MW As investors pile into private assets, this storied firm expects slowdown

By Steve Goldstein

Investors are piling into private assets, and one of the leading firms in the space is warning that it's getting more difficult.

"We expect transaction activity across the private market to be slower over the near term given the increased macro-economic and geopolitical uncertainty," said 3i Group (UK:III) CEO Simon Borrows, who's been running the firm since 2012.

3i listed on the London Stock Exchange in 1994, about a decade ahead of when American giants like Blackstone and KKR did.

Firms including BlackRock $(BLK)$ are betting that investors will increasingly move into private markets, because of their long-term and less turbulent nature as well as hopes for stronger returns.

3i on Thursday reported its fiscal-year ending March 31 numbers, including a net asset value per share that rose to a smaller-than-forecast 2,542 pence per share from 2085 pence. Analysts expected an NAV of 2,575 pence per share, and its total return of GBP5 billion lagged the Visible Alpha-compiled consensus of GBP5.7 billion.

3i shares tumbled 7% to 3,897 pence per share.

3i's stock-performance these days is largely tied to its biggest investment, European discount retailer Action. Action's comparable-store sales through May 11 slowed to 6.8% from 10.3% last year.

"We view Action as a high quality retailer with significant long-term growth potential. However, it has significantly outperformed in recent years and as such, we see less potential upside," said analysts at RBC Capital Markets.

In a presentation, 3i said Action's long-term valuation multiple, at 18.5 times enterprise value-to-EBITDA, compares favorably to the 21.2 times for the grouping of Costco $(COST)$, Dollarama, Five Below and Ollie's $(OLLI)$.

-Steve Goldstein

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May 15, 2025 05:01 ET (09:01 GMT)

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