3i Group PLC on Thursday reported a rise in net asset value per share during its third-quarter, and hailed bullish trade from its largest investee.
The London-based investment manager said that its net asset value per share increased 7.8% to 2,034 pence at its December 31 third-quarter end, from 1,886p at September 30. It registered a total return of 18% for the first three quarters, after a negative £151 million foreign exchange impact, or 16p per share
Action, a Dutch non-food discount retailer in which 3i Group owns roughly a 55% stake, produced ‘another excellent result’.
In the 12 months to December 31, Action’s net sales grew 28% to €11.32 billion, from €8.86 billion a year prior.
Action’s operating earnings before interest, tax, depreciation and amortisation rose to €1.62 billion, 34% ahead of €1.21 billion for 2022.
Action returned 3i a dividend of £189 million in December, and the investee ended the year with a cash balance of €1.09 billion. 3i’s stake in Action was valued at £13.78 billion as of the end of December.
3i Chief Executive Officer Simon Borrows said: ‘Action has again produced an all-round, impressive set of results and has started 2024 with good momentum across all of its markets. Action’s mission is to help customers by offering great value products at low prices and selling an increasing range of essentials through its flexible format. Some 2,500 prices were reduced in the second half of 2023, which is driving strong like-for-like performance and further increasing the price gap between Action and other retailers.’
During its third-quarter, 3i completed £495 million of total investment, £455 million of which being reinvestment into Action. It noted £26 million went into the purchase of a minority stake in Royal Sanders, a Netherlands-based manufacturer of personal care products. In December, Royal Saunders successfully refinanced, returning proceeds of £109 million to 3i, £48 million of which was recognised as income.
Elsewhere, 3i said: ‘The value-for-money, private label, healthcare and infrastructure investments continue to perform resiliently and represented 86% of our investment portfolio at 31 December 2023. Outside of these sectors, performance was more mixed.’
As at December 31, 3i held £666 million in cash, up markedly from £55 million at the end of September. Combined with the company’s undrawn £900 million revolving credit facility, liquidity stood at £1.57 billion at the year-end, with £542 million in net debt.
CEO Borrows added: ‘Macroeconomic conditions and global uncertainty are likely to continue to have an impact on selected names within the portfolio but we feel our unrelenting focus on good capital allocation means that 3i is well set for a strong return for the group for this financial year.’
Shares in 3i were down 1.8% at 2,433.70 pence each in London on Thursday morning.
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