3i, Britain’s oldest private equity firm, bets Action, its European discount chain, can conquer the US market despite regional slowdowns. The retailer plans to spend €400mn opening 100 stores in the southeastern US by 2030, starting with one by late 2024. Simon Borrows, 3i’s chairman, calls it a “significant growth opportunity,” but warns US expansion risks mirroring past European missteps.

Action’s European success—74% of 3i’s portfolio—has driven its €49bn valuation, surpassing Tesco and Dollar General. Yet 3i’s shares plummeted 17% twice in 2023: once over France’s slumping sales and again on US expansion news. Analysts note US stores may take longer to profit than European ones, citing Walmart and Costco’s dominance. Action’s US subsidiary will source locally, acknowledging market differences.

Action’s European model—90% of products under €5—attracts 21mn weekly shoppers across 14 countries. With 4,650 planned European sites, the firm bets on sustained demand despite flat 2024 margins. Critics, however, question if US losses could erode 3i’s €40bn implied valuation of Action, down from its own €49bn estimate.

3i defends the move, citing Action’s cash-generative nature and growth speed. Yet Dragoneye research warns a 30-50% share price drop if Action’s European-style multiples apply. With the US market’s scale and competition, success hinges on balancing ambition with caution—a gamble that could redefine 3i’s legacy.