No FTSE 100 progress share can match the stellar latest efficiency of personal fairness large 3i Group (LSE: III). 

Over the previous 5 years, its share price has soared 253%. It’s even overwhelmed Rolls-Royce, which grew 165% over that interval (though Rolls smashes it over three years, rising 430%).

Which means a £10,000 funding in 3i Group 5 years in the past would now be value £35,300, with dividends on high.

Can this share price proceed to fly?

I’m thrilled I purchased the shares about 18 months in the past, and I’m already near doubling my cash. But I missed one of the best bit, with the shares up a comparatively modest 57% during the last 12 months. Nonetheless, who’s complaining?

A lot for previous efficiency. As ever the all-important query is that this: are 3i Group shares nonetheless a purchase for me at the moment? Or ought to I financial institution some earnings?

In contrast to many non-public fairness corporations, 3i has solely invested its personal capital since 2015, avoiding the volatility of exterior funding. This technique has proved extremely profitable, though largely because of its star asset: European low cost retailer Motion.

Motion is the jewel in 3i’s crown. In its newest buying and selling replace, printed on 30 January, 3i reported that Motion’s internet gross sales and working EBITDA for 2024 had been up 22% and 29%, respectively. 

The retailer added a document 352 new shops within the yr, driving its enlargement.

That success has immediately benefited 3i shareholders, because it paid a £215m dividend in December. Nevertheless it nonetheless left Motion with an €814m money steadiness.

My fear is that it now accounts for greater than 70% of 3i’s non-public fairness portfolio. This stage of focus danger is uncommon in non-public fairness and leaves 3i closely reliant on only one firm for future progress, which may be very dangerous.

Like-for-like gross sales progress remained robust in 2024 at 10.3%, however that’s down from 16.7% the earlier yr. I’m involved the retailer’s greatest progress years could also be behind it.

I’m sticking with it

Past Motion, 3i has a various non-public fairness portfolio that has been resilient in powerful financial situations. 

The corporate has been in a position to safe new investments, equivalent to its latest £121m acquisition of WaterWipes. It additionally realised £280m from the sale of Weener Plastics (WP), attaining an 18% premium on its March 2024 valuation.

From a monetary standpoint, 3i stays robust with £792m in gross money and an undrawn £900m credit score facility. This could enable it to proceed making strategic investments.

Regardless of my considerations, I’ve no intention of promoting my 3i shares. However I’m hesitant to purchase extra. 

With Motion’s progress slowing and its valuation making up such an enormous portion of 3i’s portfolio, I consider the dangers have elevated.

Additionally, because of its success, 3i now makes up a meaty chunk of my portfolio. A little bit of diversification known as for. I’ve determined to let my winnings roll, despite the fact that I don’t anticipate 3i to repeat the astronomical positive factors of the previous 5 years.