Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Oakley Capital Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
Overview

Oakley Capital are one of a select group of private equity managers who have a listed fund as a cornerstone investor to their limited partner (LP) funds. The listed private equity sector remains a relatively narrow peer group, and so whilst OCI has been a strong performer amongst its listed peers (see Performance), many investors may not appreciate how strongly Oakley’s funds have performed relative to the wider private equity peer group. Recent data from Prequin puts the Oakley Fund III (2016 vintage) in the top 5% of the European Buyout funds of the same vintage on several investment return metrics.

Underpinning NAV growth in recent years has been the strong earnings growth across the portfolio. In the interims, Oakley Capital stated that the average year-on-year EBITDA growth for the portfolio had been 35% to 30 June 2021. This impressive growth trajectory is enabled by the focus on digital businesses, which have been able to transcend many issues that traditional business models have had to contend with (such as rises in inflation or supply chain issues). If the earnings growth continues to come through, the portfolio’s average valuation multiple of 12.3x (EV/EBITDA as at 30/06/2021) appears undemanding. Indeed, further strong NAV growth is not reliant on multiples expanding.

OCI will be reporting the 30/12/2021 NAV in late January, which will enable more meaningful comparisons with the peer group, most of which make quarterly NAV announcements (or more frequent). In 2022 and going forward, OCI will make quarterly announcements, which we view as a good step forward in helping investors understand the NAV trajectory, and over time potentially a narrower discount.

Kepler View

We think Oakley’s focus and expertise in specific sectors, its proven ability to source investments (platform or bolt-on) through its proprietary network of entrepreneurs and its discipline in terms of pricing and valuations means OCI is highly differentiated from peers.

This differentiated approach has paid off for investors, given the strong performance in NAV terms (and share price) over the five years to 30/06/2021 (see Performance). The average holding period for Oakley Capital’s investments has been around four years (Source: Oakley Capital), which compares to the average maturity of the current portfolio being between 3.5 – 4 years. In this context, we would expect that Oakley should be able to take advantage of the current ‘sellers’ market’ in private equity markets.

We believe that evidence from other LPE trusts suggests that OCI will be reporting further progress in NAV growth at the year-end. At the time of the interims, Oakley attributed several key drivers of NAV growth, amongst them IU Group and TechInsights. Both companies represent ‘classic’ Oakley companies, in dominating their niches and using technology to grow. Importantly both companies seem to have been making strong progress since OCI’s interims.

Oakley is in the process of raising Oakley Fund V, and we expect an announcement on how fundraising has gone in Q1 2022. With institutional investors potentially committing capital at NAV (into Oakley Fund IV), we continue to question why the market ascribes a significant Discount to OCI’s shares.

bull bear
NAV growth largely driven by attractive secular growth trends and portfolio-company performance
Concentrated portfolio means that returns can be materially impacted by specific company performance
Oakley Capital has a clear edge in a competitive market
Private companies offer limited liquidity, and returns can be lumpy
Board and manager enacting progressive changes towards ‘best in class’, which should reduce discount over time
Private-equity funds charge relatively high fees
Continue to Portfolio

Fund History

27 Jan 2022 Flash update: Oakley Capital Investments
OCI reports very strong NAV growth, up 21% (or 95p per share) since 30 June…
12 Jan 2022 Bargain hunt
We survey the discount opportunities in the market and update on the performance of our Discounted Opportunities Portfolio…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
14 Dec 2021 Fund Analysis
OCI’s historic NAV potentially belies progress made by its underlying companies...
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
23 Sep 2021 Even better than the real thing
We explain private equity and examine why tweaks to listed private equity trusts give the sector an advantage over the direct route...
15 Sep 2021 Bargains galore
We review our discounted opportunities portfolio, with one constituent rallying more than 30% in just two months…
10 Sep 2021 Results analysis: Oakley Capital Investments
OCI provides more detail on the drivers behind its strong NAV performance and repeatable investment process...
04 Aug 2021 60/40 and other dinosaurs
A simple practical step to take your portfolio from the 1990s into the 2020s...
14 Jul 2021 Grade inflation
We look at how our discounted opportunities portfolio has done in the first half of the year and update on the performance of our long-term rated funds…
29 Jun 2021 Fund Analysis
OCI’s capital markets day provided valuable insight into opportunity...
19 May 2021 The complexity premium
We examine the idea that extra returns can be obtained from buying investments which are perceived to be more complex by most investors...
14 Apr 2021 Wide Boys
We review our portfolio of chonky discounts as one star performer hits its target…
17 Mar 2021 Results analysis: Oakley Capital Investments
The results for the year ending 31/12/2020 reaffirm that OCI offers exposure to resilient growth businesses...
28 Jan 2021 Trading update: Oakley Capital Investments
OCI reports a strong NAV, up an impressive 14% since 30 June 2020…
06 Jan 2021 This time next year Rodney...
We review the performance of the team’s ‘top picks’ for 2020 – including some proper plonkers – and place our bets for the year ahead…
23 Dec 2020 Flash update: Oakley Capital Investments
OCI’s NAV announcement next month will update investors on what is a potentially high growth portfolio...
05 Nov 2020 The haves and have nots
With listed private equity trust discounts widening, are investors mistakenly assuming that underlying portfolios will perform worse than public market indices?...
07 Oct 2020 Flash update: Oakley Capital Investments
Oakley Capital (OCI) trades on a 28% discount despite the majority of its portfolio companies showing resilience to COVID...
08 Sep 2020 Wolf in sheep's clothing?
AVI Global’s growth characteristics shouldn’t be underestimated, yet it trades on a “double discount” of c. 45%...
21 Jul 2020 A game of four quarters
Seven trusts, two quarters. Are our team still happy with their trust picks for 2020?
15 Jul 2020 Fund Analysis
OCI, trading on a historically wide discount, is approaching an important NAV update/capital markets event...
03 Jun 2020 Price is what you pay, value is what you get
The listed private equity sector has seen discounts widen markedly, but does this present an opportunity?
20 May 2020 Fund Analysis
AGT seeks companies with high-quality growth assets trading at a discount to fair value…
07 Apr 2020 Opportunity passed?
Discounts gapped out, but in many cases have rebounded…
25 Mar 2020 Of mice and men
Our ‘best laid plans’ have somewhat ‘gang aglay’ since the KTI team put forward its best ideas for 2020 in early January…
18 Mar 2020 Their darkest hour?
We update our shortlist of discount opportunities...
12 Mar 2020 Results analysis: Oakley Capital Investments
Oakley Capital Investments (OCI) released a strong set of results this morning, delivering shareholder returns of 56% over the year to Dec 31, 2019...
20 Nov 2019 Off to the races: Kepler's fund shortlists post strong performance
We check in on our growth, income and annuity income shortlists launched earlier this year, which have performed strongly in 2019 to date...
14 Nov 2019 Fund Analysis
OCI is a focused private equity trust, trading on a 29% discount…
13 Nov 2019 The parallel worlds of listed private equity
Some private equity trusts are on an average premium of 18%, whilst others trade on discounts of 15%. Are we missing something!?
24 Jul 2019 Fool's gold?
We examine the relationship between how much a fund costs and how it performs, with surprising results...
01 May 2019 Sweet or sour?
Three months in, we check up on the progress of our discount opportunities portfolio...
26 Mar 2019 Fund Analysis
Aiming for long-term capital appreciation through investments in Oakley Capital Private Equity Limited Partnerships...
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