3i Group NAV rises as Action delivers strong FY2027 first quarter

A solid start despite currency pressure

3i Group's FY2027 first-quarter update was led, once again, by strong trading at European discount retailer Action.

Net asset value, or NAV, per share increased from 3,030 pence at 31 March 2026 to 3,131 pence at 30 June 2026. NAV represents the value of 3i's assets after liabilities, divided across its shares.

The group generated a total return of 3% during the three-month period, despite suffering a £276 million negative foreign exchange translation impact, equivalent to 27 pence per share.

That currency movement matters because much of 3i's portfolio is valued in euros. Sterling strengthened by 1% against the euro during the quarter, reducing the reported sterling value of those investments.

The second FY2026 dividend of 48.0 pence per share is due to be paid on 24 July 2026. After deducting that dividend, diluted NAV stood at 3,083 pence per share.

Key group figures	30 June 2026	31 March 2026
Diluted NAV per share	3,131p	3,030p
Gross cash	£724 million	£664 million
Net debt	£481 million	£547 million
Gearing	2%	2%
Investment portfolio value	£32,409 million	£31,821 million

Action remains the main engine

Action generated net sales of €8,348 million in the six months to 28 June 2026, up 14% from €7,340 million in the comparable period.

Operating EBITDA increased by 13% to €1,108 million. EBITDA is earnings before interest, tax, depreciation and amortisation, and is commonly used to assess underlying operating performance.

The operating EBITDA margin remained unchanged at 13.3%. This indicates that Action maintained profitability as it expanded, although earnings growth was slightly behind sales growth over the six-month period.

Like-for-like sales growth was 3.6%, compared with 6.8% in the same period last year. Like-for-like growth measures sales from established stores and strips out the effect of opening new locations.

The slower rate is worth watching, but management said growth was primarily driven by increased customer transactions. Performance in France and Germany improved, fast-moving consumer goods categories continued to trade well, and seasonal sales strengthened during June.

Action's second-quarter performance was particularly robust. Sales rose 14% to €4,338 million, while operating EBITDA increased 18% to €609 million.

Action performance	P6 2026	P6 2025	Change
Net sales	€8,348 million	€7,340 million	14%
Operating EBITDA	€1,108 million	€980 million	13%
Operating EBITDA margin	13.3%	13.3%	Flat
Like-for-like sales growth	3.6%	6.8%	Lower
Net new stores	121	125	4 fewer

Store expansion and cash generation continue

Action opened 121 net new stores during the six-month period, taking its estate to 3,423 stores across 15 countries.

That was slightly behind the 125 stores added in the comparable period, but the company remains on track to open at least 400 stores this year. Recent milestones included opening its first three stores in Sicily and reaching 50 stores in Slovakia.

Strong cash generation allowed Action to pay a €450 million shareholder dividend in May, of which 3i received £254 million. Action still ended the period with €718 million in cash.

Its net debt-to-run-rate EBITDA ratio declined from 2.8 times at the end of March to 2.7 times. This leverage measure compares borrowing with annualised earnings, so the reduction suggests Action's balance sheet strengthened modestly despite the dividend payment.

3i valued its 65.4% equity stake in Action at £24,249 million, up from £23,743 million at the end of March. The valuation used run-rate EBITDA of €2,730 million and an unchanged post-discount multiple of 18.5 times.

This is both the central attraction and the clearest risk in the investment case. Action represents roughly three-quarters of 3i's total investment portfolio value, meaning its trading performance and valuation have an outsized influence on group NAV.

The unchanged 18.5 times valuation multiple avoids an additional uplift from re-rating, but it remains a substantial earnings multiple. Continued profit growth is therefore important in supporting the carrying value.

The wider private equity portfolio looks steady

Royal Sanders made a solid start, supported by previous acquisitions and resilient customer demand.

Audley Travel's US bookings offset softer UK performance, while strong cash generation enabled 3i to receive £45 million of proceeds. Luqom delivered revenue and earnings growth, and most of the remaining portfolio maintained positive momentum.

No portfolio company valuation multiples were changed during the quarter. Private equity portfolio leverage declined from 2.9 times EBITDA to 2.8 times. Excluding Action, average leverage remained at 3.2 times.

3i invested £125 million during the period, including £118 million in Nutergia, a French natural food supplements business. Evernex also completed the bolt-on acquisition of UK-based IT infrastructure deployment companies Empowered and OrderWork.

These investments demonstrate that 3i is still deploying capital, although the amounts remain small relative to Action's valuation.

Infrastructure and the buyback provide additional support

Shares in 3i Infrastructure, known as 3iN, increased by 13% during the quarter to close at 378 pence. This lifted the value of 3i Group's 29% stake from £897 million to £1,016 million. The group also recognised an £18 million dividend from 3iN.

Capital returns are another important feature of the update. In May, 3i launched a share buyback programme of up to £750 million, scheduled for completion by the end of December 2026.

By 21 July, approximately 14.7 million shares had been purchased and cancelled for around £344 million. Cancelling shares reduces the number in circulation and can increase each remaining shareholder's proportionate interest in the group's assets.

The programme does, however, use cash that could otherwise support investment or reduce debt. For now, the balance sheet appears capable of carrying it. At quarter-end, 3i had £724 million of gross cash, £1,924 million of liquidity including its undrawn revolving credit facility, and gearing of just 2%.

What investors should watch next

The update presents a broadly positive picture: Action is growing sales and earnings, generating cash and opening stores, while 3i's wider portfolio is trading in line with expectations. NAV increased even after a meaningful foreign exchange headwind, and the balance sheet remains conservatively geared.

The main points of caution are equally clear. Action's like-for-like growth has slowed from last year, its valuation multiple remains high, and 3i's portfolio is heavily concentrated in a single investment. Currency movements can also create substantial swings in reported NAV, with a 1% euro movement estimated to affect total return by £248 million, including hedging.

3i will not hold a Private Equity Capital Markets Seminar in September. The next scheduled market update is its half-year results in November 2026, when investors will be looking for continued momentum at Action and evidence that the wider portfolio can make a larger contribution.