Okay. Good morning, everyone, and welcome to 3i's interim results presentation. Well, it's been an eventful few months in the U.K. since we last met in May. I'm pleased to say the 3i team has kept its focus on building long-term portfolio value for the shareholders and our Limited Partners. We've put together another good half, and as you can see from this morning's results, we're making consistent progress against both our strategic and financial objectives. Let's look at some detail. It's been another first half with a total return of 10% and a strong performance in both portfolios. It's been a quieter period for realizations, but we do have a number of projects in train that will see the pace of the activity step up in the second half.
We've remained active but disciplined investors across the group, and we've seen a good level of bolt-on activity across both portfolios. We now have to deal with a dangerous combination of a slowing macro environment together with an enormous supply of dry powder. More than ever, we've got to maintain our discipline as well as carefully assessing how our investment targets will respond to a deteriorating macro. This morning, we've confirmed the proposed sale of Eurofund V's interest in Action to new 3i-managed vehicles. They are backed by existing and new institutional investors and by 3i itself. We're pleased that this transaction also preserves the 3i-led governance model, which has been so important to value growth since we acquired the business in 2011. The transaction is priced at an enterprise value of €10.25 billion.
The EUR 10.25 billion represents run rate and last 12 months EBITDA multiples of 18.2 times and 20.3 times. Action will pay a EUR 745 million distribution to all shareholders just prior to the Eurofund V sale as a result of the sixth refinancing of the company. 3i's economic holding in Action will increase to just under 50% as a result of reinvesting our distribution proceeds. By any measure, Action has been an extraordinary investment, and the opportunity ahead for Action is very exciting. At 3i, we continue to see significant growth potential in this exceptional business. Action is delivering very strong current trading with like for likes of 5.6% year to date at the end of P10 in October. The group is on track to open 230 stores as it did last year and has already opened three new distribution centers this year, as you can see here.
As they say, what doesn't kill you makes you stronger, and that is absolutely the case with Action. Last year, we suffered from acute supply chain issues in France, which dramatically reduced availability of stock in some of our busiest stores. We now have significant excess capacity across the supply chain, as well as much improved stock availability. Over the last few months, management have been presenting the five-year plan for the group to both new and existing investors. This is a summary profile of the plan. It envisages significant future growth, even if in relative terms that growth is much less dramatic than what Action has delivered over the last eight years. I very much doubt there are many retailers across the globe that could credibly put together a plan like this.
It is certainly reassuring to know that in the first year of the plan, 2019, we're already comfortably ahead of budget for sales, like for likes, and EBITDA growth. That increase will lead to a more than doubling of turnover and to a significant increase in EBITDA as material scale benefits come through across key markets. Over the course of the plan, we expect group EBITDA margin will improve to a little over 12%. Action has never been better positioned, and its growing scale advantages are beginning to really to set it apart from the competition. Turning to the rest of the private equity portfolio, we have a good performance overall. There was some softness in industrials, particularly in automotive and particularly in Germany.
I'm pleased to say that our bolt-on activity has continued at a pace. 91% of our top 20 investments ranked by value grew their earnings. Six of those 20 companies delivered very strong growth, and once again, Schlemmer has been struggling with sales and margin pressure, particularly in its German plants. We completed the purchase of Evernex for GBP 214 million. Evernex is a strong business with a background of good growth based on its international presence, where they provide third-party maintenance of critical IT infrastructure. This is another business where bolt-on M&A will be an important part of its growth strategy. We continue to focus on investing into sustainable growth trends. We don't always get it right, and it is often difficult to spot where the next piece of disruption will come from.
In the main, we feel the portfolio is defensive, as well as being well-positioned for continued good growth. As I said earlier, we continue to pay particular attention to portfolio M&A. We've been busy in the first half, and we have a good pipeline of further bolt-ons to come in the second half. The portfolio continues to be weighted towards our better assets, with only 6% of our portfolio in our two problem buckets. We're also fortunate to have a high-performing infrastructure team. Once again, they delivered very solid performance in the first half. Share price performance from 3iN and cash income were both strong. The team have made some interesting investments with Joulz in Holland and Ionisos in France, as well as two rail companies in the U.S. 3iN continues to be the quality share in the listed infrastructure space.
Just last month, Phil White and his team organized a very effective placing to raise GBP 220 million of new share capital at a substantial premium to NAV. Scandlines continues to generate good levels of cash, as well as delivering a very decent return of 8% in the first half. The team managed to achieve a refinancing earlier than we expected, with GBP 70 million of cash proceeds to 3i in August. I first showed you this slide last year, and not much has changed. Except for the fact that these defensive companies now account for 75% of our portfolio, rather than 69%. We love our value stocks, and they are growing strongly. 3iN and Scandlines keep delivering the cash, and we have some very interesting platform assets in Cirtec and Q, which are set to achieve very good growth over the coming years.
I'll close my section by saying this has been another strong half for 3i, with some judicious investment, execution of the complex Eurofund V transaction, and decent portfolio performance from both divisions. I know everyone has been very excited about the Eurofund V realization transaction. I also know that there were some punchy price expectations for this transaction. We ran a very thorough process against the backdrop of declining growth and accelerating structural decline in many parts of the High Street. Look around. With the exception of Primark and some of the discount food concepts, a lot of the U.K.'s household retail names are facing an existential crisis due to disruption, either from the value sector or from digital. Action, meanwhile, has traded outstandingly well and has stood up brilliantly to multiple investor reviews over the last four months.
Those folks who have put the work in have a new respect for the power of the format and its significant white space potential across Europe. Management have done a great job in presenting the business to investors, but they have done an even better job in excelling in operational performance this year in what is clearly a very challenging environment for many businesses across Europe. To achieve a 20x LTM EBITDA exit multiple is a huge credit to the business. By the way, the share price we achieved for this minority sale, after taking account of the last two cash distributions from the company is 2.4x the cash offer for the whole company we rejected from a third party in the summer of 2016. Our prime focus at 3i is not price per se.
It really is on value, and in particular, on long-term compounding value, as that 2016 transaction benchmark suggests. Let me give you my view on Action. Discount general merchandise is one of the most attractive categories in retail. Action can select the best-selling products from across 14 different categories. It simply doesn't need to sell products that are not best sellers or that don't fit with its deep discount approach to pricing. Discount is here to stay. Consumers love it, and pricing in today's world is very transparent. Action is the best format in this discount sector in Europe. Our sales per square meter are two to three times greater than any of our competitors. Our mix of low price, surprise, and convenience drives very significant footfall. Whichever country we have opened in, the Action store works.
This is the holy grail of retail, very few companies have a format with this type of universal appeal. We have industrialized the store opening process, so the rollout potential is enormous. History tells us this format works in good times and in bad. New Action stores pay back invested capital on average in one year. In our language, that's 100% IRR return on each store we open. I don't know another retailer that's got those economics. That accelerated return results in significant excess cash flow each year, over and above the investment requirements to grow the business. Over time, as we fill out the store network in Action's larger new countries, like France, Germany, and Poland, we can expect to see country profitability in those countries move up from single figure or loss-making EBITDA percentages to the higher teens, like our Benelux markets.
That will drive up group EBITDA very materially. I'll close my section by urging you to focus on the compounding value growth potential of Action, the same way our rolling LPs have done. We understand why some parties had to step out of Eurofund V at the end of its life and after a very good run, but it was never 3i's intention to sell any of our stake at this point. When the transaction completes in the new year, 3i will own just under 50% of Action. That's net of any carry drag, and I'm very confident that the enhanced position is going to become very valuable to 3i and its shareholders. Okay, let's not forget that we're here to talk about 3i's half year results, so I'll hand over to Judith to take you through the details. Thank you.
Thanks, Simon, good morning, everyone. We have delivered another six months of good performance from our portfolio. As Simon has just explained, we have been very busy managing the Action liquidity transaction on behalf of the LP investors in Eurofund V. I'll take you through how that transaction is expected to impact on 3i's investment in Action. First, I will go through the rest of our financials. We closed the first half with an NAV per share of GBP 8.73. That's after paying out the dividend of GBP 0.20 in July. As you can see here, that increase in NAV was principally due to GBP 0.51 of value growth from our portfolio. As at the 30th of September, we had a net translation benefit of GBP 0.21 from FX. In the six months, our private equity business delivered an 11% gross investment return.
As I talked about in May, we expected this to be a quieter half for realizations, but we are still in line with my assumption of GBP 350 million to GBP 500 million proceeds for the year. The cash investment of GBP 221 million includes Magnitude, the data management solutions business, which we completed in May. As a result, our private equity portfolio value increased from GBP 6 billion to GBP 6.9 billion. The GBP 429 million of value growth is underpinned by earnings growth from our portfolio companies. As you can see here, 17 of the top 20 investments have earnings growth. Hans Anders and Royal Sanders, for example, were particularly strong, as was our longstanding investment in Tata. Simon's talked about the sharp slowdown that we've seen in the automotive sector, that has certainly not helped the performance of Schlemmer.
As a result, we have had to take down its value through both its earnings and multiple. GBP 381 million of the GBP 471 million of performance comes from Action and its growth in like for likes, store openings, and a much improved supply chain. Now, what about the Eurofund V liquidity transaction and how it impacts 3i's investment in Action? We had thought that we might use the Scandlines transaction as a template, but in the event, this Eurofund V liquidity event has been much more complicated. We have carried out a very thorough process, which importantly, from a 3i perspective, has both validated our valuation approach and preserved our governance model. The implied transaction value, which uses a multiple of 18.2 times, is ahead of Action's value at 30th September, based on our longstanding methodology, which uses a multiple of 18 times.
This is what I call our clean September value. Now when you've adjusted for changes to Action's capital structure and related costs, the transaction value is still ahead of that clean value, but is not materially different. We have not tried to reflect the transaction in our value at the 30th of September. Our current intention is to maintain our run rate valuation methodology going forward. As well as valuation, there are a number of other transaction features which will have an effect on 3i. Action will complete a refinancing when the transaction completes in January. The proceeds of that refinancing will be distributed to all of the current investors in Action. We intend to reinvest our share of those proceeds back into Action. The sale of Eurofund V's interest in Action also triggers a number of carry transactions. These are complicated.
To keep it simple, and using our 30th of September numbers, GBP 681 million of our total GBP 684 million carry receivable is due from Eurofund V. We expect to receive that in January. Of the GBP 998 million total private equity carry payable, GBP 481 million relates to the carry participant share of the Eurofund V carry receivable, the GBP 681 million that Eurofund V pays to 3i. Again, assuming that the transaction completes in January, I expect the GBP 481 million will be paid out to carry participants in May. We had already set aside GBP 109 million of the GBP 481 million in a cash escrow. The net cash payment made by 3i should be the difference, GBP 372 million. We are paying out the carry participant share of the Eurofund V carry received. We will continue to accrue the carry payable on 3i's pre-transaction investment in Action.
This was a transaction feature that was important to the rolling LPs and new investors. We're planning to reinvest the excess of the carry that we receive, GBP 681 million, over the net cash outflow of the carry paid, GBP 372 million. We think of this new investment as a natural hedge against the ongoing carry liability. We will have to show the investment and liability gross in our balance sheet. The exact amounts and % won't be finalized until January. That said, you should assume that we will have a net interest of just under 50% in Action when the transaction completes. That's net after any carry charge and when you take account of that hedging. One final point on the presentation of Action post-transaction. We have stayed invested and will increase our stake because we see it as a long-term hold, which will continue to produce compounding growth.
As a long-term hold, it fits in our corporate asset segment. The governance is unchanged, and we are not planning to make any changes to the way that we manage the asset. Regardless of the accounting presentation, we will continue to separate out its performance so you can easily see the value that Action generates. Turning to our infrastructure business. Those of you at 3iN's results last week will have seen what a good first half that they have had. We got GBP 53 million of value growth from the increase in 3iN's share price. That, together with GBP 12 million of 3iN dividend income, accounts for most of the GBP 88 million gross investment return. We were busy with our reinvestment in Scandlines. An earlier-than-expected refinancing meant that in addition to its planned dividends of GBP 6 million, we received another GBP 91 million of cash from the investment.
We took GBP 70 million of the refinancing proceeds as capital and the remainder as income. Since reinvesting 15 months ago, we have already received over 20% of our reinvestment back. Scandlines is an important contributor to our cash operating profit, along with our infrastructure business. We generated a small operating cash loss in the first half. This was impacted by the timing of variable pay, and we do expect to have generated a profit by the end of the year. We closed the period with net cash of GBP 50 million, reflecting the balance of investments and realizations. We've talked about being comfortable operating in a corridor of net cash to net debt of GBP 500 million, which, by the way, is gearing of about 5%. With liquidity of just under GBP 1 billion, we remain well-funded for new investments. As Simon said, we remain cautious about the environment.
This balance sheet strategy is a critical factor in our dividend policy. In keeping with our policy, we have today confirmed that we will pay a first dividend for FY 2020 of GBP 0.175. That's 50% of last year's total. We have had a very busy first half. It has been a good half for both our private equity and infrastructure businesses, and we head into the second half with decent momentum, but also with a careful eye on the macro environment. Thank you. We're now happy to take questions.
Any questions? Please.
Thank you. Liz Miliatis from Bank of America. If I can ask two questions on Action. Firstly, I'm a little surprised by the increase of your stake from about 45% to 50%, to be honest. Is that perhaps a reflection of the price that it came in at, and therefore you think it's a good deal, and therefore why not increase your stake? Is it perhaps a reflection of the appetite of new investors into the asset? I'd just be interested to get color as to why the increase in the stake. Secondly, is there any announcement perhaps on new countries that you're potentially going into next year or the year after? Thank you.
On the question of increase in the stake, it was always our intention when we set off on this to either go a route which would involve an entire restructuring of the company, in which case the refinancing would have been used to replace part of the share capital of the company, which would have had the effect, because we weren't selling, of enhancing our stake, or if we went this fund replacement route to use our distribution in the same way. It hasn't really changed for us. The only circumstance under which we would not have done this would have been if we'd have had a really punchy price. For us, this price is not punchy. We're very comfortable with this price. We see significant investment return from this level, so we're very happy to continue with the objective of recycling this distribution into the company.
That's really what drove it. I think the second thing that really dawned on us going through the process is that our control and stewardship of this investment is vital to it. We didn't want any compromise to that position. This reinforces that position. They're the two things that really weighed very heavily on our approach to this transaction. In terms of Sorry, what was the second-
The new countries.
The new countries. I think they're going to make a presentation in March as usual, and I don't want to steal Sander's thunder, so he will tell you about that. There are going to be two new countries coming in fairly soon, and it'll be the first time we move into two new countries at the same time. Chris?
Chris Brown from JP Morgan. Are you able to sort of give any hints or clues about the new investors perhaps that came in, and whether they were significant overall, or whether it's mainly existing investors rolling over and buying stock off the exiting investors?
There's a good chunk of both. The new ones coming in, I would say, are the classic blue-chip, secondary-type global institutions. They don't want their names publicized, and this is a private fund, but they are names you would recognize from being very prominent in secondaries activity.
Julia, you mentioned that there was not a material uplift in value. Are you able to be a bit more specific on that in terms of a pro forma number, what your investment looked like to look like? Or is that difficult because you don't quite know where your stake's going to end up?
Yeah. I suppose in headline terms, we had an 8.2x multiple versus our 18x multiple. You start to sort of diverge straight away because we've then got a different capital structure under the transaction, which includes the refinancing. There are a number of costs that come through as well because of the various transactions that happened. I'm not going to give you the absolute number, but you can take it that it wasn't a material difference. The transaction is a little ahead of our September value, but not so much so that we thought it was worth putting it into the NAV.
That's fine.
I guess a point to add on that is the transaction was hinged off the P9 result. That was important for the banks on the refinancing. That was important in terms of due diligence for the new parties coming in. The focus of the transaction was really the P9 number. Any other questions? Wow, we got away. No.
Just on the general investment environment.
We need to have the microphone so it goes on the webcast.
Say your name, Bruce.
Thanks. It's Bruce Hamilton from Morgan Stanley. Just on the general investment environment, obviously, you've noted caution given the level of dry powder, macro conditions, and so forth. Can you give a little color on segments or sectors or geographies where you do think there's still value? Where, on the other hand, you'd be particularly careful in terms of any new deployment or where perhaps you're worried about existing investments above and beyond Germany and autos?
I think I'll just maybe focus on current WIP. I think we're still looking hard in the services area. We see good resilience in that area in a number of companies. Those sorts of things make up our WIP. We're also looking in the healthcare sector, and we're going a bit deeper into some of those things that we're already doing there. We would see both of those offering up new investment opportunity as well as bolt-on opportunity rolling forward. Industrials is quite challenging at the moment, so you have to be very careful in that space, I would suggest. Again, consumer, you have to pick your spot. I've talked about a good spot today, but there's plenty of dodgy spots as well.