first pure real
estate investment
2008The investment in LHI Technology
brings our portfolio to 29 direct
investments within Asia.
200 14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
180
160
140
120
100
80
60
40
20
0
dealvolume
dealvalue$m
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
est
deal volume deal value $m
CAGR volume ‘97-07: 17.4%
CAGR value ‘97-07: 60.4%
Investment in Southeast Asia

16. winninga
3i has long worked with some of
the world’s most respected business
leaders to fulfil the potential of its
portfolio companies. Under a new
name, the Business Leaders Network,
these flexible partnerships will
continue making a vital contribution
to business success.
14
Intouch
com

17. Chambré is now Chairman of two
companies in 3i’s portfolio – Apatech
and Axellia. His interest in working
with 3i is driven by the exciting
opportunities that arise from its unique
deal flow. “3i identifies companies that
are at points of change and helps them
to evolve rapidly,” he says. “That
dovetails perfectly with my personal
goals. I have the opportunity to tap into
the very broad pipeline of deals that 3i
offers, as well as to generate transactions
myself. This gives me an exceptionally
wide range of companies to evaluate.”
Responding to an increasingly
complex global scenario
Working with outstanding managers
and entrepreneurs has long been an
important part of 3i’s value creation
process. When Cristina Grace joined
3i in 2007 to take forward this aspect
of 3i’s heritage, then known as People
Programmes, a global review highlighted
the scope to build on strong foundations.
“3i has long built strong relationships
with great leaders, who share our
partnership ethos and play a critical part
in the success of our portfolio companies,”
says Grace. “3i’s business is constantly
evolving and our challenge is to ensure
our relationships with business leaders
stay closely aligned.”
Three developments in 3i’s strategy are
shaping the network. Firstly, the business
is becoming increasingly global, with a
greater focus on stimulating portfolio
companies’ cross-border growth. Secondly,
3i is now focussing on making fewer,
larger investments which are demanding
new leadership skills and experience.
Thirdly, the increased focus on sector
knowledge creates a premium on leaders
who share the thirst for applying
industry expertise.
As Grace observes: “Overall, we face an
increasingly complex scenario. Today we
have a strong focus on building relationships
that is finely attuned to the current
direction of our investment strategy and
priorities. No two relationships are ever
the same, so we have identified flexibility
as key. With each leader, we work in a
distinct way, helping them to use their
strengths to provide the greatest impact
and unlock the full potential of the
businesses in which we invest.”
15
Business Leaders Network
bination
W
ith an outstanding track record of growing
life sciences companies into businesses
of profit and scale, Peter Chambré is one
of the most respected leaders in his sector. In 2006,
AstraZeneca bought a company he led, Cambridge
Antibody Technology, for around €900m, leaving
Peter eager for a fresh challenge. He chose to
work closely with 3i.
Why? In Chambré’s words: “My ambition is to
continue to lead healthcare companies through their
next phase of successful development and thereby
create exceptional returns – I believe that those are
goals that can best be met in partnership with 3i.”

18. industry, and Fulcrum, a leading
independent hedge fund administrator
that has recently completed a significant
acquisition to become Butterfield
Fulcrum Group. Bhargava was appointed
to board-level roles in both.
For Bhargava, working with 3i is
about both parties bringing something
of value to the table. “3i has to have
a need for whatever skills you have to
offer,” he says. “If you can match their
need with your appetite for risk, you
have a winning combination.”
A unique and dedicated resource
3i’s Business Leaders Network is
managed by dedicated directors
embedded in the global business.
Collectively, the team covers 3i’s entire
geographic footprint, while also
providing alignment to the sector-led
investment approach. By combining
intimate local knowledge with effective
operation as a global team, they are a
unique resource within the business.
The team includes long-standing 3i
professionals, together with recent recruits
who have added strength in specific
sectors and regions. In Grace’s view:
“They’re an enormously experienced,
capable and talented group of people
who add a lot of value to investment
teams and portfolio companies through a
wide range of activities, from board-level
recruitment to management evaluation.”
Strong local roots enable each director
to understand the best way to manage
the interaction between market dynamics
and 3i’s needs. Yi Li, who joined in 2006
as the Director for North Asia, sees that:
“The profile of business leaders is quite
different here. They tend to be younger
and fully employed by multinational
companies overseeing operations in
China. The high calibre people we like
to attract are already very busy in
executive or entrepreneurial roles. This
presents a challenge and highlights the
importance of a strong network.”
With each leader, we work in a distinct way,
helping them to use their strengths to the
greatest impact and to unlock the full potential
of the businesses in which we invest.
Cristina Grace
Group Director, Business Leaders Network
16
Intouch
Fluid and aspirational
As a former partner in the leadership
services practice of Whitehead Mann,
Grace understood that the new name,
Business Leaders Network, would
convey a sense of fluidity and aspiration
while sign-posting a clear intent and
being quickly understood globally.
Individual business leaders continue
to take on board-level executive and
non-executive roles in 3i’s portfolio
companies. They also work with 3i’s
investment teams to add value in a
variety of other ways, from the
assessment of potential deals and the
devising of value-creation agendas to
giving companies advice as they
implement and adapt their plans.
A small number of highly proactive,
entrepreneurial individuals join 3i’s
investment teams as Senior Advisers
– as Akshaya Bhargava did in 2006.
He worked with 3i colleagues to
analyse the market systematically for
opportunities to apply his well-proven
leadership skills in financial services
outsourcing. As a result, in 2007, 3i
made investments in KNEIP, which
transmits information for the funds

19. 17
Business Leaders Network
Li’s counterpart in New York, Kenna
Baudin, joined 3i last year as the
Director for North America and also
coordinates the financial services sector
network globally. In her view: “The
network helps us to differentiate ourselves,
which is vital in a very developed private
equity market like the US, where 3i is
still a relatively recent entrant. The name
change and shift in focus are an important
part of building a strong reputation in
North America.”
Flexible relationships:
meaningful rewards
The relationships within the Business
Leaders Network are fluid, flexible
and unique, so they change over time,
in response to market opportunities.
To reflect this, a range of rewards offer
meaningful financial recognition that
reflect the specific business contributions
made by individual leaders. These may
include consultancy fees for project-
based roles, success fees for deal
origination, and co-investment
opportunities for selected board roles.
The innate flexibility of the Business
Leaders Network enables 3i’s investment
professionals to access a resilient and
fluid resource that adapts to the specific
needs of each current and potential
portfolio business. It’s a question of
finding the right chemistry, in which
the attributes of the leader form a
winning blend with 3i’s house style,
and its emphasis on partnership,
ambition and pace. Grace sums up
the essence of the Business Leaders
Network simply: “We achieve a lot more
together than we could separately.”
As Global Lead Partner for Healthcare,
Alan MacKay has worked closely with
Chambré and other business leaders.
“We look to form partnerships with
people who are proactive and
entrepreneurial,” MacKay says.
“Inevitably this means people who are
comfortable shaping their own futures in
sometimes ambiguous environments.”
At the same time, 3i is clearly looking
for the classic hallmarks of great
leadership – the ability to set strategies
and lead change, to apply insight and
inspire people, and to deliver growth
and value. It’s a tall order but it offers
great rewards and can be a highly
attractive option for someone who already
has an outstanding track record and is
thinking, “what next?”.
3i has to have a need for
whatever skills you have
to offer. If you can match
their need with your
appetite for risk, you have
a winning combination.
Akshaya Bhargava
CEO, Butterfield Fulcrum Group
Business Leaders
Network Directors
Anna Joseph
Anna’s focus is in the Consumer
and Business Services sectors,
working with investment teams
across Europe.
Cindy Casciani
Cindy heads our CFO practice
and is the point of contact for
the UK and Benelux markets.
Claudia Kaupmannsennecke
Claudia leads on the development
of the Healthcare sector network
in Europe. Based in Germany, she is
also a point of contact for Spain.
Doro Kronenberghs
Doro specialises in infrastructure
appointments in Europe and is
also a point of contact for the
Nordic region and Germany.
Jean-Louis Grangé
Jean-Louis is responsible for
the Business Leaders Network
in France.
Kenna Baudin
Based in New York, Kenna is
the point of contact for North
America across all sectors and the
global lead on Financial Services.
Luke Anderson
Luke specialises in the Technology,
Media and Financial Services
sectors across Europe and is also
point of contact for Italy.
Yi Li
Yi’s focus is the North Asia region
across all sectors, working closely
with investment teams based in
Beijing, Hong Kong and Shanghai.
Cristina Grace
Cristina is Group Director of
the Business Leaders Network.

20. taking
TIC cuts across many parts of the global
economy and includes the testing of
goods and services, the inspection of
equipment to ensure compliance with
domestic and international laws and
regulations, and the provision of
certification services.
The market is rich with opportunity.
In Europe, for example, it is worth
an estimated €12– €15bn, is highly
fragmented and is growing at
approximately 8–10% a year. What’s
more, income streams are typically
both visible and defensible since they
tend to be based on long-term contracts
to deliver specialist services.
The appointment of Ad Verkuyten as
Chairman of the Nordic group Inspecta,
confirms the fast-growing industry’s
position as one of 3i’s core areas of focus
within the Business Services sector.
Indeed the experienced Dutch manager
has been central to the development of
3i’s investment strategy in the sector.
Legal requirement for testing
“We spent time thinking about the
European market, searching for
opportunities and building contacts to
gain the right exposure. While we were
doing that, Inspecta came to the market,”
Verkuyten recalls. With Alan Giddins,
3i’s Global Head of Business Services,
Verkuyten identified Inspecta because
up to 75% of the company’s revenues
derive from long-term contracts and 65%
of turnover is associated with its clients’
legal requirements to undertake tests.
3i’s secondary buyout of Inspecta from
the Finnish private equity group MB
Funds in June 2007 was the first step
towards building a position in a sector
that 3i believes is set to perform strongly
throughout the current economic cycle.
The company, headquartered in Espoo,
Finland, employs more than 1,000 staff
Intouch
testing
times
advantage of
te
I
n an era of heightened legislation
and internationalisation of trade,
the testing, inspection and
certification (TIC) industry is defying
the downturn and presenting some
exciting investment opportunities.
Ad Verkuyten:
18

21. Ad Verkuyten, one of 3i’s business leaders, has
spent the last 18 months helping to develop 3i’s
investment strategy in the testing, inspection
and certification sector.
and offers a wide range of business and
health and safety services to clients in
the construction, energy, infrastructure
and manufacturing sectors in the Nordic
and Baltic states.
“TIC has a role everywhere as an
independent view of quality and safety is
needed by either clients or governments,”
says Verkuyten. “Most of the sector is
shielded from a slowdown – except
perhaps the testing of consumer goods.”
The sector also brings opportunities for
international expansion and consolidation,
he adds. Even though regulations can
vary dramatically between countries,
the methods used to test and inspect
are broadly similar. “Markets develop
differently, and the language and
structure of reporting varies, but the IT
used to report and store the information
is the same.”
Proven track record
Verkuyten, who is based in London and
speaks four languages fluently, brings
outstanding knowledge and experience
to his role as a senior adviser to 3i’s
Business Services team. As CEO of
international oil, gas and petrochemicals
testing group Röntgen Technische Dienst
(RTD), he quadrupled ebitda and
delivered an outstanding return for its
owners between 2003 and 2006, when
the company was sold.
Ad Verkuyten has successfully led a
number of international businesses
and delivered exceptional results for
their shareholders. The 57-year-old
Dutchman, who has degrees in
Economics and Process Engineering,
began his career in the textiles industry.
As CEO of Blydenstein-Willink, he
transformed the traditional Dutch blind-
maker into an international business
€12–€15bn
In Europe, testing, inspection
and certification is worth
an estimated €12–€15bn,
is highly fragmented and is
growing at approximately
8–10% a year
19
Testing, inspection and certification
that now trades under the Verosol
brand name. In 2006 he was appointed
to head the private equity-backed
TIC group RTD, where he quadrupled
turnover in just three years. He is a
non-executive director of two Dutch
companies as well as being Chairman
of Inspecta and a senior adviser to 3i’s
Business Services team.
His strategy at RTD was threefold. First,
he completed a series of cross-border
purchases including acquisitions in
Germany, France and Australia. At the
same time, he invested in research and
development to offer clients a more
efficient service. For example, the firm
introduced a device that can test the
structural integrity of pipes without
removing their insulation.
Finally, and crucially, he showed potential
customers the benefits of regular
expenditure on inspection. “TIC accounts
for just 2–3% of a company’s maintenance
costs, but if anything goes wrong there
is an enormous price to pay. So we are
helping companies maintain both the
safety and continuity of their business,”
he explains.
Restructuring Inspecta
Verkuyten has taken an active role in
restructuring Inspecta and drawing up
the company’s expansion strategy in
his first months as Chairman. Since the
former state-owned organisation was
taken private in 2002, revenues have
already grown from €25m to €106m
last year following 18 acquisitions in
Finland, Sweden, Latvia and Estonia.
His first step was to recruit a new CEO,
Mats Jungar, freeing former CEO Simo
Hassie to focus on the M&A strategy for
the business. He has also hired a new
CFO. “We needed to introduce a different
set of competencies and transform
Inspecta into a more pro-active and
international organisation.”
Working with Inspecta’s management
team, Verkuyten is now turning his
attention to expansion into new regions
including Norway, Denmark, Poland and
Germany. “The backbone of the business
– the way we generate, supply and store
information for clients – is similar across
all our geographies,” he says.
3i’s ability to attract and work with
outstanding individuals like Ad Verkuyten
has helped the company identify and
successfully pursue a promising sector
ahead of the market. Earlier this year
3i made a further strategic investment
in the TIC industry, taking private AIM-
listed Inspicio, one of the world’s leading
commodity, food and environmental
testing groups in a €425m deal. Inspicio,
like Inspecta, will continue to pursue an
international expansion strategy.
“3i knows most of the players of any size
in Europe and they are straightforward
and professional to work with,” Verkuyten
says. It’s a creative partnership that is set
to keep on delivering.
generating outstanding growth

22. APPOINTMENTS
Anna Joseph has joined the Business Leaders Network as a
Director. Anna started her corporate life at McKinsey before
moving into retail marketing with the high street chain BHS.
Anna has joined 3i from Korn/Ferry – the executive search firm
– where she was a Partner in the Consumer Practice working
on UK, pan-European and international assignments.
Amit Saboo has joined the Indian Infrastructure team as an
Associate Director from KPMG India where he was a Director
with the financial advisory group. Amit spent close to 11 years
with KPMG India working with a mix of local and international
clients in the infrastructure and industrial markets sectors.
Bob Stefanowski has joined as Managing Partner and Chairman
of 3i North America. Bob joins after 14 years with General
Electric, most recently as President and CEO of GE Corporate
Finance Europe.
Liz Sands joins as a Director to help drive 3i’s Active Partnership
programme. Liz began her career at Natwest and from there
joined AT Kearney’s Financial Institutions Group. Liz then spent
12 years in professional services, delivering multi-million pound
change programmes in both the private and public sectors.
Luke Anderson has joined the Business Leaders Network as
a Director. Earlier in his career Luke was one of the founders
of a specialist human capital and executive search consulting
business, e9c that partnered with venture investors in the UK.
Luke was previously Director, Human Capital at Imprimatur
Capital, a private equity investment business operating across
Europe, CEE, Asia Pacific, China and Latin America.
Peter Watts joins 3i as a Director in the Banking team. Prior
to 3i, Peter worked at Citigroup as a Senior Credit Officer with
responsibility for risk management in Western Europe for credit
exposure to clients in the Automotive, Building Materials,
Construction, Consumer, Healthcare and other industrial sectors.
Reginald Chambers has joined as a Vice President in the
Infrastructure team in New York. Prior to joining 3i, Reggie
was a Vice President in the Global Energy Investment
Banking Group of Citigroup Global Markets Inc.
20
news
Internationalin brief
Reginald ChambersAmit Saboo Liz SandsBob Stefanowski Luke AndersonAnna Joseph Peter Watts
AWARDS
ASCRI Private Equity Awards 2008
3i has been awarded best Growth Capital Deal in 2007 for
Clinica Baviera, one of Spain’s leading chains of ophthalmology
clinics specialising in laser refractive surgery. In April 2007,
Clinica became the first ophthalmic refractive laser business
IPO in Europe.
The Private Equity Awards 2008
3i has won House of the Year and Large Deal of the Year for
NCP. The judges were impressed by the cleverly structured
finance package, the increase in employee numbers and the
subsequent sale of half the business, with 3i retaining the
high-growth NCP Services business.
BUSINESS LEADERS NETWORK
Alan Peterson has been appointed as Chairman to Azelis Group.
Alan was previously Chairman on Rubicon Retail Ltd, PaperPak
Holdings Ltd, Refresco Holdings BV and HSS Hire Group.
Andreas Gaddum has been appointed Chairman of DruckChemie.
His previous experiences include Member of the Management
Board of Fresenius AG, CEO of Fresenius Proserve as well as
management positions with Eurest and CWS.
Andy Roberts has been appointed as Chairman of Civica.
He is a Non-executive Director of a number software related
companies and Non-executive Chairman of Vega Group plc.
Daniel Bour, former CEO of Général de Santé has been
appointed as Non-executive Director of Labco.
Giacomo Santucci, ex COO of Gucci Group and ex MD of
Salvatore Ferragamo, has been appointed to the board of AP
Bags, the handbag and accessories division of Antichi Pellettier,
as Non-executive Director.
Joe Schenk, former CFO of Jeffries Group Inc, has been
appointed Non-executive Director of Gain Capital, a leading
provider of on-line currency exchange.
Maurizio Ria has been appointed CFO of Azelis Group.
Previously he was MD of Duke & Kay, a Director at Tim Transition
Management and he also co-founded Top-Executives International,
a partnership based in New York, London, Lugano and Milan.
Mike Jeffries has been appointed Non-executive Chairman at
NCP Services. He is currently the Chairman of VT Group plc
and was previously the CEO of WS Atkins.
Stefan Zimmermann, former Assistant Plant Manager of the
Cologne Engine Plant of Ford, has been appointed COO of
MWM GmbH, previously known as Deutz Power Systems.
Steve Dolton, formerly the CFO of Azzurri, a business backed
by 3i, has been appointed CFO of NCP Services.
Wilfried Schroeder has been appointed Consultant at
TSC/Infraserv.
Intouch

23. 21
International news
AP Bags Italy Not disclosed ‘Affordable’ luxury handbag manufacturing group, comprising four owned brands.
Consumer
DruckChemie Germany €134m Develops, manufactures and supplies chemical and technical products and accessories for the printing
Business Services buyout industry, as well as providing waste reprocessing and recycling services.
Axellia Nordic €258m Oslo based world-wide developer and supplier of specialist active pharmaceutical ingredients,
Healthcare buyout specialising in injectable generics.
Butterfield Fulcrum North America $57m Fulcrum Group and Butterfield Fund Services have merged to form a world top 10 independent
Group investment alternate and fund administration company.
Financial Services
Hyperion UK €36m A fast expanding, independently owned insurance and underwriting company. Since its inception it
Financial Services investment has grown to become a leading global provider of a range of specialist insurances.
SLR Consulting UK €41m One of the fastest growing environmental consultants in the UK with a broad base of blue chip
Business Services investment customers in the energy, waste management, planning & development, manufacturing, mining
and financial sectors.
Radius UK €134m Supplier of high quality, innovative, plastic pipe systems to gas, water and telecommunications
General Industrial buyout utilities. The company partners with and supply to companies of all sizes, from local distributors
to utilities operating across national boundaries.
Civica UK €295m A market leader in software-based solutions that help organisations to improve service delivery and
Technology buyout efficiency, with specialist expertise in local government, social housing, enforcement, education and
regulated markets.
LHI Technology Asia €72m The only Asia-based supplier to develop, manufacture and sell medical cable assemblies exclusively
Healthcare buyout to medical device companies and OEMs internationally.
Soya Concept Denmark Not disclosed Fast-growing clothing company, selling value-priced women’s clothing to more than 1,000 independent
Cinsumer clothing retailers across Scandinavia, Benelux and Germany.
Unión Radio Spain €100m The leading Hispanic radio operator with a presence in Spain, Latin America and the US. It has 28
Media investment million listeners worldwide.
Labco France €140m A leading European network of diagnostic centres, providing quality diagnostic services to patients,
Healthcare investment doctors and hospitals.
COMPANY AND SECTOR COUNTRY VALUE
INVESTMENT HIGHLIGHTS
ABX Benelux €750m Belgian-based global freight forwarder with 6,500 employees in 35 countries and operating
General Industrial through 65 other countries through agents, partners and joint ventures. Trade sale to DSV.
Giochi Preziosi Italy €800m The largest player in the Italian toy market and fourth largest toy operator in the world. Secondry sale
Consumer to Clessidra.
Van Wijnen Benelux €130m Residential and commercial construction, inner city development, renovation, maintenance and
General Industrial project development.
Senoble France Not disclosed Fourth generation family business and one of Europe’s largest manufacturers of dairy products and
Consumer fresh deserts. Stake sold back to Senoble family, as 100% owners of the business.
Freightliner UK Not disclosed Freightliner is the UK's leading rail logistics company, moving containers and heavy goods across
General Industrial the national rail network. Sale to Bahrain based Arcapita.
Vetoquinol France €250m Develops and produces medicines for treating pets, livestock and horses, mainly for prescription.
General Industrial The group’s products cover 75% of therapeutic segments. IPO on Euronext Paris.
Sampletest Spain €220m Market leading clinical laboratories provider in Spain and Portugal. Trade sale.
Healthcare
Little Sheep Hong Kong HK$3bn The largest domestic restaurant chain in China, specialising in Mongolian-style hot pot cuisine.
Consumer It operates company-owned and franchise restaurants worldwide. IPO on Hong Kong Stock
Exchange (Partial realisation).
Comac Italy €72m A group of companies in the cleaning sector that designs and manufactures floor cleaning machines
General Industrial for professional, industrial and commercial use.
Novem GSE Not disclosed The leading supplier for interior wood trim components in the automotive sector. Its products are designed
General Industrial to be fitted to car interiors as fully finished components. Secondry sale to Barclays Private Equity.
Electrawinds Benelux Not disclosed The leading independent renewable energy company in Belgium. The company’s main focus is on
Oil, Gas & Power developing, owning and operating renewable energy generation assets.
COMPANY AND SECTOR COUNTRY VALUE
REALISATION HIGHLIGHTS

24. 22
Intouch
boosting
energy
Chinese
Don Bai, Senior Adviser to 3i in Asia,
sees new investment opportunities
emerging as China seeks fresh energy
supplies and support from Western
partners to meet growing demand.

25. China is already the world’s largest
consumer of coal and is beaten only by
the USA in its consumption of petroleum
products. What’s more, demand for coal,
oil, gas and renewable energy sources
is forecast to rise sharply over the next
decade as China’s economy grows at
around 10% a year.
The country’s challenge is to satisfy
its hunger for power at a time of rising
energy prices, uncertain supply and
mounting environmental concerns.
As part of the solution, China is
encouraging foreign investors to apply
their management skills and technology
to the problem in partnership with a
growing number of domestic private
firms. Controls on ownership of, and
investment in, energy companies have
been relaxed since the country joined
the World Trade Organisation in 2001,
despite the sector’s strategic importance.
Good prospects for investors
“China is experiencing strong economic
growth and seeing a substantial
increase in energy consumption. This,
coupled with a fast growing, indigenous
energy industry, makes it an attractive
prospect for investment,” says Don Bai,
a former Vice President of US oil and
gas service corporation Halliburton, who
works for 3i as a senior adviser tasked
with developing investment prospects
in China’s energy market.
According to Bai, fresh opportunities to
invest are emerging wherever Western
energy industry expertise can deliver
improvements in the performance of
Chinese companies, particularly in the
fields of oil and gas exploration and
production, and the design of renewable
energy technology, such as turbine blades
and solar panels. “China does not lack
cash but Western partners can bring
technology and management expertise,”
he says.
3i’s long track record – particularly in oil
and gas, and increasingly in renewable
energy – puts it in a good position to help
build the diversified energy industry
China needs. Already, two 3i-backed
European renewable energy companies
are active in the country. Gamesa Energia
y Servicios, the Spanish wind farm
construction and maintenance company,
and Swedish materials group Diab,
which makes turbine blades, are both
helping to power up Chinese wind farms.
Some of the best investment opportunities
lie in the oil and gas sector. Exploration
and production is increasing both offshore
and in the Western provinces. Foreign
energy firms are co-operating on the
development of at least 20 oil and gas
fields across China. And this upsurge in
activity is creating demand for oil services
companies that can support the new fields.
“There are great opportunities
23
China energy
T
he spectacle of the Beijing Olympics signalled not
only China’s arrival on the global stage but also the
country’s enormous appetite for energy.
Don Bai
In February 2008, 3i appointed Don Bai, a former vice president
of US oil and gas service company Halliburton, as a Senior Adviser
in its Business Leaders Network, charged with developing
investment opportunities in China’s energy sector. At Halliburton,
Bai gained rich operational and M&A experience. He has lived and
worked in China for the past 14 years.
Energy sources used to generate
China’s power in 2007
73%coal
22%hydropower
4%oil and gas
1%renewables
Source: government statistics

26. 24
Intouch
for private equity in upstream services –
formation evaluation, drilling, production
enhancement, technologies – everything
to do with getting oil out of the ground,”
says Bai.
Government backing
for renewables
Bai is also enthusiastic about the
fast-growing renewable energy market.
China’s government has pledged to
generate 15% of the country’s energy
from non-carbon sources by 2020, twice
as much as in 2005. Backing this intention
with firm action, the government has
designated the renewables sector an
‘encouraged foreign investment industry’,
giving companies both discounted
lending and preferential tax rates.
“The leadership is committed to cutting
pollution for both economic and social
reasons,” Bai says.
While hydropower schemes account for
most of China’s non-carbon energy output,
wind farms are the fastest-growing
source of green energy. Since 2005, the
country’s wind generation capacity has
increased by more than 100% a year,
according to the Global Wind Energy
Council. Encouraged by state backing,
there are now more than ten quoted
renewable energy companies in China.
Coal is China’s greatest source of power,
yet investment has proved problematic.
There is no doubt that mining companies
are exploring more widely, digging more
deeply and extracting more efficiently
to increase supplies – and they are
turning to smaller, niche ventures to
improve technology, infrastructure
and transportation.
But coal has carried significant risks.
Many companies in an industry that
was privatised a decade ago are being
forced to close because they do not meet
improved safety standards. “Western
companies have a strong culture of
health and safety whereas for Chinese
partners this is something that needs
to be cultivated,” Bai says.
Foreign investors are also wary of
backing the development of clean coal
and coal-to-liquid technology, which
transforms carbon into synthetic
petroleum. In August 2007, the Chinese
government suspended all but two
coal-to-liquid projects, both by the
There are great opportunities for private
equity in upstream services – formation
evaluation, drilling, production
enhancement, technologies – everything
to do with getting oil out of the ground.
Don Bai
Senior Adviser, 3i
South African group Sasol, to ease tight
coal supplies and curb excess investment
in the sector.
Moves to increase innovation
Looking ahead, the removal of China’s
oil subsidies is likely to drive further
innovation and investment across its
energy industry. At present Chinese
petroleum prices are capped. But there
are plans to eliminate the subsidies the
government now pays to refineries, to
ease the gulf between high international
oil costs and low domestic prices. “It’s a
positive sign for the development of a
market economy and the growth of an
energy-saving movement,” says Bai.
There is little question that the investment
opportunities in China’s energy market
are substantial. The challenge now is to
navigate successfully through a rapidly
changing sector.
97%increase in oil consumption
forecast between 2004
and 2025
(Energy Information Association)
38%increase in coal consumption
forecast between 2008
and 2020
(China Coal Industry Development
Research Center)
100%increase in renewable
energy supplies forecast
between 2005 and 2015
(National People’s Congress)

27. To provide feedback on this magazine, please email: john.scott@3i.com
Designed and produced by to the point +44 (0)20 7378 6999 ref: 8147.
Edited and written by Clerkenwell Consultancy (www.clerkenwellconsultancy.com).

28. www.3i.com
About 3i
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M63908. October 2008.