Oakley Capital Investments Share Discussion Threads

[1968jon] 22/7/2021 15:34

I can't see it either. I do not follow 3i - and they are a slightly different beast - but I have just had a cursory glance at their recent results. A good chunk of their recent NAV uplift is multiple expansion which they break out in their numbers. The only multiple I could find in my cursory glance was Action on 18.5x. Different scale to OCIs businesses, sure, but OCIs most recent published EV/EBITDA valuation multiple was 11.8x. Track OCIs multiple expansion over the last few years and it only ticks up. Check out the progression of HGT, which a few years ago would have been a similar beast, and their most recent valuation multiple was 22.1x and has been increasing a lot in the last few years - fair enough, they are in good and different businesses. I don't think OCI are going to move it that much, though I am hopeful for a good NAV uplift at conservative multiples.

[essentialinvestor] 22/7/2021 14:56

ah, don't think we are looking at a 25% NAV uplift over the half year!.

[makinbuks] 22/7/2021 14:54

What do you reckon? 25% NAV uplift to £5, share price goes to £4? Too much to ask?

[essentialinvestor] 22/7/2021 14:41

Outstanding Q update from 3i today, would hope we are looking at a very nice H1 NAV
uplift for OCI next week.

[essentialinvestor] 21/7/2021 16:35

So the next NAV update is next week.

[cwa1] 21/7/2021 14:58

Small increase in holding from Sarasin:-

[tomps2] 19/7/2021 09:11

Oakley Capital (OCI) mentioned in Part 2 of the virtual LPeC event at 35:52.

Watch the video here:

Or listen to the podcast here:

[essentialinvestor] 29/6/2021 13:50

Perhaps a run to the £3.75 type area pre results, over £4 a share doable
in the next 6 months imv, wider markets allowing.

[makinbuks] 29/6/2021 10:14

A positive NAV update to June plus a HgCapital rating would be lovely, and I agree its possible

[cwa1] 29/6/2021 09:21

Kepler research...



Summary...

Oakley Capital Investments (OCI) has a unique feel when compared to the listed private equity peer group. Aside from a focus on education, consumer and technology sectors, the recent capital markets day emphasised the entrepreneurial roots of Oakley Capital as manager, but also demonstrated a growing institutional feel as the team has expanded (see Management).

Digital disruption and the opportunities it presents has long been a recurring theme in OCI. This placed OCI well at the beginning of 2020, and portfolio companies have clearly been nimble in adapting to the digital opportunities presented to them during lockdown. 53% of the portfolio by value had digital delivery models at the start of the year, which had risen to 76% by the end of 2020. This has helped ensure resilience and growth, with a NAV total return of 18% achieved for 2020 (see Performance).

Following the recent capital markets day, we discuss many of the exciting businesses investors in OCI are exposed to in Portfolio. Across the three specialist sectors that Oakley focusses on, the recurring themes from the capital markets day presentations were the strong operational performance during 2020 and into 2021, the exciting future growth potential, and also how entrepreneurial founders of businesses represent a key part of Oakley Capital’s DNA. Oakley aim to continue to build on their track record of being the first institutional investors in growing companies and create “product” for other private equity firms to buy, as was the case with WebPros sold to CVC.

Over the past five years, OCI has delivered good NAV and share-price total returns relative to peers and equity indices. The next NAV as at 30 June 2021 (announcement due end of July) will give more colour.

Analyst's View
OCI’s strong balance sheet is a differentiator. It went into the market sell-off with net cash on the balance sheet of c. £250m, or 36% of estimated net assets. This put the trust in a strong position, and Oakley Capital has made a number of interesting investments since then, in what is a competitive market. We estimate that OCI now has net cash on the balance sheet of c. £162m, representing 22% of the estimated NAV.

Oakley’s track record is strong – both in absolute terms, but also relative to peers, which we discuss in Performance. For investors who want a focused private-equity portfolio, we think OCI looks exposed to plenty of exciting growth drivers from its Portfolio of niche businesses that are leaders in their field.

It is perhaps in recognition of this fact that the Discount has narrowed considerably, which currently stands at 12% to Numis’s adjusted NAV. However, we believe this is more than justified by the good long-term performance and the resilience exhibited by the portfolio during 2020. We believe that should OCI’s strong performance continue along with the higher standards of governance and investor communication, OCI may be rewarded over time by a rating more in line with HgCapital (premium of 1%), rather than the wider peer group average. With OCI clearly offering a differentiated proposition, as well as the best liquidity position of the peer group, the shares should continue to attract interest.

BULL BEAR[Apologies for lack of formatting here!]
Strong long-term NAV growth, driven by portfolio-company performance Concentrated portfolio means that returns can be materially impacted by specific company performance
Capital markets day highlighted the focus and expertise that gives Oakley Capital an edge in a competitive market Private companies offer limited liquidity, and returns can be lumpy
Shares trade on a 12% discount to Numis's NAV estimate, with 30 June NAV announcement as a potential catalyst for further appreciation Private-equity funds charge relatively high fees

[makinbuks] 28/6/2021 12:42

The Liberum view confirms what I suspected from the announcement that it has sold for less than the Dec 20 valuation. Always suspicious when such information is not included in the announcement. Given that more than half the proceeds were reinvested it doesn't matter a great deal.

HGT made a disposal today also and the opposite was the case in the announcement, it was declared as 20%+ higher than the latest valuation but no figures on returns. Given it was 2014 vintage my suspicion is that the IRR was not impressive

These PE announcements of realisations are manipulated selectively to sell the shares. Thats not a surprise but its not supposed to happen. The stock exchange should look to a standard disclosure table

[davebowler] 28/6/2021 09:15

Liberum;
Event

Oakley Capital Fund III has agreed to sell its stake in ACE Education, a leading private vocational higher education platform in France and Spain. OCI's share of the proceeds will be c.£16m. The sale will generate a 2.1x money multiple and 27% IRR for Fund III.

Oakley Capital Origin Fund will invest €40m in ACE alongside Groupe Amaury and ACE's founder, Patrick Touati. OCI's indirect contribution via the Origin Fund will be £10m. Following the transaction, OCI will have liquid resources of £174m. Amaury is the leading designer, producer, and distributor of mainstream sports content in France. Amaury and the Origin Fund intend to expand and diversify the platform through targeted acquisitions. Enrolments are expected to grow at a 12% CAGR over the next five years, benefiting from a number of recently opened campuses.

Liberum view

Fund III originally invested in ACE in August 2017 through the acquisition of AMOS. The group now operates under four brands and has over 4,000 students. ACE provides a platform for a roll-up in the higher education sector. ACE has expanded organically and also recently completed the acquisition of ESBS, a sports management business school in Spain. Revenue has grown by over 50% in the two years to June 2020. Enrolments grew by 13% in the most recent academic year despite the impact of Covid.

At 31 December 2020, OCI's indirect share of the residual cost was £7.2m and the book value was £18.8m. OCI's share of the sale proceeds is £2.8m below the December book value, of which we estimate c.£1m is due to FX movements. The investment by Amaury should enable the business to solidify its position as the leading dedicated sports management business school. OCI currently trades on a c.12% discount to NAV. Given the positive outlook for the portfolio at the recent capital markets day, we expect OCI's strong NAV performance to continue in the upcoming H1 results.

[cwa1] 28/6/2021 07:32

Oakley agrees sale of ACE Education to Groupe Amaury and follow-on investment

Oakley Capital is pleased to announce that Oakley Capital Private Equity III ("Fund III") and other co-investors have reached an agreement to sell their stakes in ACE Education ("ACE") (formerly AMOS), a leading private vocational higher education platform in France and Spain. The exit will generate a gross return on investment of c.2.1x MM and c. 27 % IRR to Fund III.

As part of the transaction, Oakley Capital Origin Fund ("Origin Fund") will invest c.EUR40 million alongside Groupe Amaury ("Amaury") and ACE's founder, Patrick Touati, to benefit from the strong future growth potential, as well as the significant commercial and strategic benefits Amaury can bring to ACE, given their prominence in the French sports industry.

Fund III first invested in ACE in 2017 through the platform acquisition of AMOS, the leading business school in France solely focused on sports management. Since then, the group has been transformed via three bolt-on acquisitions and five new campus openings. Today, ACE is a diversified higher education group with over 20 campuses and over 4,000 students, and operates under four brands: AMOS, which remains the leading French business school focused entirely on sports management; ESBS, a sports management school based in Valencia, Spain; ESDAC, the largest group of design schools in South East France; and CMH, a leading higher education provider in the hotel management, luxury brand and tourism sectors.

Amaury is the leading designer, producer, and distributor of mainstream sports content in France. Amaury's investment will further reinforce AMOS's position as the leading dedicated sports management business school with all of its stakeholders including applicants, students, and employers in the sports industry. As owners, the Origin Fund and Amaury will benefit from strong growth momentum generated by recently opened campuses, as well as growth in enrolments which are expected to increase at a 12% CAGR over the next 5 years. Together, the owners will look to further expand and diversify the platform through targeted acquisitions.

Peter Dubens, Managing Partner of Oakley Capital, commented:

"We would like to thank the ACE management team for their continued hard work in developing the business and we look forward to the partnership with Amaury, who, given their unrivalled reputation in the French sports industry, will bring valuable experience and industry knowledge to support the growth of ACE."

[biggest bill] 24/6/2021 11:26

He obviously thinks the shares are still undervalued and he should know.

[makinbuks] 24/6/2021 09:11

especially after this recent run

[brexitplus] 24/6/2021 08:01

Good to see.

[cwa1] 24/6/2021 07:59

That's a chunky share purchase by David Till. 130,000 @359p

[shaker44] 22/6/2021 12:44

Thanks Dave. Very useful. Another example of Oakley's expertise. In time, discount will shrink

[davebowler] 22/6/2021 12:29

Liberum;
Event

Oakley Capital Fund III has agreed the acquisition of PRIMAVERA Business Software Solutions, the Portuguese leader in business management software. Oakley Capital Investments' indirect contribution via Fund III will be £11m. Following the transaction, OCI will have liquid resources of £162m.

PRIMAVERA was established in 1993 and it provides ERP and cloud business software solutions to over 32,000 SMEs in Portugal and Portuguese-speaking Africa. Oakley intends to combine PRIMAVERA with its existing portfolio company Ekon, a Spanish provider of ERP software. Oakley is acquiring the business from its founders who will invest alongside Fund III in the merged entity and continue to co-lead the PRIMAVERA business. The new merged entity, Grupo Primavera, will be the largest independent provider of business software in Iberia. The transaction is subject to regulatory approval.

Grupo Primavera will comprise PRIMAVERA, Ekon and five additional bolt-on acquisitions made over the last twelve months (Tabulae, Contasimple, Billage, Diez Software and Professional Software). The group has over 55,000 customers and revenues of c.€60m (double-digit annual growth). The group will accelerate its deployment of cloud solutions through product development as well as further acquisitions.

Liberum view

The investment in Primavera has many of the characteristics of an Oakley acquisition (founder-led, subscription-based revenues, structural growth opportunity). The Primavera Group is well placed to benefit from the structural shift to the cloud. The market is dominated by legacy technology and international vendors. Ekon has performed resiliently through the pandemic as the shift in new business to SaaS accelerated in 2020. The market also offers scope for growth through buy and build strategies.

The investment in PRIMAVERA is the third acquisition in June across the Oakley funds. OCI's indirect share of the transactions is c.£44m (6% of NAV). At the recent capital markets day, the manager outlined a strong pipeline of potential investments, led by opportunities within the technology sector. Despite a competitive investment market, Oakley has consistently been able to acquire at attractive multiple due to its focus on proprietary transactions.

OCI currently trades on a c.14% discount to NAV. Given the positive outlook for the portfolio at the recent capital markets day, we expect OCI's strong NAV performance to continue in the upcoming H1 results. OCI’s discount is also based off the December NAV and many of the peer group have reported uplifts for Q1 2021 as well, indicating further latent upside in OCI’s NAV.

[essentialinvestor] 22/6/2021 12:21

Yes thanks, read the RNS, just commenting that a disposal or two may be due soon.

[brexitplus] 22/6/2021 12:13

Essential

No, an investment. And a good one too.

Oakley Capital Investments Limited1 ("OCI") is pleased to announce that Oakley Capital Private Equity III2 ("Fund III") has agreed to invest in PRIMAVERA Business Software Solutions, ("PRIMAVERA" or the "Company"), the Portuguese leader in business management software.

OCI's indirect contribution via Fund III will be £11 million.

Oakley Capital is pleased to announce that Oakley Capital Private Equity III ("Fund III") has agreed to acquire PRIMAVERA Business Software Solutions ("PRIMAVERA" or the "Company"), the Portuguese leader in business management software. The Company will be combined with existing Oakley Capital portfolio company Ekon, a Spanish provider of Enterprise Resource Planning ("ERP") software, to create a new group under the name Grupo Primavera, which will be the largest independent provider of business software in Iberia. The transaction is subject to regulatory approval.

Founded in 1993, PRIMAVERA provides ERP and cloud business software solutions to over 32,000 Small and Medium-sized Enterprises ("SMEs") across Portugal and Portuguese-speaking Africa. PRIMAVERA is widely recognised as a market leader, with a strong brand and reputation, and is supported by a broad distribution network of over 500 partners . The Company was acquired from its founders, José Dionísio and Jorge Batista, who will invest alongside Fund III in the merged entity and continue to co-lead the PRIMAVERA business.

Grupo Primavera will comprise PRIMAVERA, Ekon, which was acquired in 2019 as Fund III's initial investment in the space, and five additional bolt-on acquisitions made over the last twelve months (Tabulae, Contasimple, Billage, Diez Software and Professional Software). The newly established group will be the largest independent software platform serving SMEs in Iberia, with over 55,000 customers, c.EUR60 million of revenues and double-digit annual growth, driven by the rapid adoption of Software as a Service ("SaaS") solutions. Grupo Primavera will be led by Santiago Solanas, an industry veteran with over 30 years' experience in global roles in the software industry, including leadership positions at Cisco in France and Southern Europe, Sage Iberia, as well as in Microsoft and Oracle.

The Iberian business software market continues to benefit from long-term structural growth, as SMEs digitise and adopt cloud technology. Portugal and Spain lag international benchmarks in cloud adoption, at c.25% and c.30%, respectively, compared to over 60% in Northern Europe.

Grupo Primavera will accelerate its deployment of cloud solutions organically through investment in product development and go-to-market initiatives, as well as through further acquisitions.

Peter Dubens, Managing Partner of Oakley Capital, commented:

"This is another example of Oakley's ability to invest in founder-owned technology businesses and execute buy-and-build strategies. With the adoption of cloud technology in Iberia being behind the rest of Europe, we see significant value and further potential in growing the largest independent business software platform to service SMEs within the region."

José Dionísio and Jorge Batista, CEOs and Co-Founders of PRIMAVERA, commented:

"We are very excited about the new path that we are taking by creating an independent Iberian business software champion. This is a project with great potential, bringing together companies with a wide range of experience and leadership within the sector. We have been approached by many potential partners over the years, but it is with Oakley Capital and Santiago Solanas that we decided to take this step due to the exciting project they presented to us."

[essentialinvestor] 22/6/2021 11:55

Hoping they can exit the North Sails investment, that and TMO have contributed
to the discount.

Also worth noting GBP Euro is now at 1.17, the vast majority of the portfolio
in the Euro area.

[essentialinvestor] 22/6/2021 11:42

Must be due a disposal shortly.