Complete your registration today for a chance to win £50 John Lewis vouchers in our weekly draw Enter now
Fund Profile

Oakley Capital Investments 14 March 2023

Disclaimer

Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
OCI’s focus on high-growth companies has delivered strong NAV returns over five years…
Overview

Oakley Capital Investments (LON:OCI) are one of a select group of private equity managers who have a listed fund (Oakley Capital Investments, or OCI) as a cornerstone investor of their limited partner (LP) funds. OCI has been a strong performer amongst its listed peers (see Performance), and is now the leader of the LPE peer group in NAV terms over the five years to 31/12/2022.

Oakley tends to target companies which are digitally disruptive, are founder-led, get an increasing proportion of their revenues from a subscription or recurring revenue base, and finally, that the team believe are exposed to a clear or enduring megatrend. OCI’s portfolio consists of 26 underlying companies, most of which are invested through Oakley funds, with a roughly even split across the three industry sectors.

Over time, and reflecting new commitments to different Oakley funds which target different deal sizes, the number of companies within OCI’s portfolio has increased. That said, it still has a relatively highly-concentrated exposure to the top ten companies, at 79%, as we illustrate in the Portfolio section.

Underpinning NAV growth in recent years has been the strong earnings’ growth across the portfolio. This impressive growth trajectory is enabled by the focus on digital businesses, which have been able to transcend many issues which traditional business models have had to contend with, such as rises in inflation or supply chain issues. OCI has an adjusted commitment cover of 29%, which is relatively thin compared to the wider LPE peer group. The current discount to NAV is c. 30%.

Kepler View

We think that 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 31/12/2022 (see Performance).

OCI’s commitment cover presents potential risks, but Oakley believe that they have plenty of immediate headroom and that, in practice, distributions have broadly matched capital calls over time, even during 2022.

2022 saw a significant widening of discounts across all sectors, but most especially for the listed private equity sector. Starting in 2022, OCI now publishes its NAV every three months, which we view as another positive step towards narrowing the discount. As we discuss in Performance, OCI has been amongst the best performers compared to its peers over many time periods, so there appears little left for the board or manager to do to achieve a narrower discount. Certainly, the very high KID RIY figures will be hard for some investors to stomach, potentially limiting the appetite of investors. However, assuming performance continues to impress, we think the shares justify a narrower discount in absolute terms, and most certainly in relative terms, when compared to peers, as is the case with HgCapital Trust. Any narrowing of the discount will serve as an accelerant for NAV returns.

Bull

  • NAV growth largely driven by attractive secular growth trends and portfolio company performance
  • Oakley Capital has a clear edge in a competitive market
  • Board and manager have made progressive structural changes towards ‘best in class’, which should reduce discount over time

Bear

  • Concentrated portfolio means that returns can be materially impacted by specific company performance
  • Private companies offer limited liquidity and returns can be lumpy
  • Private equity funds charge relatively high fees
Continue to Portfolio

Fund History

16 Jan 2024 December sees sharp rally in AGT and AJOT
Narrowing discounts and Japanese reforms have driven striking returns…
21 Dec 2023 The best-performing investment trust of 2023 (so far)
3i’s price rise this year is unlikely to be repeated, but what of the rest of the LPE sector?
13 Apr 2023 Far from the madding crowd
Smaller nimble companies, both public and private, may be best placed to navigate the current environment…
14 Mar 2023 Fund Analysis
OCI’s focus on high-growth companies has delivered strong NAV returns over five years…
30 Nov 2022 Cry havoc!
Lessons from a year in which an already troubled world was savaged by the dogs of war...
03 Aug 2022 Diverging fortunes in listed private equity
Growth capital and buyout trusts now trade at similar wide discounts. In our view, this belies very different prospects for underlying earnings and for valuations...
11 Mar 2022 Results analysis: Oakley Capital Investments
OCI’s annual results provide more colour on the exceptionally strong NAV performance in 2021...
02 Mar 2022 Spread 'em!
We explore how much dispersion in returns of stocks drive the differing fortunes of trusts…
02 Feb 2022 Getting in on the act: Private markets
Private markets could be the next big opportunity for investors…
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?
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...
View all

Welcome to Kepler Trust Intelligence

Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.