3i Group (III ) raced to the top of the FTSE 100 after the private equity giant defied the bears with a better-than-expected 11.7% return in its third quarter.

Shares in the £14.2bn investment trust jumped 79.5p, or 5.5%, to £15.39 after revealing its big investment in Action, the Dutch discount retailer, was continuing to draw in cash-strapped customers with sales and profits up 30% and 36% on 2021.

That and resilient performances from most of 3i’s other unquoted investments and the sale of German jeweller Christ enabled it to post a 26.8% investment return for the nine months to 31 December. Analysts were impressed that the strong performance was derived from the underlying performance of the businesses not by lifting the 18.5x multiple on their earnings, although the stake in online lighting specialist Luqom was written down again. 

‘This is another strong result from 3i, cementing its reputation as a private equity manager that performs well even in difficult environments,’ said Liberum analyst Shonil Chande.  

Net asset value ended the year at £16.49 per share, up from £14.77 at 30 September. JPMorgan Cazenove’s Christopher Brown estimated net asset value (NAV) had since dipped to £16.39. ‘This implies a discount of 10.9% at last night’s close of 1460p per share which in our view is a very attractive level,’ he said of a closed-end fund that has nearly doubled investors’ money in the past five years.

The FTSE 100 was buoyed by hopes for a strong showing on Wall Street today after strong Tesla results after the bell, which cheered Elon Musk fan Scottish Mortgage (SMT ), which added 1.6% to 755p.

The main index gained 0.31%, or 24 points, at 7,768 as US futures pointed to a higher opening after Tesla beat earnings expectations in the fourth quarter thanks to a record delivery of electric vehicles. It posted $24.3bn of revenue in the final three months of 2022, marking 33% year-on-year growth, and ahead of analyst expectations.

Victoria Scholar, head of investment at Interactive Investor, said the focus would remain on the US with investors looking for ‘clues into the strength of the US economy’ from the latest quarterly GDP figures.

‘The dollar continues to come under pressure, hitting the lowest level since May 2022 while the euro reaches the highest since April 2022,’ she said.

‘A weakening greenback has boosted demand for gold which has hit a nine-month high.’

Guinness to Johnnie Walker drinks group Diageo (DGE) was a dark spot, slipping 3.7%, or 138p, to £35.36, despite sales up 9.4% in the second half of the year, and profit up 9.7%.

Charlie Huggins, head of equities at Wealth Club, said it was a ‘solid performance’ and the group was ‘better placed’ to weather inflationary pressures than most.

‘Overall, Diageo is demonstrating why it is considered a high-quality, long-term compounder,’ he said.

The ‘mid-cap’ FTSE 250 advanced 0.51%, or 101p, at 19,905, led by Intermediate Capital (ICP), which gained 4.9%, or 64p, to trade at £13.61. The alternative asset manager reported assets under management grew 11% in the third quarter.

Octopus Renewables Infrastructure (ORIT ) investment trust added 4.5%, or 4p, to reach 101p, after analysts at Stifel raised their recommendation from ‘neutral’ to ‘positive’. The investors in wind and solar farms last week guided to a 10.5% uplift in its dividend for 2023.

Sugar company Tate & Lyle (TATE) added 4%, or 29p, to change hands at 752p, after it said it expects to beat inflationary pressures, reiterating full-year guidance as top-line momentum continued in its food and beverage division in the three months to the end of December.