The 3i Group (LSE: III) share price was up 1.3% in early morning buying and selling immediately (18 July) following the discharge of the agency’s Q1 efficiency replace.

That takes the inventory’s complete achieve for the yr to 32.6%. It’s up 61.1% within the final 12 months and a whopping 178.5% within the final 5 years.

That’s spectacular. The funding agency specialises in non-public fairness and infrastructure, focusing on mid-market corporations in Europe and North America. It has far outperformed the FTSE 100 in current instances.

Let’s take a better take a look at why it’s climbing and if it may very well be a inventory for buyers to think about shopping for immediately.

An encouraging begin

There have been loads of positives to remove from its replace, with the agency calling its efficiency within the quarter an “encouraging start” to FY25.

For the interval, there was a 4% improve in its web asset worth (NAV) per share to 2,167p. That compares to a NAV of two,085p on 31 March, even regardless of a damaging overseas trade translation affect of £113m or 12p.

Action

However many of the discuss was about Motion, the Dutch non-food low cost retailer that makes up round 65% of the group’s complete portfolio.

In the course of the quarter, Motion’s web gross sales rose to €3.2bn whereas earnings earlier than curiosity, tax, depreciation, and amortisation (EBITDA) climbed to €446m.

Within the six months to 30 June, like-for-like gross sales grew 9%. 3i additionally introduced that it had elevated its gross fairness stake within the enterprise from 54.8% to 57.6%.

Except for Motion, CEO Simon Borrows stated the group was “encouraged by the good start to 2024” for the remaining portfolio. He highlighted how 3i was “seeing positive developments in some of the assets which experienced headwinds in 2023”.

Valuation

The sturdy efficiency of Motion has been a significant catalyst within the group’s share price hovering. However that additionally comes with dangers.

With it making up almost two-thirds of its portfolio, meaning the funding belief is massively unbalanced in the direction of only one firm.

The fast-growing Dutch retailer goes from energy to energy. Nevertheless, any signal of a slowdown would most certainly see the inventory take a tumble.

Extra broadly, the non-public fairness business will proceed to face challenges with the lingering danger of inflation. Excessive rates of interest are additionally a priority. That’s on high of the belief buying and selling at a whopping 48.5% premium to its NAV.

A high performer

However regardless of these challenges, the inventory has been delivering over the previous few years, highlighting its resilience. It’s the third-best-performing inventory on the FTSE 100 within the final 5 years and the fourth-best within the final 12 months.

Its strong efficiency could also be partly attributable to its wholesome stability sheet. It has liquidity simply shy of £1.3bn. That features £336m in money in addition to £900m in an undrawn revolving credit score facility. It additionally has a modest gearing of simply 4%.

One to think about

Regardless of its lofty valuation, I believe it may very well be a inventory for buyers to take a better take a look at.

If 3i Group wasn’t on my radar, it actually is now. I’ll be doing a little additional digging into the corporate within the weeks to return.

That’s particularly after Citigroup reaffirmed its Purchase score for the inventory on 15 July. The financial institution has a 3,800p goal price.