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3i Group (LSE: III), the FTSE 100 private equity and venture capital company based in London, enjoyed a massive 14% single-day spike this week. But while the move is promising, it’s only a small way from recouperating the 30% losses it suffered in November 2025.
So what do all these volatile price moves mean for investors, and can the company still be trusted as a stable growth vehicle?
Let’s take a closer look at the various factors sending ripples through 3i’s price chart.
A potential recovery play
The short story is that this week’s jump was driven by a reassuring Q3 update around Action, its dominant holding. After poor autumn performance in France — one its largest markets — January saw significant improvement. Like‑for‑like sales grew 6.1% in the first four weeks of 2026, with France back to positive territory at about 2.1%.
This directly addressed the market’s biggest fear – that France’s weakness was structural. Combined with its other holdings, the boost helped drive up 3i Group’s net asset value (NAV) per share by 5.6%, bringing the total return for the past nine months to 20%.
But that wasn’t the only thing driving growth. To further cement the board’s confidence in Action, the company increased its stake from 62.3% to 65.3%. Issuing stock at these levels to buy in more signals high-conviction by management.
It’s also worth noting that the euro’s strengthened, which would have provided an additional boost when converted back to sterling. If that strength doesn’t hold, it could reverse some of the gains further down the line.
But that isn’t the whole story
This relatively minor growth spurt looks more like a relief rally than the start of a new uptrend. Yes, Action’s January numbers were better, but growth’s still slower than a couple of years ago. And one decent month in France doesn’t prove the problems are fixed.
On top of that, a chunky slice of the NAV gain was just euro strength. With roughly three‑quarters of 3i’s value tied to one retailer, the shares now trade more like a single‑stock bet than a sleepy compounder. After this bounce, a lot of the easy gains look priced in, which cools the investment thesis for growth-focused investors.
Why I’m still buying
3i’s growth story may be slowing but its income story still looks to be on track. Over the past 10 years, dividends have grown at an average annual rate of 25% a year. That’s almost unheard of, particularly for a growth stock.
If the price tapers off, the yield‘s likely to increase rapidly, prompting a narrative change from growth to income. So while some investors may be deterred, it could soon become a top stock to consider for income in 2026.
I remain bullish on its recovery narrative and dividend trajectory, so I plan to continue increasing its position in my passive income portfolio.
For investors more interested in value stocks with greater growth potential, it’s worth checking out JD Sports or Hikma Pharmaceuticals. And that’s two undervalued UK stocks that look highly attractive right now.
