Stock Spotlight: 3i

FILMED IN DECEMBER 2025

Sunil Thakor discusses private-equity firm 3i with its highly profitable investment in Action, a retailer that has grown from around 250 stores to more than 3,000 across 13 countries.

Transcript

I'm Sunil Thakor from Sands Capital Management and this is why I'm choosing 3i for the Alliance Witan portfolio.

3i itself is actually a holding company. It's essentially a publicly traded private equity firm — a business that invests in other businesses. But the most important asset is a retailer, a discount retailer based in the Netherlands called Action, and that is what is central to the investment case in 3i in our view.

They operate about 3,000 stores across continental Europe and are adding about 400 stores per year, selling a mixture of fast-moving consumer goods — your soaps and shampoos — as well as other home goods, candles, housewares and the like. Discount retail is a business model that has proven to be extremely attractive in multiple geographies across the world and in multiple different store formats.

The first reason it's so successful is that it's great value for money. You're offering quality products at a low price. In Action's case, they have a fairly narrow product assortment: only 6,000 items. That compares to your typical hypermarket that might have north of 25,000 or 30,000 items. About a third of those items are fast-moving consumer goods — that's your soaps, your shampoos, your paper products — and two thirds of those items are more discretionary home goods, luggage, cutlery, seasonal items. The average item — two thirds of the items in the store — cost €2 or less. So it's a tremendous value proposition combined with sort of a treasure hunt type of a shopping experience, and that leads to an extremely attractive value proposition for the customer and unit economics for the retailer.

First and foremost, we believe that management is extremely focused on efficient execution. The company does one thing. They have a standardised store format and in our view they do that one thing incredibly well: that's open and operate stores at a large scale.

Secondly, the narrow product assortment allows Action to be a very large buyer in each of the products in its store. There are several items in any Action store where Action is the single largest importer of that item into Europe. That brings tremendous efficiencies.

Additionally, the company has been quite aggressive in shifting its assortment to private label. Today, the company has 73 private label brands. We expect that number to continue to grow, both in terms of the number of brands as well as the percentage of revenue generated from those brands — and private label tends to be higher margin.

So when we combine management's focus and discipline with our view around the company's scale advantages, that gives us a lot of confidence that Action stands out ahead of other discount retailers.