International funding agency 3G Capital’s method to investing facilities on pursuing high-quality companies that may profit from its long-term involvement.
The agency’s owner-operator methodology usually equates to pretty lengthy holding intervals, with 3G Capital probably remaining immediately concerned with an organization’s operations for many years.
After it acquired Burger King in 2010, for instance, 3G Capital spent years strengthening and increasing the model.
On the time of the almost $4 billion deal, administration modifications and different challenges inside the quick meals chain had led to an absence of technique and efficiency points. The 3G group immersed themselves in Burger King’s operations to find out how its expertise administration, compensation, and different elements of the enterprise labored.
By menu innovation, price streamlining and different techniques, the agency lowered the chain’s overhead bills and achieved different operational efficiencies. In June 2012, 3G Capital was capable of take Burger King public once more.
In 2014, 3G Co-Managing Accomplice Daniel Schwartz, who had been appointed as Burger King’s CEO the 12 months earlier than, mentioned the chain had turn out to be “one of the fastest-growing and most profitable QSR businesses in the world,” via efforts resembling “successful international growth, a consistent focus on brand revitalization and strong commitment to our franchisees.”
That very same 12 months, 3G acquired coffee-focused restaurant chain Tim Hortons — and established Restaurant Manufacturers Worldwide, an organization each manufacturers started to function independently below. After including the Popeyes Louisiana Kitchen chain through a $1.8 billion acquisition in 2017, RBI additionally obtained Firehouse Subs in what the Monetary Occasions mentioned was a $1 billion deal in 2021.
At this time, RBI is likely one of the largest fast service restaurant firms in existence — encompassing 29,000 [EB2] eating places in additional than 100 international locations and producing greater than $35 billion in annual system-wide gross sales.
On the lately launched Sept. 26 episode of the Make investments Just like the Finest Podcast, host Patrick O’Shaughnessy — founder and CEO of enterprise capital agency Optimistic Sum, who launched the enterprise and investing podcast community Colossus in 2020 — and funding professional Ted Seides, who hosts the Capital Allocators podcast, mentioned 3G’s Burger King acquisition.
Seides mentioned he believed it was the highest-returning non-public fairness deal on file.
“[3G] really grew this business, and it was doing really well,” he mentioned. “And then, they had an opportunity to buy Tim Hortons, and they literally re-levered the entire thing, almost … They had this wildly successful LBO, and then they risked it all again, and they made it work again; and then they did it again.”
Noting that 3G Capital nonetheless owns Burger King, Seides talked about the agency’s use of single asset funds.
“It’s a great story because there’s a combination of this operating model that 3G has, and this vision, ability to take risk, but also a very different private equity structure,” he mentioned. “It’s [been] 14 years, and they find ways to get some people some liquidity if they want, but most people are like, ‘No, no, no, keep doing what you’re doing. It’s working really well.’”
Working With Legacy-Led Corporations
Along with firms like Burger King, 3G Capital additionally has discovered success partnering with family-owned companies that hope to advance their group to the subsequent stage of operations.
In 2022, 3G Capital obtained a 75% stake in window coverings producer and retailer Hunter Douglas; headquartered in The Netherlands, the corporate had been owned by the Sonnenberg household since 1919.
Whereas Hunter Douglas — which presents merchandise that present vitality effectivity and good dwelling know-how options — had turn out to be a key participant in its business with a robust market place, the corporate had reached a pivotal second in its trajectory; and the members of its founding household have been seeking to transition its management.
They finally determined to work with 3G Capital and retain a 25% share of the corporate.
When the $7 billion deal was initially introduced, 3G Capital Co-Founder and Co-Managing Accomplice Alex Behring and Schwartz mentioned the agency had a deep respect for the Sonnenberg household’s steadfast management of the greater than 100-year-old firm and its various portfolio of manufacturers.
“Hunter Douglas’ strong market position is the product of its specialized expertise built over the past century,” they mentioned in a press release. “We are committed to preserving this expertise by empowering and supporting Hunter Douglas’ leadership and partnering closely with Hunter Douglas’ exceptional team of founders and entrepreneurial managers and unrivaled network of dealers and fabricators.”
Ralph Sonnenberg, whose father based Hunter Douglas, referred to as 3G Capital “a well-renowned investor, operator and a strong partner for our business.”
Previous to the acquisition, regardless of possessing inherent high quality as a enterprise, Hunter Douglas had been underappreciated, in keeping with 3G Capital, garnering solely minimal analysis and information protection inside the monetary neighborhood and a really low float on the Amsterdam alternate.
The partnership with 3G Capital has helped improve Hunter Douglas’ management group. Its Co-President and Co-CEO David Sonnenberg, who had garnered 30 years’ price of expertise working on the firm, moved into an government chairman function on its board of administrators and continued to be concerned in Hunter Douglas’ each day operations; 3G accomplice João Castro Neves stepped into the CEO function, and Alex Behring and Daniel Schwartz grew to become board members.
Since turning into concerned with the corporate, 3G Capital has helped determine choices for long-term development, together with potentialities to develop in areas resembling Latin America and Asia, the place Hunter Douglas’ market penetration continues to be comparatively low.
The Sonnenberg household’s a long time of business expertise and institutional data, in tandem with 3G Capital’s involvement, is now serving to place Hunter Douglas to evolve on a global scale, with out having to sacrifice its model integrity — enabling it to maneuver into what David Sonnenberg, when the partnership was first introduced, known as “the next chapter of Hunter Douglas’ history.”
“As owner-operators with a long-term investment horizon and significant experience operating global branded businesses alongside founding families, 3G Capital is a dynamic steward to continue the legacy of Hunter Douglas,” he mentioned. “As a private enterprise, Hunter Douglas will have the opportunity to advance and expand our business — while preserving the family-led culture and strong relationships with stakeholders, which have been core to our success.”
