3i Group (III) has launched its first share buyback programme in 21 years after annual results revealed a further slowdown in sales at Action, the European discount retailer that accounts for around two thirds of the private equity giant’s £31.8bn portfolio.
Shares in 3i Group plunged 19%, or 450p, to a two-and-a-half year low of £19.71, after the company said Action sales growth had decelerated to 2.4% this year, down from 3.6% in the first three periods of 2026 to 29 March, and from 6.8% this time last year.
The like-for-like figures were flat in France and Germany as consumer confidence was knocked by the economic shock waves from the conflict in the Middle East.
It added that while fast moving consumer goods (FMCG) categories were trading well, seasonal products had underperformed, affected by the cool weather.
However, Action’s trading in the Netherlands, Belgium and Southern Europe was in line or ahead of expectations, the group said. Moreover, its balance sheet was strong with €925m of cash and its expansion continued unabated with 69 new stores added this year to the 3,302 it had at 28 December in 14 European countries. It opened 384 net new stores last year.
Throughout the year to 31 March, Action generated a £4.5bn gross investment return, equivalent to 25% of its opening value, and the vast majority of 3i’s total £5.3bn return from private equity investments.
In 2025, it grew overall net sales by 16% and earnings by 14%, although like-for-like growth excluding new stores was 4.9%.
The company divides its retail year into 13 four-week periods. In the first three of 2026, up to 29 March, net sales were just over €4bn from €3,5bn a year ago, with operating profits of €498m up from €464m.
Chief executive Simon Borrows said: “Action continues to differentiate itself from its competitors with its continued focus on quality at the lowest price, which has made it a consumer favourite across Europe.”
He said: “We are also seeing some good momentum across the rest of the private equity portfolio.
3i shares have more than halved from £43.02 in October when the group first highlighted the decline in Action’s previously impressive sales growth, with a further setback in March when investors baulked at its plans to launch in the US.
At their current level the shares stand 34.5% below their net asset value (NAV) of £30.30, a wide discount that has prompted 3i to start its first buyback since 2005. It said the programme was aimed at reducing share capital and would end at 31 December.
The shares revived in response, to £21.23, reducing today’s fall to 12%.
While 3i shares have derated from a big premium over asset value, the company has maintained its underlying growth with a total 22% return on net assets in the financial year. NAV per share rose from £25.32 on 31 March 2025, an uplift of 498p per share, of which 77p reflected the positive move in the pound against the euro.
A second dividend of 48p per share was declared, taking the total for the year to 84.5p, up 15.9% from 73p.
Before today, 3i shares had returned 600% to shareholders over 10 years, by far the best of any UK-listed private equity fund. Its next best rival, CT Private Equity (CTPE), delivered 204%. Action has been the main driver of that performance.
Our view
James Carthew, head of investment company research at QuotedData, said: “3i’s shares look to be trading on about a 35% discount to its end March 2026 NAV and a 4.3% dividend yield. A £750m share buyback sounds large, but it is less than 5% of 3i’s market cap and may not move the dial. There has to be an end game for 3i’s investment in Action. It is so dominant within the portfolio that it feels like everything else is a rounding error, which is unfair to the team. Perhaps the best plan would be to spin Action out as a separate listed company.”
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