Shares in 3i Group PLC (LSE:III) dropped 11.4% to 3,606p, a seven-month low, as the FTSE 100-listed private equity firm reported a stronger second quarter but made some cautious statements on the market backdrop.
Chief executive Simon Borrows said the private equity portfolio has "maintained good momentum" in the face of a challenging macroeconomic and geopolitical backdrop, while the infrastructure asset portfolio outperformed expected returns.
He added: "We remain cautious in the deployment of capital into new investment, but will continue to allocate selectively, including to lower-risk reinvestments in businesses we know and trust.
"We are mindful that both the transaction market and the wider environment are likely to remain challenging into the second half of our financial year."
A 13% total return was reported for the six months to 30 September 2025, up from 7% in the first quarter, citing continued strong performance from its flagship investment, the European discount retailer Action.
The total return for the period was £3.3 billion, compared with £2.05 billion a year earlier. Net asset value per share rose to 2,857p from 2,542p in March, helped by a 78p per share foreign exchange gain.
Private Equity delivered a gross investment return of £3.2 billion, or 14%, driven by Action, which saw value growth of £2.1 billion.
Action generated net sales of €11.23 billion and EBITDA of €1.56 billion for the nine reporting periods to late September, while year-to-date figures to October showed net sales up 17% and like-for-like sales up 5.7%.
In September, 3i acquired a 2.2% stake in Action from GIC through a share exchange worth £739 million, increasing its holding to 60.1%, before raising it to 62.3% after reinvesting most of the £944 million return from a capital restructuring in October.
Realisations in the half included the sale of natural pet food maker MPM and a signed deal to sell IT services provider MAIT, which together generated £542 million at strong returns.
The Infrastructure division posted a £139 million gross investment return, up from £43 million last year, supported by a 14% rise in the share price of 3i Infrastructure plc and higher valuations within its portfolio.
Liquidity at period-end was £1.64 billion, with net debt of £772 million and gearing of 3%.
An interim dividend of 36.5p per share will be paid in January 2026, up 20% on a year ago.