3i Group (LSE: III) has been the worst-performing stock on the FTSE 100 in 2026 so far, with its share price under sustained pressure throughout the year.
The private equity firm’s struggles stem from a very specific source, with its portfolio dominated by a single investment in European discount retailer Action.
Action has been experiencing a notable slowdown in growth, with weakness concentrated in France, which remains the retailer’s largest market.
3i has attributed the sluggish performance to a difficult trading environment in France, though investors have grown increasingly concerned that the slowdown may be structural rather than cyclical.
That uncertainty has caused 3i shares to fall sharply as the market reassesses what Action is worth, pushing the stock to its lowest price-to-book multiple in a decade.
News from a rival retailer this week, however, may have provided an early signal that conditions in France are beginning to stabilise.
B&M European Value Retail, which also has significant operations in France, reported earnings and noted that sales growth in the market had started to stabilise after a difficult period.
B&M’s stock surged following that report, and analysts believe the same improvement in French retail conditions could benefit Action if the trend continues into the coming months.
3i’s book value is directly tied to its valuation of Action, which the FTSE 100 firm currently values at an EBITDA multiple of 18.5, a figure considered very high for a retailer.
If Action can return to stronger growth in France, the argument follows that 3i’s price-to-book multiple could recover meaningfully from its current decade-low levels.
3i is not scheduled to report its next earnings update until July, leaving investors to weigh whether to act ahead of that announcement based on the signals from B&M’s results.
One structural advantage that 3i holds over many of its private equity peers is that it invests its own capital, meaning it is not beholden to fixed timelines when it comes to buying and selling assets.
That flexibility has helped insulate the firm from broader pressures facing the private equity sector, even as Action’s challenges have weighed heavily on sentiment and share price performance.
For longer-term investors, a dividend yield close to 4% provides some support while waiting for any recovery in Action’s growth trajectory to materialise in 3i’s financial results.
Stephen Wright, who owns shares in 3i Group, has stated he is looking to add to his investment before the firm reports in July, describing the current valuation as an unusual opportunity given the company’s long-term strengths.