Final 12 months I loaded up on a high UK inventory with an excellent monitor file of smashing the FTSE 100, and it’s been my greatest buy of the 12 months. That claims so much, as a result of I purchased virtually 30 shares to fill up a self-invested private pension (SIPP) after transferring some legacy firm schemes.

The corporate in query is non-public fairness and infrastructure specialist 3i Group (LSE: III). It sounds dangerous and I suppose it’s, however it has a stable monitor file since being fashioned in 1945 with £15m of capital. Right this moment, it manages a portfolio of £19.6bn.

3i is a world funding supervisor giving odd individuals entry to quoted and unquoted fairness and debt investments in Europe, Asia and the Americas. Latest years have been unstable for personal fairness, as the worldwide economic system slows whereas rates of interest drive up the price of capital, however you wouldn’t know by trying on the crimson sizzling 3i Group share price.

Three cheers for this one

It’s the fourth-best performer on all the FTSE 100 over 5 years, up 183.03%. Over 12 months, it’s shot up 47.6%. Dividends are on high. The trailing yield is 3.3%.

3i makes its cash by shopping for into mid-market firms valued with worldwide development potential. It raises the funds through its personal stability sheet and exterior capital, and goals to carry for between three and 5 years. The plan is to generate development, exit at a revenue and reinvest the cash. And it’s achieved all of it jolly effectively.

But there are dangers too. Not each guess will play repay, inevitably. And even once they do, 3i nonetheless has to discover a purchaser, which may be difficult in a downturn. The belief additionally makes use of gearing, which might enhance returns however ramps up the chance.

There are extra particular risks. A lot of its current market-busting efficiency has been pushed by Dutch non-food discounter Motion, which is booming with 2,300 shops throughout 11 international locations in Europe. Motion makes up virtually a 3rd of the overall portfolio, which makes it somewhat high heavy for my liking.

FTSE 100 development inventory

3i generated a “strong” whole return of £3.839bn within the 12 months to 31 March 2024, a return of 23% on shareholders’ funds. That was down on the 2023 development price although, when shareholder returns jumped 36% to £4.585bn.

Whereas Motion roared, a lot of portfolio firms struggled, notably within the discretionary shopper sector. Others are “working through adverse phases of their market cycles”. Its US infrastructure portfolio did effectively however I’m questioning if that can proceed because the US economic system slows.

Over the 12 months, 3i acquired greater than £1.4bn of money from its portfolio. It ended the 12 months with liquidity of £1.296bn, web debt of £806m and modest gearing of 4%.

It upped the overall 2024 dividend 15% from 53p to 61p per share. I’ll get my share on 26 July. CEO Simon Borrows warned that “challenging conditions” could sluggish short-term returns and the share price has calmed somewhat recently. I’m now nervous.

There’s yet one more concern. 3i is an funding belief and at present trades at a whopping 42.91% premium to underlying web asset worth. I’m taking a big gamble however up to now it’s paid off and I’d anticipate that to proceed. No ensures although.