3i Group Doubles Down on Shareholder Returns as Action's Growth Stall Clouds the Picture

After a 47% stock tumble, 3i fights market skepticism with share buybacks, dividend increase, and insider buys to close the gap between book value and share price.

The London-based private equity group 3i is mounting a forceful rebuttal to the market’s recent verdict. After the stock crashed as much as 24% in a single session following its annual results in mid-May, management is now deploying a combination of a hefty share buyback, a dividend hike and insider purchases to close the yawning gap between the company’s book value and its listed price.

At the centre of the tension is Action, the European discount retailer that accounts for the bulk of 3i’s value. Like-for-like sales at Action slowed to just 2.4%, weighed down by unfavourable weather and more cautious spending in France and Germany. Though the chain is preparing to enter the US market by late 2027 or early 2028, the deceleration has clearly spooked investors. Over the past 12 months, 3i shares have tumbled 47.52% in euro terms, and the stock now trades at €25.61, barely above its recent low.

Management is betting that capital returns can restore confidence. The company has launched a buyback of up to £750 million, to be executed by Barclays and completed no later than 31 December 2026. Under current authorisations, 3i can repurchase as many as 97 million shares, which would then be cancelled. The programme is intended to shrink the stock count and visibly narrow the discount to net asset value. The NAV per share stood at 3,030 pence at the end of March, up 19% from 2,542 pence a year earlier, while the share price lingers around 2,080 pence – a gap the board considers unjustified.

Shareholders are also being offered a larger cash return. The board has proposed a full-year dividend of 84.5 pence, a 16% increase from 73.0 pence last year. A second instalment of 48.0 pence is scheduled for payment in July, pending approval at the annual meeting. The ex-dividend date is set for 18 June, with the record date on 19 June. The dividend lift, combined with the buyback, marks a deliberate shift toward translating portfolio realisations and mature holdings into tangible shareholder payouts.

Executives have put their own money behind the message. Chief financial officer James Hatchley and board member Peter McKellar bought shares worth a combined £725,000 at prices between 2,075.8 and 2,082.5 pence each – right where the post-results sell-off created a visible valuation entry point. The insider purchases echo the earlier signal from a key stakeholder who doubled down on the stock.

3i’s financial capacity to fund these moves is underpinned by a strong balance sheet. The group reported year-end liquidity of £1.864 billion, including an un undrawn revolving credit facility that was increased to £1.2 billion. Net debt stood at just £547 million, implying a leverage ratio of 2%. The infrastructure arm contributed an overall return of 8.5%, within its medium-term target of 8% to 10%. A standout deal was the sale of TCR, an airport ground-equipment lessor, which generated proceeds of €1.14 billion for 3i Infrastructure and delivered a 3.6-times money multiple, 50% above the previous book value.

Not every portfolio asset performed equally. 3i Infrastructure wrote down its stake in German fibre-optic operator DNS:NET to zero, citing sharply worse financing conditions for fibre projects in Germany. The impairment serves as a reminder that portfolio quality is not uniformly robust.

Meanwhile, 3i has deepened its commitment to Action. It increased its ownership stake from 57.9% to 65.4% by investing an additional £2.6 billion. That concentration means any shift in Action’s growth trajectory has an outsized impact on the group’s overall valuation.

For now, the buyback offers a measurable test of management’s conviction. The deeper the discount to NAV, the more powerful each share cancellation becomes for remaining investors. By the end of 2026, when the £750 million programme is scheduled to conclude, the market will have a clearer view of whether capital returns alone can outweigh the drag from a slowing core holding. The dividend vote in July provides the next hard marker along the way.