3i Group announced in October that European partner and 13 year-veteran Crevan O’Grady had moved from London to the firm’s New York office to help grow 3i’s North American business. O’Grady’s transition to the US became effective on 1 September, and he is already getting the lay of the land, he tells PEI. “Having been [in the US] for a few weeks, it’s increasingly clear to me that there’s a real opening in the market for somebody who can provide that international reach to North American entrepreneurs,” O’Grady says. “There is a need for more bodies on the ground here, and I can provide some of that international experience.”
O’Grady joins a team of 11 other investment professionals in New York, where he reports to managing partner Ken Hanau and chairman of 3i North America and 3i Asia, Bob Stefanowski. In London, O’Grady ran 3i’s European telecom, media & technology (TMT) business from 2003 to 2008, after which he was responsible for running the firm’s consumer sector team. He has also worked on business services and financial services deals for 3i. O’Grady is replaced in London by partner on the European buyouts team Simon Freer, who now leads 3i’s TMT practice.
3i has had a private equity business in North America for roughly four years, during which time it has deployed about $900 million of capital. The firm still believes there is plenty of room for growth, which it hopes to accomplish by increasing its global connectivity in North America. “Almost everything we look at will have an international component to it,” says managing partner Ken Hanau.
The portfolio in North America includes a $60 million investment in digital marketing provider Coremetrics and a $97 million investment in Gain Capital, a provider of online foreign exchange trading services, both of which were made in 2008. In terms of North American exits, 3i sold online advertising company BlueLithium to Yahoo! for approximately $300 million in 2007.
While the firm has undergone significant restructuring recently, merging its buyout and growth capital divisions and acquiring a debt investment business with more than $6 billion under management – not to mention the departure of 24-year veteran Jonathan Russell – its strategy of bringing global scale to the mid-market remains the same in North America. “I think the focus will shift from being heavily European origination-focused to being heavily North American origination-focused,” O’Grady says.
In addition to the UK and North America, 3i operates in China, Singapore, India, France, Germany, Spain, Italy, Switzerland, Sweden, Finland, Denmark and the Benelux region.
“We have a team on the ground in China and teams on the ground in India that do nothing really but help our existing portfolios internationalise” O’Grady says, “and you see the impact that that resource can bring to a European or North American business.”
India is home to 3i’s roughly $1.2 billion infrastructure fund, which it raised in April 2008. The firm has yet to make an infrastructure investment in North America, but has been looking for infrastructure opportunities in the region for over two years. “We think longer term there’s a big opportunity in this market for infrastructure,” says partner on the investor relations team Jim Rutherfurd.
3i Debt Management, a “distinct business line” sitting alongside the infrastructure and private equity businesses, was launched following the acquisition of Mizuho Investment Management (MIM) from Japanese-headquartered Mizuho Corporate Bank for $29 million. MIM, which has roughly $5.8 billion-worth of assets under management, was merged with 3i’s fledgling debt management division.
“We have now entered the debt business and believe that there will be plenty of opportunity to add to that platform with the US piece of the strategy,” Rutherford says.
Despite 3i’s new structure that will see it operate with three distinct investment programmes – debt, private equity and infrastructure – Rutherford says the firm will continue to stay the course it has for its over 60-year history.
“When you fast forward five years, we’ll probably look more similar than vastly different to what we look like today,” he says.