Shareholders in 3i Group (III) must feel like it’s Groundhog Day after the stock fell over 15% for a second time on results. The shares tumbled a similar amount in November 2025 when the private equity investment trust released its H1 figures.
Slowdown at Action
For the year to March 2026, the group reported a total return of £5.3 billion or 22% on opening shareholders’ funds. That translated into an NAV per share of £30.30 against £25.42, including a 77p per share benefit from currency gains.
Once again, the bulk of the upside came from the financial performance of European discount retailer Action, the group’s biggest holding. Action generated a gross investment return of £4.5 billion or 25% on its opening value. During FY26, 3i also recognised proceeds and dividend distributions of £1.19 billion from Action.
During 2025, Action reported annual net sales growth of 16% driven by LFL growth of 4.9%. However, LFL sales growth so far this year is just 2.4% against 6.8% in the same period of 2025.
In total, 3i received £1.9 billion of cash from its portfolio in the year to March. A large part of those proceeds, €1.1 billion (£950 million) came from the sale of TCR, which generated a return on investment of 3.6 times.
To quote the legendary New York Yankees catcher Yogi Berra, it’s like déjà vu all over again for 3i shareholders. This time, however, the reason for the share price fall is more fundamental than in November.
Then, CEO Simon Borrows spooked investors by saying the group was taking a ‘cautious’ attitude to new investments. Borrows also painted a picture of a challenging market for transactions in the second half of the financial year.
This time, the concern is over a marked slowdown in organic sales growth at Action, by far the group’s biggest asset and valuation driver. The Middle East conflict has knocked consumer confidence, resulting in flat sales in France and Germany.
Adding to consumer caution, cooler weather has impacted sales of seasonal goods against high comparables last year. Therefore, while fast moving consumer goods sales are steady, some higher-margin categories have underperformed.
That matters because 3i’s 65.4% stake in Action is worth £23.7 billion. After today’s sell-off, the whole of 3i’s equity is valued at around £24 billion. The group cannot afford for the slowdown in growth at Action to drag on.
Read the press release here:
https://www.3i.com/investor-relations
