3i Group (III) shares hit a two-month high after relieved investors welcomed news of a positive start to the year for Action, the European discount retailer that accounts for over two thirds of the private equity giant’s portfolio.
Shares in the FTSE 100 firm jumped 10.5%, or 331p, to £34.78, clawing back over a third of the slump the stock suffered in November when 3i warned that Action’s sales growth was slowing. This morning’s rise adds back over £3bn of market value leaving the company at £34.6bn.
In a third quarter trading update, 3i confirmed that Action’s sales had slowed last year on account of weak consumer sentiment in France. Like for like sales growth dropped to 4.9% from 10.3% in 2024. However, it said, “the new year has started well” with LFL sales growing by 6.1% in the first four weeks.
Net asset value (NAV) per share rose by 5.6% to £30.17 at 31 December from £28.57 on 30 September with positive forex movements contributing 78p of the 160p gain. At yesterday’s close of £31.54 that briefly left the shares 4.5% above NAV, less than half the previous 10% premium. Today’s spike, however, has pushed the shares to 15% above asset value.
Before the fall in November 3i peaked at £44.59 on a 50% premium a huge contrast to the wide discounts of most London-listed private equity funds. The subsequent derating saw some its directors snap up the comparatively cheap shares.
Despite the recent turbulence, the highly-rated shares have delivered phenomenal long-term performance. Over 10 years shareholders have seen a total of 906%, nearly three times more than its nearest rival, CT Private Equity (CTPE).
Our view
James Carthew, head of investment company research at QuotedData, said: “It’s daft that the price is whizzing up and down on the back of a few weeks of sales figures at Action.”
