Proactive Investors - Britain's largest listed private equity firm dropped 4.5% today despite it reporting healthy growth for its investors as it benefited from the success of Dutch discount retailer Action.
3i Group PLC (LON:III) said it yielded £3.8 billion, the equivalent of 23% of opening stakeholders' funds, in the year to March, as its net asset value lifted from £17.45 per share to £20.85.
Action was said to be the firm's "major driver" throughout the year after the retailer's sales soared by 28% to £9.72 billion while underlying earnings lifted 34% to £1.38 billion.
Liberum analyst Joachim Klement believes that the stock may start to see some profit-taking soon, and that may be the reason why the shares have slid today.
Klement said: "We keep warning about the large concentration risk in the portfolio, the high valuation of the shares, and the difficult market environment for consumer companies like Action.
"But Action remains remarkably resilient... margin expansion has helped limit the drop in EBITDA growth which is a highly respectable result given the difficult market environment.
"Having said that, the results generally miss by some margin and come in barely above the lowest forecast of analysts covering the company."
"Overall, this is a mixed set of results, in our view, with Action’s performance holding up very well given the circumstances, but the company generally experiencing a sharper slowdown in growth and profits than expected."