Today, and thank you for standing by. At this time, all participants are in a listen-only mode. Welcome to the 3i Group plc Capital Markets Seminar. After each presentation, there will be a question- and- answer session via the conference call, and instructions will follow at that time. Participants can also submit questions through the webcast page using the Ask a Question button. Please be advised that today's conference is being recorded. I would now like to hand the conference over to the CEO of 3i Group, Simon Borrows, to open the presentation. Please go ahead.
Good morning and welcome to our 3i Capital Markets Seminar. I'm Simon Borrows, Chief Executive at 3i. I'm joined today by James Hatchley, our Group Finance Director, and Silvia Santoro, our Investor Relations Director. I'm also joined by two of our Private Equity teams, who I will introduce shortly. The main purpose for this capital markets today is to tell you about two of our recent private equity investments, WaterWipes and OMS , and more about our recent disposals of MPM and MAIT. The agenda for today is set out on this slide. There will be an opportunity to ask questions at the end of each session, as well as for more general Q&A at the end. Before that, I intend to give you a brief update on the 3i portfolio. We've completed our September semi-annual portfolio company reviews for private equity and infrastructure.
Both portfolios are performing resiliently against a subdued macroeconomic environment. Action continues to generate strong sales and EBITDA growth. Year-to-date sales at 21st, September 2025 of €10.9 billion are 18% ahead of the same period last year. Like-for-like sales growth over the same period was 6.5%. Like-for-like stood at 6.8% at the end of August, driven by transaction growth in all countries. Weaker overall consumer spending in France and Germany has been a feature of year-to-date performance, with recent general strikes and unrest in France causing the reduction of like-for-like to 6.5% for the group. Performance has benefited from good seasonal sales and strong trading from new and recently opened stores. We expect operating EBITDA for the 12 months to the end of P9 2025, to be circa €2.295 billion compared to €1.894 billion at the end of September 2024, an increase of 21%.
The LTM P9 2025 operating EBITDA figure is after a one-off expense of €26 million, related principally to a payment to eligible Actual employees in June 2025 to mark Action's 3,000 store opening. Cash generation has continued to be strong, with cash balances at 21, September 2025 at €758 million. Action has now added 207 net new stores in the year to date, and remains on track to deliver or exceed 370 net new stores in 2025. New openings this year include the first seven stores in Switzerland and the first store in Romania in Pitești, which opened yesterday. Royal Sanders continues to perform well, and the broader Private Equity portfolio is showing improving momentum. Since the publication of our Q1 performance update at the end of July, we announced the sale of MAIT, one of our P E portfolio companies, to a fund advised by DB AG.
Total gross proceeds to 3i for this sale were estimated to be about €143 million, which represents a 30% uplift to the 31 March valuation of MAIT, and results in a 2.7 x multiple of invested capital and 27% IRR. We've also announced today that we have bought a further 2.2% equity interest in Action in exchange for 3i shares. This is consistent with our strategy of continuing to increase our exposure to Action when the opportunity arises. Okay, on to today's presentations.
First up is Rupert Howard, who heads our London P E team. He is part of our consumer and retail team, and has been at 3i for seven years. Rupert will be talking about the recent sale of MPM, and our new investment in WaterWipes. Next will be Peter Wirtz, who is the overall Head of our P E team and based in Frankfurt. Peter will talk about the recent sale of MAIT and our latest investment in the testing sector, OMS . I'll now hand over to Rupert. Thank you.
Thank you, Simon. Morning, everyone. I'm delighted to join you today, to talk through the successful exit of MPM and introduce our most recent consumer investment, WaterWipes. As Simon said, I'm Rupert Howard. I head the UK Private Equity team here at 3i, having been with the firm for seven years. Prior to that, I spent 13 years at Rothschild, also in consumer, retail, and leisure, M&A. Consumer has long been a core sector for 3i. Over the last two years, we've deployed around €1.7 billion into the sector. Today, over 80% of our private equity portfolio by value sits in consumer, and I'm sure you're all familiar with these names that sit across branded products, private label, e-commerce, retail, and travel. It's a sector we understand deeply and continue to invest behind. 3i has been investing in U.K. growth businesses for more than 80 years.
We have a team of 14 PE investment and banking professionals based in London. Today, the UK portfolio includes WaterWipes, which we acquired earlier this year, Audley, our tailor-made travel provider, AES SEAl, our specialist seals and support business, and Thor, a manufacturer of specialty chemicals. Previous successful investments and exits from the U.K. team include MPM, MKM, Aspen, and Mayborn, all of which delivered 3x+ returns. Now let's turn to MPM. MPM is an international leader in branded, premium, natural pet food, focused particularly on cats. It owns the Applaws and Reveal brands. Reveal is known as Encore outside the U.S. Its proposition is distinct. All products are clean- label and human- grade. They're entirely natural, with limited ingredients, and the business benefits from a fully outsourced manufacturing model, with its wet food being made in Thailand and dry food being made more locally.
The cat-first proposition is important. 90% of MPM sales are cat-related, and it's a market that's often ignored in favor of dog. We first identified MPM in 2017 and acquired it in late 2020, investing around €125 million in a secondary buyout from ECI, alongside the existing management team, who rolled significantly. Talking about the team, when we invested in 2020, it was in the depths of the COVID pandemic, and the relationship that we had built and our confidence in Julian, the CEO, James, the COO, and Dave, the CFO, enabled us to push on with the transaction, as we had high conviction in the quality of the business and the team that we were investing behind. We complemented the board with the appointment of Tim Whiting as Non-Executive and Chairman.
The business had scaled to a point, but we had ambitions to scale it further and were aware that it required upweighting in certain areas, notably bringing in the Head of the U.S. Business, Kim, and in marketing with a new CMO in the form of Sam. The impact of those hires will become clear as we progress through this presentation. The global premium cat food market is large, growing, and resilient. When we entered, growth was running at about a 7% CAGR. This accelerated to 11% during our whole period, and forecasts now show it growing about 6% going forward. What's driving this growth behind cats? Pet ownership is rising, especially among younger urban consumers, and this trend is even more pronounced with cats. Delayed family formation drives more pet ownership.
Cats, those of you who've got them, are lower maintenance than dogs, and they live longer, approximately 15 years. Critically, cats' behavior and dietary needs are globally consistent, which makes this a truly international play. Our investment thesis, which some of you may remember I took you through in September 2021, was built around four clear pillars, the core, building on the already strong foundations, U.S., growing in the world's largest pet food market, online, the fastest growing channel, and brand, migrating the business towards becoming a more consumer-focused branded business. Let's go through those in a little bit more detail. As I said, MPM's products are visibly differentiated. Typically, they're just three ingredients. For example, flaked chicken or tuna, broth, and rice. This is very different from what else there is in the market, which is usually packed full of preservatives and sweeteners to increase shelf life and palatability.
We back two brands with distinct, but complementary identities, Applaws, which was born in the specialist channel, a playful, fun, natural proposition, generally appealing to families and slightly older shoppers, and Reveal, born in grocery, which stands for connection, warmth, the satisfaction you get from feeding your pets, generally appealing to a younger consumer. Indeed, under our ownership, these brands have attracted quite different consumers and are now sold alongside each other in stores and online, for example, in PetSmart, driving higher basket value to our retail customers. Together, these brands double the addressable white space. It's also worth flagging that in core, we're referring to some of the business enablers, such as the strong management team, the great market position, strong customer relationships, and a dynamic, disruptive culture.
Turning to the U.S., which at entry was about 14% of sales, today it's over 40%, having grown more than 6x . That growth came from a number of factors. I mentioned the hiring of a U.S. CEO, but we also built a 30+ person team in the U.S. We invested ahead of the curve. We took some calculated inventory positions to support future listings, which were particularly beneficial in the face of the shipping and logistics dislocation that impacted the market. We were able to take advantage of competitor out- of- stocks, and the continued support from the retailers for our brands. Finally, product innovation, including the recent launch of Vitality, which is a complete product range with added natural nutrients, addressing a new space in the market for MPM.
As a result, MPM now has a strong presence in specialists like PetSmart and Petco, in grocery, Kroger and Walmart, and online, such as Chewy. Online was the third core pillar and a big growth lever for us. At investment, our largest customer was Zooplus in Europe, the specialist online pet retailer. We saw the opportunity to expand into Chewy in the U.S., a business many times larger than Zooplus. Today, U.S. online sales have grown 10x, and account for almost half of MPM's entire business in the U.S. A key enabler for this was that we built a digital-first strategy around the right assortment, strong availability, targeted content, and full channel integration.
In 2024, we completed a major rebrand of Applaws, giving the brand a more modern and unified look across the channels, a clearer emphasis on its natural and tasty credentials, and a flexible identity to support that innovation. This brand work that you see on the slide was instrumental in increasing customer appeal, shelf presence, and allowing that harmonization across channels, both online and offline. This slide shows how the valuation of our investment developed over the years. It follows a fairly typical path, with investments in the team and the business in the early years, leading to moderate growth, which accelerated towards the end of the whole period as the benefits of these investments came through. Our exit at around €400 million was at a €60 million premium to our March 2025 valuation.
Our investment thesis that I just outlined was validated in June 2025, when we announced the sale of MPM to Partners Group, which subsequently completed earlier this month. The headline results are €400 million gross proceeds to 3i, a 3.2 x money multiple at a 29% IRR. We ran a disciplined and well-prepared process, with interest from both strategic and private equity parties and from all corners of the globe. Our exit was aided by the business consistently outperforming. E ven when Liberation Day disrupted bids just after round one, we kept momentum and re-engaged constructively with selected parties. MPM is a great example of our investment strategy of backing world-class, winning companies that benefit from structural trends and delivering strong international execution through a partnership between 3i and the management team. Now let's turn to WaterWipes, our latest consumer investment.
We acquired the business in January 2025, but it is one that we have tracked for a long time and many of us here at 3i are loyal customers. We invested €145 million in a limited process, and importantly, we are delighted that the founder, Edward McCloskey, has retained a significant minority stake, partnering with us on the next stage of the journey. WaterWipes has a genuinely inspirational founder story, with Edward setting the business up in 2008 because he couldn't find a product in the market that was clear of nasty chemicals that contributed to his daughter's nappy rash. Fast forward to today, and WaterWipes is a leading premium natural wet wipe brand. It's a clean- label product, 99.9% pure water, with just a drop of seed extract.
Its products are accredited by global dermatological bodies, and the business is omnichannel and diversified internationally, with over 50% of the revenue coming from the U.S. I mentioned a limited process. What we mean by that is that Edward deliberately set up the process to be narrow, with a huge focus on finding the right partner for his business. This played to our strength, as we have significant experience partnering with founders across 3i. W e were able to demonstrate how we could add value to WaterWipes, for example, by drawing some of the clear parallels with the success of our investments in MPM. The global wet wipes market is huge. It's worth about €13 billion, and is growing mid-single digits.
In addition, the market tailwinds include a consumer that is focused on natural skin-safe products, which is even more pronounced at the newborn or baby end of the market, a clear premiumization trend, and an established omnichannel presence. It's very important to both bricks-and-mortar and online retailers. It's a sector that is dominated by a few CPG companies and private label, providing a genuine role and high retailer appetite for challenger brands. Wipes have many uses, and present an opportunity to move beyond core baby, into adjacent occasions and categories. WaterWipes sits across a number of subsectors that we have specific domain expertise in, personal care, through our investments in Havea, which actually has its own wipes product, and Royal Sanders, premium brands such as Mepal and MPM, juvenile and children, our historic success with Mayborn, and our experience with Konges Sløjd, our premium lifestyle brand.
We're able to leverage our experience and our network across all of these categories to underpin our investment decision and deliver on our thesis. There are a number of attractive attributes, that beyond our portfolio experience that I touched on, gave us confidence that 3i was the right investor for WaterWipes. The business is Irish headquartered, with the majority of its revenue coming from international and clearly sits at the premium end of the market. There are attractive market tailwinds that we just discussed, and a sector and model that we understood from a number of different angles. People is always a critical part of the assessment. N ot only do we have a strong management team in place with a great entrepreneurial culture, but we have that continuity with Edward investing alongside us. That culture is underpinned by purpose, with consumers trusting WaterWipes with their newborn skin.
Moreover, sustainability is not a buzzword, but is at the core of WaterWipes products, which are entirely natural and plastic-free. Clearly, a strong financial profile is important for us, with WaterWipes delivering consistent top-line growth at attractive margins and cash conversion. There were five attributes in particular that we wanted to dive into, the first being the differentiated product and IP, the proprietary seven-stage purification process, the brand and consumer loyalty, number one in premium in the U.K. and U.S., and leading accreditations, international and omnichannel. It's well diversified with strong growth levers, a strong financial profile, and sector interest. This is an active M&A environment in personal care. The WaterWipes formulation was developed by Edward back in 2008, and is based on 99.9% purified water, with only natural fruit seed extract added. This means that there are no preservatives, surfactants, or emulsifiers in our products.
This is clinically proven to reduce skin reactions and preserve the skin microbiome, a big differentiator, particularly with sensitive skin and even as far as neonatal care. Unlike our competitor products, going back to the founding principles, WaterWipes do not cause any irritation to the skin, do not upset the pH balance of the skin and nor does it leave behind any nasty chemicals after use. This unique and versatile formulation is proudly manufactured in WaterWipes' own facility in Drogheda in Ireland. WaterWipes has already achieved a strong market position. I referred to the number one positions in the premium space in the U.K. and Ireland, France, and the U.S. Brand loyalty is extremely high. 98% of physicians would recommend the product. MPS scores are also industry-leading across consumers and professionals. I'm sure that many of you on this call are or have been customers.
Finally, there is very strong consumer ranking on Amazon, which is a key partner for the business. Hopefully, on this side, you can see that the business is well diversified across both geography and channel. As I mentioned, the U.S. is broadly half the business, but there are strong positions in the U.K., Europe, and the Middle East. This is the benefit of a globally applicable product. Everyone has babies, and everyone with babies needs wipes. Channel-wise, it's well balanced across retailers, online, distributors, and pharmacy. This gives resilience and a platform for growth across a genuinely blue-chip international customer base. I mentioned earlier the impressive financial performance, but this chart demonstrates it a bit more clearly. Since 2017, WaterWipes has delivered a greater than 20% CAGR. Before that, even higher, with strong top-line growth across all markets, high gross margins, robust EBITDA, and cash generations.
Net sales in 2024 were around €200 million. Lastly, personal care remains an active M&A category, with a full range of transactions such as strategic exits like Dr. Squatch, PE to trade deals, and healthy valuations, especially for premium branded assets. This gives us confidence that when we do come to exit, there will be multiple avenues to take. Our investment thesis is based on four pillars. The observant of you will note that these are very similar to what we executed at MPM. Firstly, around the core and new product development, continuously working to improve the product. Indeed, a new, improved, two times stronger and thicker wipe is rolling out in stores as we speak. International, we'll continue to expand internationally, deepen our presence in the U.S. and Europe, and unlock wipe space where we undertrade.
In terms of channel, we have ambitions to grow in club, convenience, and pharmacy, all of which are developed wipe channels, but where we have a more limited presence to date relative to others. Category, while WaterWipes today is predominantly a baby product, there is significant opportunity beyond baby towards broader life stages such as toddler, adults, senior care, and even convenience with our on-the-go product. As you've been listening to this, you will have hopefully seen that there is significant read across between what we have done with MPM and what we intend to do with WaterWipes, which goes well beyond the simple four-stage investment thesis. The playbook might be familiar, but it is also effective. Both MPM and WaterWipes address large global markets. They benefit from global trends towards premium and natural segments. They compete against large incumbents as the clear challenger brands.
The brands both have very strong consumer advocacy, and a loyal base of passionate customers. They both leverage natural, clean- label, limited- ingredient positioning, putting sustainability at the heart of their proposition, to further differentiate from their competitors and have multiple avenues for growth across the U.S., online, and product innovation. The first year of a new investment is always busy, as we seek to tackle a number of areas. Our key priorities in year one include strategy, aligning on the markets, channels, and products, NPD, driving product innovation and enabling that strategy, from a marketing perspective, building digital and in-store awareness, from an operations perspective, ensuring supply chain flexibility and delivering that renovated wipe that is two times stronger than the previous iteration. From a people perspective, we're bolstering the leadership and building governance.
Like MPM, we're delighted that we have been able to attract quality talent to the team to help deliver on our ambitions. In finance and IT, we're leveraging our expertise in banking as hedging, as well as ensuring ERP optimization. While sustainability is already at the core of the WaterWipes proposition, we are ensuring that we build on that already strong ESG credential. We're hugely excited about what lies ahead for WaterWipes. It's a great brand, a strong team, and a market full of potential. It sits across a number of subsectors where we have deep expertise and shares a number of attributes with MPM, which has been a very successful investment for us. Thank you for your time, and I'm happy to take any questions.
Thank you. We will now come to the question-a nd- answer session. To ask a question via the conference call, you need to press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. As a reminder, participants can also submit questions through the webcast page by using the Ask a Question button. Please stand by while we compile the Q&A roster. Thank you. We are now going to take our first question. The questions come from the line of Gregory Simpson from BNP Paribas Exane. Please go ahead, your line is open.
Yeah, morning. T hanks for the presentation. There are two from my side. The first is for both MPM and WaterWipes. The U.S. is a meaningful part of the story. Can you maybe talk through what you've seen so far in terms of the impact of the U.S. tariffs around consumer businesses? Is it causing a lot of uncertainty in terms of your forward planning? Did it weigh on the MPM sale process and so on? The second question is, MPM was sold to another private equity firm who presumably think they can get a lot more growth out of the business. Could you maybe frame the decision to exit now, versus maybe keeping it as more of a longer-term compounder like you're doing with Royal Sanders? Thank you.
Yeah, sure. I'll take tariffs and Simon, do you want to take?
Yeah.
Yes. L ook, clearly the U.S. tariffs are something that we've had to deal with from both an MPM perspective and a WaterWipes perspective. Liberation Day itself caused us to pause the process, as I referred to earlier, just while the market digested the impact of particularly the Thailand tariffs. However, I think that the market was pretty quick to understand the implications, which were more applicable to the entire sector than necessarily the individual businesses. There are a number of parties who were able to price that and move forward with the transaction. From a WaterWipes perspective, yes, the business is exposed to the 15% tariffs placed on the EU, but our view is that that is manageable within the pricing and the cost infrastructure in the business.
Thanks, Rupert. Let me pick up on the exit long-term hold decision. I think you have to remember that the majority of our investments will be on the normal private equity cycle of holding for five or six years, and then selling at that point. In this particular case, we didn't focus on it as a long-term hold candidate, not because of the quality of the business, but simply that it was a long way from reaching our $100 million EBITDA threshold, which we have to have for those businesses to move across.
Thank you.
Thank you. We are now going to proceed with the next question. The next questions come from the line of Manjari Dhar from RBC. Your line is now open.
Hi, good morning. Thank you for the color. Just two questions from me, if I may. The first question is on the overall portfolio exposure to the consumer sector. I appreciate that Action will be a good chunk of that, but maybe ex-Action, how do you see the exposure to consumer evolving going forward? Secondly, just a question on WaterWipes, I appreciate that that has significant exposure to the U.S. I suppose the question is, do you think that there's material more growth opportunity in that market now, or would you be focusing growth maybe elsewhere? Thank you.
I think you take the second first, and I'll do [crosstalk].
Yes, we see huge opportunity in the U.S. I think if you look at the scale of the market and the size of the business as it is today, while it is a large business, it is still relatively small compared to some of the larger FMCG businesses out there. I referenced in the presentation, some of the beyond baby opportunity that we see. That gives us more than enough conviction that if we were to get any meaningful scale in any of those categories, the business would be significantly larger than it is today. In short, we are very bullish on the U.S. opportunity.
Thanks, Rupert. On the weight of the consumer sector, when I first joined 3i in 2011, I did quite a bit of research on the nature of the portfolio going back over a decade, in order to define what sectors we would use going forward. It was very clear from that analysis, that consumer had been the largest sector in the group for quite some time and it will continue to be. It's obviously somewhat overweight because of the great success of a number of our consumer companies, pointing to Action and Royal Sanders in particular. As you know, we have permanent capital, and we will run our winners, and we do expect a consistent number of winners to come out of the consumer portfolio.
Thank you.
I am showing no further questions, so I will now hand over to Silvia Santoro, 3i Group plc's Investor Relations Director, to address the written questions submitted via the webcast page.
The first question is from William Woods at Bernstein. He says, "You have given two good examples of FMCG investments. However, in the wider space, many FMCG challenger brands have failed to reach sustainable scale. What do you think are the hallmarks of MPM and WaterWipes that make them different to other FMCG challengers that have failed in the space?"
I would like to think that I may have set out a few answers to that as we've been through it, but I think in particular, these businesses both appeal to globally applicable markets. The pets or babies, everyone has them. It gives you real runway and potential to expand, not in a single market. T herefore, you have portfolio diversification and more avenues for growth than if you were operating in a single market.
I think challenger brand is a term that is often loosely thrown around. A challenger brand can be a small startup with $1 million of capital. These brands have proven that they are, while challengers compared to say a P&G, they are off scale, they have a proposition that works. T hey deliver a consumer benefit, and they deliver a rate of sale to their customers, whether that's online or offline, that is additive to the proposition that they're offering.
Thank you, Rupert. We have another question from Ashton Olds at Rothschild Redburn. He says, "Are you able to give some insight as to how exits can be managed when you are partnering with a founder who is selective about their investment partner?
How exits are managed when you're?
When you're partnering with a founder who is selective about their investment partner.
Hopefully, they like you. Now, I think it gives an opportunity for you to leverage the experience you already have within your portfolio, to give them real comfort that you go beyond the, "We're really great and you should partner with us." We were able, with Edward in particular, to demonstrate, as I hopefully showed in the slides, across Havea, how we understood the space, how we had grown the consumer brand in a similar category in France and materially added value to it. With pet food, how we'd taken a business that was predominantly European into the U.S. and scaled it. It's all about differentiating your proposition, and what value you are going to bring so that founder is comfortable partnering with you.
Yeah, I would just add that in order to have a co-investor like a founder in a business, we have to have an agreement on the way forward. The agreement around this is that we were looking at it as a normal private equity investment, but with a very responsible mindset. If it meets our criteria, we would then consider whether it should join the long-term hold bucket at 3i because we will run our winners. We have that understanding.
A further question from Robert Platt. He says, "You mentioned the owned island manufacturing sites for WaterWipes. What's the CapEx needed for WaterWipes going forward with the growth you plan and capacity they have currently? Also, what's to stop larger competitors developing their own water-only pure brand?
From a CapEx perspective, clearly that was a core part of our diligence. The business and the site are very well invested. There is no need for material CapEx to deliver on our investment case. Clearly, if the business outperforms and grows further, then we'll need to put in the CapEx to support that growth, but that will be a decision to be made further down the line. In terms of competitors copying it, again, as you can imagine, that was a pretty core focus of our investment decision. The simple answer is they've tried and failed many times. The more detailed answer, as I hopefully set out, is that there is a very differentiated and frankly very clever process that is used to enable the product to be so different to anything else on the market.
Great. There is another from Jeremy Kincaid at [crosstalk] . You said you were looking to expand use cases and the occasion for the wipes. What are the biggest opportunities there, and how do they compare to the existing baby-related occasions?
I've talked about the opportunity to expand beyond baby. All life stages ultimately are addressable by wipes as a proposition. Whether that is extending from baby into toddler, who are still messy, that's where we have a small part of our business, through to senior care, which is a massively growing category, particularly in the U.S., where we already have a small proposition. Between the two of those, there is the adults and the convenient products. In that case, for us, it's all about making people aware, not just us growing into an existing market, but actually growing the market itself as we show people where and why you can be using the WaterWipes product. Roundabout answer, but any of those avenues could be of significant scale and could be larger than baby if we execute.
Thank you, Rupert. It looks like we have no further questions, so we can move on to Peter's presentation.
Thank you very much, Silvia. Good morning also from my side. A brief introduction. My name is Peter Wirtz. A s Simon already mentioned, I'm heading 3i's P E business. In one week, I have been with 3i for 27 years, 1st of October and I've been based in Frankfurt since then. I've been co-heading the German business for 10 years, before taking over the leadership of our Private Equity business internationally in 2019. I'm also a member of the Investment Committee and the Executive Committee. Besides these tasks, I'm still getting involved in transactions, supporting deal teams to originate and execute deals, particularly in Germany. I'm currently sitting on five boards of our portfolio companies, one of which is OMS , which I'm going to talk about. Brief look at Germany. We have been in Germany on the ground for more than 30 years now.
We have been pioneering private equity also in this market, like in other European markets. We are a recognized brand name in Germany, with a broad and deep network as a result. We are currently 12 investment professionals, and two of our sector heads are based in Frankfurt, André Perwas, heading the software and service sector, and Malte Fehn, who recently joined us from DBAG, a German competitor who heads our industrial sector. On the slide, you can see our current portfolio and a selection of investments we made over the years in the German market. On the current portfolio, I'm going to talk about two of our companies, one OMS, that we just bought and the other one is MAIT, that we just sold. Before I come to the companies themselves, I'll just have a quick look at our approach in the software and services sector.
We focus on three subsectors. One is the tech-enabled services, where OMS is placed. I'm going to talk about what tech-enabled means later in the presentation. I think OMS will give a lot of color on what we actually mean by that. Then we have mature software, and there we have a German asset, xSuite, which is a leading accounts payable process automation specialist focused on the SAP ecosystem. Then we have IT services, where MAIT sits and two other French investments, Constellation and Evonik, which I believe was introduced last year at this occasion. Let's have a look at MAIT. What is MAIT doing? MAIT is a German IT service provider, with a focus on the manufacturing Mittelstand, where it generates 80% of its net revenues. They do this as a partner. They are a trusted partner for their customers, and support them on their digitalization journey.
They do this as a partner for four core software vendors, which you see there. It's Siemens, [ABAS], PTC, and [Korbach]. Siemens and PTC are both in the PLM area, and PLM stands for Product Life Cycle Management. The purpose of PLM is to establish a data foundation, or you could say a single source of truth, to track the product across its life cycle, hereby connecting all departments within a manufacturing business. The other part is ERP. For many of its customers, MAIT has been a partner for over 10 years. T his underpins the quality that MAIT delivers to its customers, and the ability to grow together with them. What excited us about MAIT was first, the resilience of the business, the strong downside protection. I'm going to talk about this in more detail, and t hen the strong track record in buy and build.
We continued this story with 14 add-on acquisitions in only four years during our ownership. I'm going to talk about this in a bit more detail. How did we find or how did we source MAIT? A partner in the Frankfurt office, Michael Specht, who focuses on services and software, identified MAIT in 2020 as part of the subsector work on IT services, which has since become a core pillar of the software and services sector strategy. We then bought the company in a fully proprietary and bilateral process, leveraging our strong network in Germany to a small- cap investor, Findus, investing £53 million in September 2021. Since then, we have worked hand in glove with the existing management around CEO, Stefan [Neumann] and the CEO, Axel Schmidt to scale the business. Let's have a look at the investment thesis that we invested on.
I touched on the first point, strong downside protection as a foundation. MAIT has proven to be a very stable business, even in a tough economic climate. This is due to the solution itself, sales and implements that are truly core to the operations and mission-critical for their clients. This is not something you can switch on and off. There's very little churn, and the churn is less than 2% per year. A very stable customer base. The customer base itself is also very broad and diverse, with over 7,000 clients, so no big client risk or not one client making a lot of your sales. Finally, its solutions are typically sold as a subscription, leading to a share of 50+ of contractually secured revenues.
The growth of its core market in PLM and ERP is driven by megatrends, as mid-market manufacturing clients or any clients or any company, needs to move to digitalization and needs to move to cloud solution. Therefore, the applications are becoming more and more complex, and they're looking for experts to outsource their IT services. The market as such is growing as a result of that. The third pillar, M&A, I will touch on this on the next slide. Finally, DACH expansion. We saw the potential for a geographic expansion from a German-centric business to a true DACH organization, by building structures, processes, and teams in Austria and Switzerland, and creating a more international group, first focused on DACH. In 2024, we also paved the way for further international growth, with the first small add-on in the Benelux. Now, as I said, let's have a look at the M&A agenda.
Over the four years, we have completed 14 add-ons with MAIT, and there's a clear and strategic rationale for M&A in the market. The smaller players lack the depth and breadth of offering that is required by the software vendors and the customers. The solutions are getting more and more complex, and the smaller companies can't cope with that increased complexity. Smaller founder-led partners often saw MAIT as a natural next step of growth, and a good home for their business. We have acquired across MAIT's portfolios of vendors, but especially strengthened the strategic PLM side of the business. As you can see, you can see most of the clicks at Siemens. Each of these acquisitions was sourced bilaterally outside of sale processes, and importantly, they were tightly integrated because buying a business is not that tough.
It's more the integration to have it properly integrated, which is the hard part of it. Our team helped particularly with the M&A, the financing, and the integration of these companies. That strategy delivered, as you can see, from €53 million value in September 2021 to €143 million at exit, delivering a 27% IRR and a 2.7x money multiple. Talking about the exit, throughout our investment, MAIT received strong interest from investors that valued its stability, downside protection, M&A track record, and its clear strategic focus on the manufacturing industry. We have started to thoroughly prepare the exit already a year before. This is what we need to do with all our investments. We start early on to make the companies that we own exit- ready, that they have all the data available that will allow us to run efficient and good processes.
We had initially targeted a post-summer process, with a start in September 2025, so now. However, after early informal meetings between management and potential investors, we noted very strong interest in MAIT. Over the summer, DBAG, who we know well, then stepped forward with an accelerated preempt. This provided a high level of transaction certainty at an attractive valuation. The transaction was then signed on the 29th of August and delivered, as I said, 2.7 x money multiple and a 27% IRR. We now expect completion of the transaction in Q2 2025, after approval of the German and Austrian merger control authorities. This is our story on MAIT, and you see a quote from Stefan Neumann who's on the right-hand side, I think bringing it together. I think it's a good summary of our journey with that management team. We then turn to our latest investment, OMS. What does OMS do?
OMS is a testing business for electrical safety equipment, portable and fixed equipment. On the right-hand side, you see the portable appliances, PAT, which is basically everything in an office that has a cable and needs to be checked for safety on a regular basis. That is 70%- 75% of the business today. Then you have the bigger machinery installations and machinery, which is called I&M, which stands for 25% - 30% of the business. As I said, these need to be regularly checked, and OMS is the service provider who is doing these checks. The company has more than 700 employees, service staff who are executing these checks across 43 locations in the DACH region, serving more than 7,000 customers. It's the best operator in the market, we believe, because of its proprietary software platform.
I'm going to talk about that platform called INSPEKTRA later in the presentation. It's a key differentiator for us in the market, making the business more efficient and more profitable than anyone else in the market. We have been following that company for many years. We first identified it in 2019. It is a primary buyout that we bought in a bilateral and proprietary process, which I think is very important for us. I mean, we always pay good valuations or fair valuations, but a bilateral process allows you to get closer to the business, to execute a much better due diligence than what you can do in a process. We invested roughly £100 million. Again, you probably can see a bit of a pattern here, a significant reinvestment of the sellers and the founders, announced it in January 2025 and completed it in February 2025.
This is actually a growth pattern we really like. This is from 2016, and turned to 2024. It's a compounding business. It's this consistent growth that you see. There are no big jumps, up and downs, but a very constant, continuous growth pattern. Between 2016 and 2024, you can see more than 40%. We're looking at revenues here. On the lower side, you can see the number of sites that the company operates from, two in 2016 to 43 in 2024. This is a very nice growth trajectory that we of course found very appealing and attractive. What about the other attractions for us? First of all, the market. OMS services are fundamentally backed by EU regulation, transferred international law. These tests that OMS does are compulsory. They're relatively low- cost for its customers, but severe consequences in case of non-compliance.
If an MD of a company has an accident involving electrical equipment, if he hasn't done the test, he's personally liable. The cost of non-compliance can be very high. Loss of insurance, personal liability, risk for management. The second key attraction is scale. OMS is the clear market leader. We have 5%- 10% market share in DACH, in a highly fragmented market. Why this matters, I'm going to talk about in a minute. It has a density with over 40 branches, with close proximity and high project efficiency. I'm going to talk about the software in a second, but this is a key differentiator that we see, highly data KPI-driven testing processes enabled by the INSPEKTRA software. A strong experienced management team that built the business over the last years, and finally, a very strong financial profile with recurring revenues and revenue visibility.
The backlog is typically multiple months from both new and repeat business, which allows the business to optimize service staff hiring and project staffing. Let's have a look at the underlying market. In 2024, the market in DACH was roughly €1.9 billion. It's €0.7 billion, plus Austria and Switzerland. It is a sizable market. It is made up of machinery, install, and portable testing. We expect a CAGR over the next six years of 9% to $1.2 billion. It's a sizable, big- enough market for us. The market is driven by two factors. First of all, the inspection penetration rate increasing from 37% in 2018 to 67% in 2030. More people or more companies are testing as a result of increased awareness. The piece of outsourced share of testing is growing from 53% in 2018 to 67% in 2030. This is driving the market.
We expect good market tailwinds for the foreseeable future. We now come to the density model or the geographic coverage of our business. This is one of the differentiated factors. No one else has this network of branches. Why is it important? It drives productivity as it reduces driving times. The testers or the service staff travel from the various locations to their customers. The more density or the more sites you have, the shorter the routes will be, the more efficient they can be. The proximity of local leadership to service staff for management and coaching is also important. Finally, your customers like to have you close by. If you have a branch in their regional area, that helps in the selling process. Now, the second one is our software, which we call the INSPEKTRA platform.
This has been developed over several years, and it's supported by a large in-house software development team, a key differentiator for us. No one else has this kind of platform or this kind of proprietary tech. OMS derives significant advantages from it, both internally, but also for its customers. The internal benefits are that INSPEKTRA fully digitized OMS testing processes and enables highly data-driven operations. Project leaders can live- track testing performance, how quick someone tests, how many tests in an hour, and so on, allowing for early interventions and rapid problem- solving. We have seen this in the numbers. In the Pod Segment, the launch of a testing app that the company uses in 2022, delivered a substantial productivity gain in the testing, as previously manual steps were automated. We have seen this clearly in the numbers when we did our due diligence.
These learnings can be leveraged to further optimize and digitize processes around other segments. The focus so far was on PAT, where we have 75% of our sales . W e are now rolling it out to I&M, currently 25%, to make comparable productivity gains. In terms of the customer-facing benefits, this is a cloud-based portal software that acts as a one-stop shop, enabling customers to access testing data, review outcomes, and actively manage assets, for example, to track and resolve defective devices after inspection. Beyond the core segments, OMS also offers additional services through INSPEKTRA, such as self-testing and home office testing. All these features are highly valued by customers and enhance stickiness, and this is what we mean with tech-enabled services. The next slide brings those two differentiating factors together, so the density that we have and the software-enabled services.
On the left-hand side, you see the travel time per project, that from 2021 to the last 12 months declined. At the same time, the testing efficiency, so that we measured in real speed number of tests per FTEs, increased. That has an impact on the productivity and the output per FTE. On the right-hand side, you see 2022 to LTM, the number of volumes of tests per FTE and the revenue per service FTE, both going up significantly in that period. That, you can imagine, has a significant input on our P&L and our EBITDA margin. As the business grows, it scales very nicely also on the bottom line. This is how we found the business or how we came across it. We have been following this business for many years, six years, but we have also known the owners for more than 10 years now.
We have a very trustful relationship with the sellers. They know us from other transactions, and they know that we do what we say. There was a trustful relationship with us, that allowed us to get into a proprietary process. They trusted that we would deliver what we said we would. I think what also helped is 3i's tech expertise. Right at the beginning, I've shown you a list of companies in the tech sector that we have owned and that we have successfully grown and exited. What always resonates particularly with f ounders, but also with the CEOs, is our permanent capital approach that we invest from our own balance sheet, that we are not limited by fund periods.
That also resonated. A lso, our active partnerships approach, that we work with our companies very intensively and help building capabilities and growth. Finally, the investment thesis overview. The first one is actually more of the same, which is always nice in an investment case, if you can do something that has been proven. There is a lot of potential in the market still. As we already pointed out, the market is growing and with increasing penetration, we can leverage our existing network that we already have and our existing software that we have. Doing more of what we already do should contribute to good profitability growth. As I said, 75% today is PAT, 25% is IMS.
I think that potential in IMS is much bigger for the company, and we are currently thinking about how we can focus and how we can tap into this market more. Enhance operational efficiency, we constantly develop our INSPEKTRA platform, to get additional gains in efficiency and improve our processes further. Lastly, selectively, M&A to strengthen our core segments and potentially to push into adjacent business areas or geographies. As you can imagine, if you acquire a market that is highly fragmented, you are able to acquire smaller competitors where you can use your software and you can integrate into your already existing network. That makes a lot of sense for the business. Here is a slide that Rupert also has shown for MPM.
This is almost a standard that we have in our business, that we, in the first year of ownership, make sure the bases are right, that in the coming years, we are set for growth. This is what we do in the first year. We look at everything, particularly here in operations. This is a business that needs to show operational excellence. You're managing a lot of people, a lot of tests that you're doing, and the more efficient you are in these operations, the better.
It's one of the key pillars of this business being successful. IT, optimization of the IT architecture, as you can imagine, is key here, given how important the software is. We're helping the business with the financing. We just closed the banking or the financing of the transaction. All these things, we're focusing on, but I would say, after the first, what is it now? Four, five or six months almost, I think we're on a good way. Thank you very much.
Can we have any questions for Peter now?
Thank you. As a reminder, we'll now conduct a question- and- answer session. To ask a question via the conference call, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. As a reminder, participants can also submit questions through the webcast page by using the Ask a Question button. Thank you. We are now going to proceed with our first question. The questions come from the line of Manjari Dhar, RBC. Please go ahead. Your line is now open.
Thank you. Morning again. I just had one question on OMS . I'm just curious about that. The long-standing relationship, and the six years between when you first identified or made initial contact and the first investment. I'm just curious about that timeline, and what was it that led to the investment being made in 2025 and not before, or so what was the trigger point there? Thank you.
That's a very good question. We tried to buy it earlier. If you remember the slides with the number of sites, they invested quite heavily in this business, but the profitability needed to come through. They opened a lot of branches, which were not mature enough to contribute to the profitability. You could see with every year and the branches maturing, getting more customers, how the profitability went up. They could see this affects. They waited basically to show better numbers, and then eventually we could buy it.
Okay, t hat's clear. Thank you.
We are now going to proceed with our next question. The next questions come from the line of Andrew Lowe from Citi. Please go ahead. Your line is now open.
Hi. Thanks. I've got two questions. One's on OMS, and the other's just a bit broader about the returns that you've generated in your private equity portfolios. On the OMS question, I noticed on page 46 that the number of sites that you've had has slowed quite a bit in the past couple of years. Just curious , kind of what's the end game? Is this just small incremental growth now that you've got the densities up? The second question, maybe it's one for Simon, but you've flagged some really good IRRs, some really good money-on-money returns. Can you just help us maybe think about how we benchmark that versus your peers? Have you got any data to say where your returns are versus your peers, be it in a quartile? A nything you could do there would be really helpful? Thank you.
I'll take the first one. Yeah. I mean, it's a right observation that the growth has slowed. Probably in Germany, we have another two or three, four sites we're going to open, which doesn't mean that the growth has come to an end. It's just that we need to make these branches now more efficient. Now we have full German coverage. You can see it, like the cohorts, I don't know how they grow. These branches will grow every year and gain more customers in their region. The growth from just opening branches will slow down, but the branches itself, they're going to grow by higher penetration or penetrating the market better. We see potentially, further openings in Switzerland and Austria. That's the answer to that question.
Thanks, Peter. I'll take the second one. This is always quite difficult because comparisons, and information and transparency are not of the best in this industry, as you know well. If you look at us, we do it in three-year cycles. We have three-year vintages. The first vintage that we're really talking about from when I've been here is 2010, 2012, and then they go three-year cycles from there. The majority of those vintages would be top quartile, we think, but not all of them. There are still question marks over whether we can attain that in a couple of them. Certainly, overall, the compounding growth that we've had from our portfolios is really not seen anywhere else, I would suggest.
Great. Thank you both. That was really helpful.
I'm showing no further questions. I will now hand over to Silvia Santoro, 3i's Group Investor Relations Director, to address the written questions submitted via the webcast page.
The first question is from William Wood at Bernstein, and it says, "Does AI change your perspective on the opportunities and risks of investing in the software and services space, either from an operational or valuation perspective?
I think that' s a very broad question. I mean, I think this is certainly something that our sector is evaluating on an individual basis, I would say. Really, of course we're following what's happening. We look at every investment, how AI might affect it. I don't think we have an overall view on how exactly the sector will evolve, because I think there's a lot of moving parts at this point of time. It will certainly have some kind of impact on the industry and what it does. That's for sure. I can't give you a precise view on how we're looking at it. Sorry.
Thanks, Peter. There's a question about international expansion. I think you alluded to opportunities in Austria and Switzerland. Given that this regulation and the compliance rules are EU-wide, is there a broader opportunity as well?
There might be, yes. At this point of time, I think we see still so much potential in Germany and the DACH region, that we focus on that. As I said, it's EU regulation. The Germans take it particularly serious. A t the end of the day, all other countries will have to do the same thing. I think we're well placed. At this point of time, we focus on Germany. I alluded to potential M&A outside of Germany to enter into adjacent geographies. That might be an option because in principle, the software should also work there.
Thanks, Peter. We have some more detailed questions about the comparison, the cost comparison between outsourcing and doing this testing in-house for a company, and the reasons for outsourcing, whether that's driven by risk mitigation or cost reasons.
I think it's both. The documentation, you have to be, you need to document the work you're doing very well. If you do it in-house, it's not always clear that this documentation is done well. I think if you test these kinds of equipment every day as your job, you're much faster and much more efficient than if you're trying to read into what you have to do with your people. You have to be electrically trained to do that. Not everybody can do it.
The final question is on the size of a fine, the cost of non-compliance versus just not doing.
I think that can be very high. As I said, it's a personal liability if there is an accident. You, the General Manager or the MD are responsible for that.
Thank you. I think we are showing no further questions, so perhaps we can move on to closing remarks from Simon.
Thank you, Peter. I hope you've found today's presentations helpful, and we're now happy to take any final questions that people may have, which is not about the investments that we've heard about today.
A reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. As a reminder, participants can also submit questions from the webcast page by using the Ask a Question button. Thank you. We are now going to proceed with the first question. The questions come from the line of Manjari Dhar from RBC. Please go ahead. Your line is now open.
Thank you. Simon, I just wondered if I could ask a question on the statement this morning. I see that you've entered into an agreement with GIC just to purchase some additional Action equity in exchange of 3i Group shares. Is this kind of transaction something that you guys think you could do a little more of in the future? Is it something you'd explore to further increase the Action stake?
We have a long-standing appetite to buy more Action equity, as you know. In this particular case, we were approached regarding using shares rather than using cash. We have the flexibility to do either. The benefit, I suppose, of using shares for the seller is that they continue to maintain their exposure to our compounding story over the long term. I wouldn't be at all surprised if this happens again. We will continue to have an appetite for increasing our stake [crosstalk] .
Great. Thank you.
We are now going to proceed with our next question. The questions come from the line of Ashton Olds from Rothschild and Co Redburn. Please ask your question. Your line is now open.
Hi, guys. Ashton here. First question is just whether you have any more commentary you can provide around France, and what you're seeing there at the moment. My second question is just related to gross margin. It seems seasonal sales were quite good, which suggests that gross margins might be a little bit stronger in the period. Obviously, as we go into next year, we might have the benefit of FX and changes at the factory gate. I suppose, how are you thinking about reinvesting versus maintaining gross margins going forward?
Okay. Let me say a few comments on France, but we have been reasonably detailed in the release. Context is important. Like- for- likes is always a measure against the previous year. September last year was our strongest like- for- like month, and it had three of the top six like- for- like weeks in it. This was a very high hurdle we're jumping. That is why with the disruption that we've seen since the beginning of September in France, it has pulled those like- for- likes down a little. We're still trading very positively in France, and we're very confident about the last quarter. The economic situation and the political situation is very difficult, and that is affecting consumer sentiments and consumer confidence. There's no doubt about that. In terms of the gross margin sales mix, you're right.
Seasonal sales have been strong this year over the summer, although we would like colder weather in September because that does help. Some of the weather last year was very favorable to sales in September. We are seeing a nice margin increase as a result of sales mix, not as a result of us increasing any prices. When it comes to the future and the better buying prices that we're seeing this year, we will be passing on the majority of that benefit to the consumers in the price of the catalog in store next year.
That's very clear. Thank you, guys.
Thank you. I'm showing no further questions. I will now hand over to Silvia Santoro, the 3i Group Investor Relations Director, to address the written questions submitted via the webcast page.
There are no further questions.
Okay, great. Thank you to everyone. I hope you found this morning interesting, and thanks for dialing in. Have a good day.
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