3i Group (III) can trace its roots back to the Industrial and Commercial Finance Corporation (ICFC), which was formed in 1945 by a consortium of major banks, led by the Bank of England. Its purpose was to buy into small and medium-sized UK businesses to bridge funding gaps as they grew, but over the years this purpose became diluted: the group expanded abroad and eventually changed its name to Investors In Industry. In 1994, with the name reduced to its initials, the group floated in London at 272p a share. The principal external adviser was Simon Borrows.
Eighteen years later, he came back as 3i’s chief executive to turn the group around. The previous management had made a series of glamorous acquisitions at inflated prices, with a correspondingly poor financial performance. By June 2012, in the wake of the banking crash, the share price had slumped to 179p. Drastic action was needed. Businesses were closed and staff numbers cut by over a third. A greater focus was restored.
In 2011, 3i had bought a substantial stake in Action, a small Dutch retailer with 250 stores and 7,000 employees. Its private owners needed funding to expand and were attracted by 3i’s “extensive European retail knowledge”. Year by year, Borrows and his team have gradually beefed Action up. Today, it is the fastest growing non-food discount retailer in Europe, with 2,566 stores across 12 EU countries. It employs 69,000 people, serving more than 15mn customers a week, on average, and could be regarded as Britain’s second-largest retailer after Tesco (TSCO). In March, 3i valued its 54.8 per cent stake at £14bn. That’s larger than Next (NXT), which is worth about £12.5bn, and larger than M&S (MKS), which is worth almost £8bn.