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MARKET REPORT: 3i Group hammered over consumer spending fears

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Private equity company 3i was considered one of the hardest-hit stocks in a latest sell-off in London amid renewed worries about consumer-facing industries.

3i tumbled 11 per cent, or 146p, to 1,178p as investors cottoned on to the proven fact that a very good chunk of its portfolio is made up of consumer businesses liable to the rising living costs and the specter of recession.

Considered one of its key investments is the Dutch discount retailer Motion, which has around 2,000 stores across mainland Europe. 

3i tumbled 11% as investors cottoned on to the proven fact that a very good chunk of its portfolio is made up of consumer businesses liable to rising living costs and the specter of recession

In a recent meeting, the 3i team was reportedly keen to emphasize ‘the likely resilience of Motion’s trading’, and reassure on the strength of the non-food discounter’s wider portfolio, which can raise the eyebrow of many a bargain- hunting investor.

3i’s other consumer facing investments include Danish furniture store BoConcept, Dutch optical retailer Hans Anders, German online retailer Luqom and US travel rewards platform Arrivia.

Fellow listed private equity group Bridgepoint Group was not down as much, losing 2.2 per cent, or 6p, to 273p, nevertheless it too owns a number of consumer focused firms.

Under the burden of those worries, the FTSE 100 nosedived after three sessions of comparative calm, falling over 200 points in morning trading before a small fightback later to complete down 1.82 per cent, or 135p, at 7302.74.

Gloomy reports from retailers Walmart and Goal across the pond slammed shares exposed to household spending.

Ben & Jerry’s maker Unilever fell 4.8 per cent, or 174.5p, to three,451.5p, Guinness brewer Diageo 5.1 per cent or 191p to three,570p. 

Tesco fell 4.1 per cent, or 11p, to 255.1p and Kingfisher dropped 3.3 per cent, or 8.3p, to 245.2p. Disappointing earnings and worries about economic growth are triggering investors on either side of the Atlantic.

Stock Watch – Redx Pharma

Redx Pharma has gone against type within the biotech sector in with the ability to raise the money it must thrive.

It has brought in a quickfire £30million by issuing latest shares at 59p each, a modest discount to their close on Wednesday.

The corporate has around £56million to bankroll development of cancer and fibrosis drugs. 

The aim is to get these assets to value inflexion points, which often means finding a partner willing to licence them. 

Shares rose 1.7 per cent, or 1p, to 60p.

‘The fear is that Goal’s pain is a precursor for yet more struggles to come back for retailers,’ said Susannah Streeter, senior investment analyst at Hargreaves Lansdown.

Property groups with exposure to retail were also feeling the warmth, with London-focused Great Portland Estates falling 5 per cent, or 34p, to 640p on the day of its results.

Great Portland boss Toby Courtauld said inflation and the continuing macroeconomic and geopolitical uncertainties, in addition to a tightening of planning rules, were ‘choking off the provision’ within the capital – though he suggested this was a positive in driving a ‘flight to quality’. 

Full-year results showed a 6.1 per cent increase in portfolio valuation, entirely from its offices, with retail values flat.

On a grim day for markets, it was hard to choose a winner from London’s upper echelons, with only a handful of stocks trading within the black. Dechra Pharmaceuticals – a supplier to the veterinary sector – up 4.2 per cent, or 136p, to three,400p, and generic drugmaker Hikma Pharmaceuticals up 1.5 per cent, or 25p, at 1,703p, were probably the perfect of the remainder within the mid-caps.

While rival pub groups offered little cheer a day earlier, Young’s was throwing peanuts within the face of consumer spending fears as boss Patrick Dardis hailed a return to profits last yr and the resumption of dividend payments. 

‘Young’s are firmly back in business, with the firepower to deliver further growth,’ he declared. However the shares were pulled down by the broader sector, falling 0.45 per cent, or 6p, to 1326p.

For giant gains, investors needed to look further down the ranks, where legal and skilled firm Knights Group charged 32.4 per cent, or 30.6p higher, to 125p, after confirming profits can be a minimum of consistent with profit warning in March that had seen shares lose around three-quarters of their value.

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