Target Company Overview

Three Hills is pleased to announce the successful closing of its investment in TwentyFour Seven Group ("TwentyFour Seven" or "24.7"), a leading production services company known for its premium advertising campaigns. Established in 2004 and headquartered in Madrid, 24.7 excels in providing high-quality production services to renowned global brands such as LVMH, Nike, and Adidas. The company has built an impressive portfolio, with a majority of its clientele based in the US and UK, further enhancing its reputation in the industry.

With a robust international presence in seven countries, TwentyFour Seven has established Iberia as its primary hub, allowing it to serve a diversified range of global clients effectively. The company operates from key locations in Madrid, Barcelona, Palma de Mallorca, and Lisbon, and has expanded its reach to countries like Chile, Argentina, the Dominican Republic, Poland, and Lithuania.

Industry Overview

The €2.8 billion production services market is currently experiencing notable growth and remains highly fragmented, with numerous opportunities for consolidation. As the demand for high-quality audiovisual production services continues to rise, the industry is projected to achieve high single-digit growth rates internationally. This expanding market presents an advantageous landscape for established players like TwentyFour Seven to leverage their competitive advantages.

Specialized in premium production services, 24.7's strategic positioning allows it to capitalize on the increasing demand for top-tier production solutions. The firm's defensible scale advantages in various geographical markets, comprehensive service offerings, and superior systems facilitate its competitive edge, further solidifying its status in the premium segment.

The production services sector is also witnessing a shift towards international collaboration and convergence, with companies increasingly seeking reliable partners for executing global campaigns. This trend highlights the role of firms with proven track records, like TwentyFour Seven, in meeting the evolving needs of clients worldwide.

In Spain, the creative industries, particularly audiovisual production, are thriving and becoming integral to the economy. This growth reflects the increasing investment in innovative marketing strategies by major brands, creating substantial demand for production services that can deliver exceptional results on a global scale.

Rationale Behind the Investment

Three Hills' investment in TwentyFour Seven is primarily designed to facilitate a management buyout, allowing founders and the senior management team, including Ivo Van Vollenhoven, Álvaro Weber, and Gordon Mackinnon, to reclaim control of the company. This strategic move enables 24.7 to focus on its next phase of growth, including further international expansion and vertical integration through mergers and acquisitions (M&A).

Given its exceptional history of organic and inorganic growth, including the successful acquisition of Smile in 2022, 24.7 is well-positioned to pursue additional acquisition opportunities while expanding its geographic footprint and production service verticals.

Investor Information

Three Hills is an investment firm dedicated to partnering with exceptional management teams to drive growth. The recent investment in TwentyFour Seven marks the eighth transaction for its fund, Three Hills Capital Solutions IV, which successfully closed in October 2022 at its hard cap of over €1 billion. The Firm's strategy focuses on industries that are primed for consolidation and benefit from strong growth trajectories.

Three Hills’ preferred capital investing strategy is particularly appealing to management teams looking to maintain control while securing expansion capital. This investment model creates exciting opportunities for shareholder reorganizations in high-potential businesses, aligning with the Firm's track record of supporting companies with ambitious growth objectives.

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The investment in TwentyFour Seven presents a compelling opportunity for Three Hills to collaborate closely with a higly experienced management team committed to the company’s next growth phase. By regaining control, the leadership is positioned to navigate the expansive landscape of the production services market, which remains highly promising.

Given the firm's strong track record and unique market position, the strategic partnership could enhance TwentyFour Seven's ability to innovate and expand its services, potentially leading to significant competitive advantages. The management team's experience and vision, combined with Three Hills' financial backing, make this a favorable investment prospect.

Furthermore, as 24.7 pursues additional acquisitions, it can harness the industry's ongoing consolidation trends, further solidifying its leadership within the premium production services segment. The emphasis on organic growth opportunities alongside targeted M&A initiatives aligns well with market dynamics and consumer demands.

The collaboration with Three Hills is likely to amplify TwentyFour Seven’s capabilities and overall market presence while enabling the management team to execute its ambitious plans effectively. Overall, this partnership has the potential to yield significant returns on investment if aligned well with market growth, management execution, and strategic objectives.

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