Action (3i Group) Capital Markets Day
Our Take
Yesterday, Action organized its 2026 capital markets seminar. Because the company represents 74% of the net asset value (NAV) of 3i Group, we paid attention closely. 3i Group is, by far, the largest shareholder of Action with 65.2% of economic rights.
The Bigger Picture
Let’s start with the bigger picture. Action has been a true compounding machine for 3i Group. The company realized a net sales CAGR of 24%, while their operating profit (reported as operating EBITDA) grew by 27% annually.
The results for 2025 compared to 2024 were somewhat disappointing, with 16% and 14% growth, respectively.
Action tends to compare their results to peers, such as Costco and Dollar General. While these are strong companies, they operate mostly in the U.S.A. and are more mature than Action. Therefore, it doesn’t surprise us that Action performs better in terms of LFL sales, net sales growth, and EBITDA growth.
Business Performance Update
In 2025, Action opened 384 stores. Besides, the company opened its first stores in two highly differentiated markets: Switzerland & Romania. Both markets exceeded expectations, according to management. The fact that Action decided to open a distribution center in Romania immediately underscores this.
The first store opening in Switzerland led to Action’s highest first-day sales ever. It’s great to see that the ‘Action Playbook’ works well across all markets in Europe. Stores are profitable immediately, with payback periods of less than a year on average. No matter the disposable income of a country, people like cheap prices for reasonable goods everywhere. That is precisely what Action’s strength is about: entering markets where they can be the absolute cheapest retailer, while giving scale advantages back to customers.
Here you can see the difference in price versus competitors (online retailers and promotions not taken into account).
We actually made a price comparison in the Netherlands ourselves. It turns out that Action is, indeed, by far the cheapest retailer. If you want to read it, we published our deep dive, normally only available for premium members, for free!
To continue about that pricing strategy, Action has a dedicated buying team that monitors prices intensively. If the gap becomes too narrow, the buying team takes action.
In 2026, Action expects to open 400 stores in Europe (while two new countries will be introduced: Croatia and Slovenia). Besides, Action identified room to grow its store count by 4,600 stores across the markets it’s already active in.
And that excludes this major announcement…
Action will enter the U.S.A.
Yes, you heard that right. The ever-successful retailer from Europe is going to compete directly with the likes of Costco, Dollar General, and Walmart. Based on intense market and pricing research, Action concluded that they can be the cheapest offerer in its product categories. Georgia, South Carolina, and North Carolina will be the states where Action will enter first, as soon as at the end of 2027.
Given the intense reaction of Mr. Market, which destroyed 3i’s stock price by almost 20% after this seminar, investors seem to worry. While we agree that this expansion is risky, it might not be as risky as people think. Action is careful when entering new markets, typically starting with around ten stores. If their expectations about the market turn out to be wrong, the company can easily pull-back.
Of course, there are initial investments to make. Think about hiring experienced employees that know the U.S. market, setting up new supply chains, opening a new office, buying land and setting up locations, etc. Action expects to spend €400 million with 100 stores by 2030.
Management has a great track record of entering new markets and the potential upside is enormous. To be honest, we believe the worries of investors are unfounded, although many of Action’s peers failed to enter the U.S. market successfully.
About France
We can dedicate thousands of words about reasons for lagging results in France, Action’s biggest market. In 2025, LFL growth in France was just 1.2%, compared to 7.2% in its other markets. It looks even worse when looking at the first twelve weeks of 2026, with only 0.9% LFL growth compared to 5.8% for the other countries.
However, we’re not dedicating many words to it in this update. Why? We believe the challenges are not structural, but have everything to do with the macroeconomic environment France is in now. At the end, people choose the best product for the cheapest price. Action is taking measures to reduce prices in France even further, which pressures profit margins, but strengthens its competitive advantage. This is what we love to see: long-term strength over short-term gains.
Valuation
Let’s value Action and see how much value it actually represents for 3i Group. Action’s operating EBITDA in 2025 was €2.367 billion. Because 3i Group has a 65.2% stake in Action, €1.543 billion belongs to 3i Group.
Action’s operating result will likely grow in line with revenue growth. As we’ve seen, the CAGRs are impressive over the past decades. Action will not maintain this pace, but will likely grow by at least 13% a year. Only their new store openings (400 in 2026) could contribute 10% net sales growth. After 5 years, this gives you an operating EBITDA of €2.843 billion.
Peers in the U.S. are given a higher multiple by the market, so we don’t want to match Action’s valuation with those companies. We think 18 times operating EBITDA is highly conservative for a company with a fantastic business model that can grow steadily for at least another ten years.
So, at the end of 2030, 3i’s stake in Action is worth €51.171 billion. In the meantime, 3i Group’s current market capitalization stands at €28.220 billion. This gives you a return of 82.1% in five years, translating to a 12.7% CAGR.
But that’s not it. 3i Group doesn’t only own Action, but dozens of other investments. They have a combined worth of €9 billion. If we add that to the €51 billion, 3i’s worth at the end of 2030 will be €60,171 billion. That leaves you a CAGR of 16.5%.
We believe this valuation is highly conservative. There are some factors that might push 3i’s worth even further.
3i Group is consistently buying more shares of Action, which likely results in an increase in 3i’s worth attributable to Action.
The worth of the group's other investments is likely to grow to more than the €9 billion in net asset value.
Final Remarks
If you want to engage more with 3i Group and Action, definitely consider joining The Dutch Investors. We have a community where we discuss companies like 3i Group, where we share transactions, and where two deep dives are provided every month.
Hope to see you soon!
Regards,
The Dutch Investors