Oakley Capital Investments Share Discussion Threads

[donald pond] 02/2/2024 08:57

Especially when stock markets are at aths.

[dov] 02/2/2024 08:52

Something going on very odd reaction

[donald pond] 02/2/2024 08:48

Yes. Wonder if Dubbens will start buying again?

[1968jon] 02/2/2024 08:43

Well that has been a horrible market since the update on the 24th!

[makinbuks] 24/1/2024 09:24

North Sails comment is very encouraging. Critical to get the debt repaid (to OCI). NS would meet 1968jon's definition of something "to get out of the door"

[1968jon] 24/1/2024 09:17

That was the definition of a steady as she goes update. Absent a huge macro shock, hopefully some of the valuation concern that has been mentioned in the last 18 months as a reason why PE trusts discounts have blown out will dissipate this year and we can get back to the more usual high teens/early twenties discount. Speaking very generally about PE as a sector, they do still need to get a few things out of the door!

[davebowler] 24/1/2024 08:44

EBITDA growth the key driver of returnsLiberum Analyst: Shonil ChandeMkt Cap £861m | Share price 482p | Prem/(disc) -29.5% | Div yield 0.9%EventOakley Capital Investments' NAV per share of 684p, as at 31 December 2023, represented a 1% NAV total return in Q4 and 4% in the calendar year. Of the realised and unrealised portfolio uplift in the year, 65% of the increase was driven by EBITDA growth, and 35% as a result of multiple expansion.Returns were driven by:IU Group –£240m realisation at a 85% IRR. The company increased enrolment by 33%, to 125k students, in 2023North Sails –revenue and profit generation was above targetIdealista –strong performance in its core Southern Europe region?OCI made look-through investments of £175m in the year, including into the following new platforms: Thomas's London Day Schools, Liberty Dental Group, and WebCentral. Additionally, £66m was re-invested into IU Group, £35m of follow-on investments were made, and £24m into venture investments via  Oakley Touring Venture Fund and PROfounders III portfolio companies.At the year-end, OCI had net cash of £207m and an undrawn RCF sized at £175m. Total outstanding commitments, as at 31 December 2023 and to be deployed into the Oakley funds over the next five years, amounted to £1,017m.Liberum viewWhile this is still a challenging market for realisations, the outlook for exits is tentatively improving. During the holding period, the valuation multiple for Oakley's portfolio companies tends to remain relatively close to the acquisition multiple. The underlying portfolio is growing well, benefitting from a focus on digital disruptors exposed to megatrends. The key driver of NAV growth will continue to be EBITDA growth, which has been the main driver of a 21% NAV TR CAGR over the past five years.OCI has a proven track record in delivering value by targeting sectors such as education, where PE representation can be fairly low. Several other portfolio companies are well-positioned to benefit from digital megatrends. These include Cegid, which operates in business software and cloud-based management solutions. It is well-placed to benefit from the data supercycle. Ultimately, the quality and durability of the portfolio holdings drive returns. We are BUYers with a 653p TP on OCI's shares.

[donald pond] 24/1/2024 07:58

Average update but encouraging words about North SailsOn TMO I agree the concept and brand are very strong. There could be upside in both these big "legacy" holdings

[makinbuks] 23/1/2024 10:41

Encouraging, thanks

[bisiboy] 21/1/2024 18:49

Visited time out in Cape Town last Sunday absolutely brilliant very busy if others are the same think this will do very well

[1968jon] 16/1/2024 11:55

Well I agree with the sector diversification bit......

[davebowler] 16/1/2024 11:38

Liberum-
Analyst: Shonil Chande

Mkt Cap £871m | Share price 490.5p | Prem/(disc) -27.8% | Div yield 0.9%

Event

Oakley Capital Investments will make a c.£90m indirect investment in Steer Automotive Group (Steer), a UK B2B automotive services platform, as part of Oakley Capital Fund V’s agreed acquisition of Steer.

Steer was founded in 2018 and has grown to a strong position in the UK vehicle repair sector, reportedly repairing c.115k passenger, luxury, and commercial vehicles annually. It services models from manufacturers including Aston Martin, Jaguar Land Rover, Lamborghini, Porsche, and Tesla. Steer represents c.5% of the UK repair market

As at 30 September 2023, OCI had net cash of £222m and an undrawn RCF sized at £175m. Total commitments were £1,053m. Post-period, OCI has now agreed indirect investments of c.£102m.



Liberum view
Steer fits the Oakley Capital mould of investing in founder-led businesses operating in large addressable markets with scope to increase breadth. Steer has been an active expander, with M&A helping to drive growth. The deal will also add some sector diversification.

[makinbuks] 16/1/2024 08:26

That is a nice, classic Oakley purchase announced today, I agree. But I suspect the share price aint going to budge while nearly 6% is tied up in Time out (38% of their equity) and 15% of NAV is in debt owed by North Sail and Time Out. Those investments together with the usual cash drag will make it very hard for "a return to double digit NAV growth" as predicted 3 posts previous to this

[ali47fish] 16/1/2024 08:15

this aquisition today sounds great- share price not budging

[davebowler] 12/1/2024 15:06

Trust costs deal in sight after 300 reply to Treasury in two days


The campaign to stop double counting of investment company fees had a frantic New Year after HM Treasury gave sector just a few days to respond to a potential policy shi

[davebowler] 09/1/2024 14:42

Tom Biltcliffe update-
OCI

OCI invests in funds managed by Private Equity manager Oakley Capital which specialises in high-growth European businesses across Technology, Consumer, Education and Business Services. Oakley has a strong network of founders and partners that it leverages to find opportunities, often before these are seen by the wider PE market. The manager looks for tech-enabled or potential platform businesses with recurring revenues, especially those that are addressing a large market that has yet to be penetrated by technology. The most high-profile realisation last year was IU Group, an online university platform, which was realised at an 85% IRR. IU Group was a prime case of a tech-enabled solution taking market share in a large, growing market. Other sectors have included online residential property platforms in Spain, insurance comparison in Italy, and golf equipment, which have all lagged the online transition seen in other countries or sectors.



Performance

With a 5-year NAV total return of 178% and 5-year share price total return of 202%, OCI is established as a top name in the listed Private Equity sector.





It is anticipated that the next few years will be a more challenging period for the broader Private Equity market, but we believe OCI is well-positioned to continue to outperform. Key concerns for the sector have centred around the resilience of portfolio constituents in tougher market conditions, excessive leverage with increasing debt costs, and the validity of the valuations. We explain why we think these issues have less relevance to OCI.

Portfolio Resilience

In the 12 months to June 2023, OCI’s portfolio had average organic EBITDA growth of 21%. Considering this period was marred by high inflation, rising rates and low consumer confidence, this growth is reassuring in showing that OCI’s portfolio companies are coping well in a more challenging environment. This is because it largely consists of established, profitable companies that tend to have sticky, recurring revenues, whilst their innovative solutions are continuing to see strong demand.

Leverage

OCI has no gearing at the company level and the average net debt/EBITDA ratio of the portfolio is 4x, which is low for the PE sector. When you consider that EBITDA in the portfolio has been growing at 20%+ per annum, this appears even more conservative.





Valuations

Private Equity valuations have come under the microscope over the last 12-18 months, with suggestions that multiples have not been adjusted to reflect the weakening seen in public markets. OCI takes a much more conservative approach to valuations, demonstrated by the fact that the average uplift to book value on exit has averaged 35%. Furthermore, the current average EV/EBITDA multiple of 16.9x is not demanding for a portfolio growing EBITDA at 20%+ p.a.

Although realisations in the sector have dropped off, 2023 European deal activity remained relatively strong last year, fuelled by the amount of dry powder in the sector. Exit opportunities is another key point of difference with OCI. Whilst the larger buyout peers are heavily reliant on a healthy IPO market, Oakley operate more at the mid-market valuation range. As a result, OCI has very rarely used an IPO as an exit route, instead selling businesses to larger PE firms such as Backstone, Apollo and EQT. As already mentioned, and as seen below, there remains significant dry powder and pressure to deploy capital, which we believe will result in continued healthy exit activity for OCI.



2024

Whilst narrowing slightly in the last couple months, the 28% discount to NAV remains an attractive entry point to a fund with a quality portfolio that has continued to perform through a difficult period, has conservative leverage, and a track record of realisations at substantial premiums to carrying values (35% average premium on exit vs 28% discount at share price is quite stark). Rate cuts in 2024, an easing environment for OCI’s assets, and a general improvement in sentiment towards the sector, could see a return to double-digit NAV growth in 2024, combined with a further unwinding of the discount to boost shareholder returns.

[donald pond] 04/1/2024 13:58

I dropped Steven a line this morning and he responded very quickly and helpfully. Nothing confidential, but very useful background on the TMO deal. He really is an asset to the company.
My understanding is that it would have been possible to roll the stake into a later fund, as makinbuks suggested, but that would have been kicking the can down the road. The approach that has been taken is more proactive.

[davebowler] 04/1/2024 11:52

Liberum-Time OutAdhoc MeetingsChris Ohlund - CEOMatt Pritchard - CFOSteven Tredget - IR Director11th & 18th JanuaryIn Person MeetingsConference Calls

[davebowler] 02/1/2024 12:16

Oakley Capital Investments Ltd on Friday said its direct shareholding in London-based publisher and food markets operator Time Out Group PLC has increased as a result of a transfer of shares.The Bermuda-based firm, which provides access to private equity investments of Oakley funds, said Fund I has transferred its shares in Time Out in-specie to its investors.As a result, OCI's direct stake in Time Out has risen to 38.06% from 19.97%. This represents a total of 5.8% of OCI's net asset value at September 30, it said.

[makinbuks] 02/1/2024 11:07

DP, I find this a slightly worrying development. The final liquidation of Fund 1 will have been an issue for Oakley Asset Managers. Many pension schemes post LDI are looking to liquidate their PE holdings and legacy issues like this are problematic for managers reputations. I'm not sure I like the way they have used OCI as a vehicle to do this. I wonder what role our independent directors played in approving this deal.

You could argue that TMO was the making of Oakley, but those heady days were a long time ago. Post IPO the rump holding has been problematic, compounded of course by COVID. If I were on the board I would have been asking myself, would I make this investment if I hadn't been involved so far and was listening to the pitch for the first time. Also if the answer were yes then is the price right.

I think its interesting that Oakley were not able to roll the stake into one of their later funds in the way they did with the German online university business for example. OCI has been used as the easy solution to a nagging problem for them.

[makinbuks] 02/1/2024 10:57

Dave, I like , but don't hold Mercia. I'm not sure I agree they are right for OCI. For a start they would be a target for Oakley Asset Management rathe than OCI I suspect. They are focused very much at the VCT market and as I'm sure you know are an issuer in that space which would be a departure for OCI. I think 35% discount is reasonable frankly for the illiquidity risk and early stage many of their investments are at. I thing Oakley recently launched a micro fund which OCI participates in so there is some synergy there I agree, but I think Oakley will be quite happy to back their own origination skills without acquiring others.

Just my thoughts, thanks for raising

[donald pond] 29/12/2023 09:28

So we now own 38% of TMO. I don't really see it as in a core OCI area. Feels too capital intensive. Not sure what the exit route might be though