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Over the last decade, shares in private equity firm 3i Group (LSE:III) have left the rest of the FTSE 100 in the dust. The stock is up a huge 773%.
That kind of performance over an extended period of time is indicative of an unusually good business. And I think the company remains in a strong position going forward.
What is 3i Group?
The big difference between 3i and other private equity firms is that it doesn’t raise external funds from investors. Since 2015, the company has exclusively invested its own capital.
That might not seem like a big deal, but I think it’s hard to overstate how important it is. In my view, it’s the key reason the stock has performed so well over the last 10 years.
The challenge for private equity firms is that capital inevitably shows up when things look good. Investors want to get in on the action, but this is when bargains are hardest…
