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Investing.com -- 3i Group (LON:III) on Monday posted strong results for the third quarter of its fiscal year 2025, with key investments driving growth despite ongoing macroeconomic uncertainties.
The private equity and venture capital company reported an increase in net asset value per share to 2,457 pence as of December 31, 2024, up from 2,261 pence at the end of September.
This resulted in a total return of 20% for the nine-month period, even after accounting for a £476 million negative foreign exchange translation impact.
The standout performer for 3i continues to be its European discount retail chain, Action (WA:ACT). The business saw a 22% rise in net sales and a 29% increase in operating EBITDA for the 12 months leading up to December 29, 2024.
Like-for-like sales growth stood at 10.3%, down from 16.7% the previous year, while 352 new stores were added, expanding Action’s presence further.
The London-based company’s strong financial standing was reinforced by a cash balance of €814 million at year-end, following a £215 million dividend distribution to 3i.
In November, Action also refinanced about 40% of its senior debt, securing lower interest costs and extending maturities.
Beyond Action, the majority of 3i’s private equity portfolio showed resilience despite economic headwinds.
Key consumer and private label investments delivered strong performances, with notable contributions from Royal Sanders, MPM (BVMF:ESPA3), and Audley Travel.
However, some companies with exposure to discretionary spending and the recruitment market continued to face challenges.
WilsonHCG, a recruitment services provider, saw a significant decline in demand, leading to a £76 million reduction in value year-to-date.
The company continued to pursue new investments and portfolio expansion. In December, 3i committed £121 million to acquire WaterWipes, a premium wet wipes brand, with the transaction closing in January 2025.
Additionally, four bolt-on acquisitions were completed across the portfolio, including Constellation’s purchase of cloud architecture specialist ILKI and Evernex’s acquisition of UK-based Ultra Support.
The realisation of WP in October generated proceeds of £280 million, an 18% premium over its March valuation.
Infrastructure investments also remained a core focus. 3i Infrastructure plc saw a 7% decline in share price over the quarter, closing at 317 pence, while still providing £17 million in dividend income to 3i.
The company’s North America Infrastructure Fund continued its expansion with Amwaste acquiring Waste Away Environmental, and Regional Rail consolidating its Canadian operations.
Scandlines, the company’s ferry business, maintained steady freight and leisure volumes and contributed £7 million in dividends during the quarter.
3i entered the final quarter of its financial year with a robust balance sheet. As of December 31, gross cash stood at £792 million, complemented by an undrawn revolving credit facility of £900 million.
Gearing remained low at 2%. The company also completed the final carry buyback linked to Action, ensuring no dilution to its 57.9% equity stake.
“Whilst we remain cautious on the macroeconomic and geopolitical environment, we believe 3i is well positioned for a strong financial year to 31 March 2025,” said Simon Borrows, chief executive at 3i Group in a statement.