OCI

Oakley Capital Investments Limited

467.00
2.00 (0.43%)
Share Name Share Symbol Market Type Share ISIN Share Description
Oakley Capital Investments Limited LSE:OCI London Ordinary Share BMG670131058 ORD 1P (DI)
  Price Change % Change Share Price Shares Traded Last Trade
  2.00 0.43% 467.00 338,912 13:11:38
Bid Price Offer Price High Price Low Price Open Price
466.00 468.00 467.50 465.00 465.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Unit Inv Tr, Closed-end Mgmt 229.98 222.96 126.40 369.46 843.40
Last Trade Time Trade Type Trade Size Trade Price Currency
17:06:40 O 128,900 466.0246 GBX

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22/5/202312:04Oakley Capital Investments1,053

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Posted at 17/5/2023 10:03 by davebowler
Liberum;
Oakley continuation fund raised to support purchase of IU Group from Fund III
Analyst: Shonil Chande

Mkt Cap £842m | Share price 474.0p | Prem/(disc) -29.0% | Div yield 0.9%

Event

Oakley Capital has raised a continuation fund to extend the IU Group ownership. The continuation fund, alongside Oakley Capital Fund V, is acquiring IU Group from Oakley Capital Fund III. Investors in the continuation fund include TPG, HarbourVest, Goldman Sachs Asset Management, Glendower Capital, and Pantheon. Fund III's exit from IU Group is expected to result in a gross IRR of 85% IRR.


IU Group is the largest online university group in Germany. It delivered revenue and EBITDA growth of 39% and 38% in 2022, respectively. Enrollments have increased at a c.37% CAGR to over 100k since 2017.


Liberum view

An update had been expected following last week's announcement that the 2016 vintage Fund III was exiting and that Fund V would extend Oakley's ownership in IU Group, alongside other Oakley vehicles. This will be Oakley's first continuation fund, bringing together a strong lineup.

Posted at 11/5/2023 09:53 by davebowler
Bit more from Liberum- Mkt Cap £847m | Share price 477.0p | Prem/(disc) -28.6% | Div yield 0.9%EventOakley Capital Investments held a CMD yesterday which included presentations by Marvin Lange (CFO of IU Group) and Paul Barry (CEO of Phenna Group). One of the central themes across Oakley's core education, technology, and consumer sectors was the extent to which several of the investments are well-positioned to benefit from the opportunities provided by generative AI.  We focus on education and some of the commentary from the investment manager in this commentary. We will review some of the comments in technology and consumer in our weekly note.Education Net of the agreed IU Group realisation announced yesterday, education represents 27% of OCI's total look-through investments. It remains an important driver of new investments and future returns. PE representation remains fairly low compared to sectors like healthcare, where PE M&A deal value was 8.5x higher at $144bn in 2022. ?On the IU Group realisation, OCI noted that Fund III's exit from IU Group will be the largest capital gain of any Oakley fund in its history. The c.£240m proceeds due to OCI represent a 76% IRR, based on an initial investment of £31m and total proceeds of £326m (including previous IU Group distributions). A realisation event had to take place within the next year or two as Fund III neared the end of its life. Moreover, IU Group's next phase of growth requires further investment into AI and international growth and some of these investments may take some time to deliver returns. This was therefore seen as the optimal time for the investment to leave Fund III. In addition to overviewing how IU Group has grown to become Germany's leading university by student numbers, IU Group's CFO, Marvin Lange, discussed how the company has been working with OpenAI platforms well in advance of ChatGPT's launch. AI provides a critical tool to further develop one of the central elements to the company's aim to further evolve and personalise how higher education is carried out beyond classrooms and exams, which was the most economically viable way historically. ?Beyond IU Group, Oakley has been expanding its K12 (Kindergarten through to 12th grade) exposure with recent investments in Thomas's while progress continues elsewhere at companies such as Affinitas. Education was described as a $3.5trn market with only about 4% of the 11k bilingual international schools having been consolidated to date. Investment manager commentsSummarising some of the fund-specific comments from the investment manager, it was noted that OCI is very important to Oakley, with its c.30% representation in each Oakley fund making it the largest investor by a distance. With respect to OCI and the wider direct PE sector's systematic discount, some of the key factors behind this were identified as 1) the sell-off in illiquid assets; 2) confidence in valuations and future growth; and 3) some of the idiosyncracies in PE that are perhaps not well-understood at times. On point one, the sell-off in alternative assets has affected all investment companies. We have noted that addressing discounts more broadly might require some combination of good performance, share buybacks, and realising assets to validate NAVs. On both a NAV and share price TR basis over five years for funds with a current market cap above £100m, OCI has been the best-performing AIC fund. On a share price TR basis, OCI's annualised 23% return is more than 6ppt higher than the second-best performer.While further details will follow owing to commercial sensitivity, the IU Group realisation provides a strong underpin to valuation, particularly when viewed in the context of the uplift applied in 2022.On share buybacks, OCI has been far more active than its direct PE peers. In value terms, we estimate it repurchased an average £8m per annum between 2021 and 2022. Along with dividends paid, that is c.£16m paid out to shareholders per annum, or c.1.9% of the current market cap.
Posted at 10/5/2023 09:57 by davebowler
Liberum-
IU Group realisation underpins NAV and Oakley strategy
Analyst: Shonil Chande

Mkt Cap £846m | Share price 476.0p | Prem/(disc) -28.7% | Div yield 0.9%

Event

Oakley Capital Fund III has agreed to realise its stake in IU Group with Oakley Capital Investments' share of the proceeds set at c.£240m. The sale price is at the 31 March 2023 carrying value. As at 31 December 2022, IU Group was OCI's largest look-through investment, with a £243.5m carrying value representing 20.9% of NAV. IU Group's valuation increased by c.85% in 2022 (+64p impact to OCI). The sale process for IU Group had commenced by late 2022. The c.1.4% difference between the December 2022 valuation and the proceeds due to OCI appears to reflect FX.

As part of the transaction, OCI will indirectly invest c.£67m in IU Group through Fund V. IU Group was acquired by Oakley Capital Private Equity III and a number of its underlying investors in 2017, with Fund III investing €85m. OCI's indirect contribution in 2017 was £30m.

IU Group is the largest online university group in Germany. It delivered revenue and EBITDA growth of 39% and 38% in 2022, respectively. Enrollments have increased at a c.37% CAGR to over 100k since 2017.

Subject to completion, OCI's available resources cash resources increase by £174m to £340m.

Liberum view
Corporate activity with respect to IU Group was likely this year and the valuation achieved provides a strong underpin to portfolio valuation. IU Group has been a hugely successful investment with £240m reflecting an 8x MOIC to OCI's original look-through investment. The transaction will see IU Group's proportional size, in NAV terms, reduce from 20.9% (Dec-22) to c.5.7%.

The Oakley funds have consistently delivered strong returns from investing in founder-led businesses, with a focus on digital disruptors exposed to megatrends. Earlier in February 2023, Fund V raised €2.85bn.

We have a BUY rating on OCI's shares with a target price of 653p, based on a 15% discount to the 12m NAV per share forecast of 767p.

Posted at 26/4/2023 11:39 by davebowler
Liberum-Oakley Capital Investments' NAV per share increased by 1% to 668p in the Q1 period to 31 March 2022. This represented a 1.2% NAV total return. Performance was driven by a +15p (+2.3%) impact from an uplift to portfolio value, partially offset by 5p (-0.8%) of FX losses. The 15p valuation uplift was split equally between EBITDA growth and multiple expansion. All of the underlying valuations are as at the end of Q1.Post-period, OCI has made £27m in look-through investments, including £14m in Thomas's London Day Schools to support capex and development projects. OCI's total outstanding commitments to the Oakley Funds at the period-end were £886m, out of which at least £200m is not expected to be drawn. OCI had cash on the balance sheet of £166m (14% of NAV), Commitments are expected to be drawn over the next five years, funded from existing cash resources and expected proceeds from realisations. Liberum viewUnderlying performance was solid in Q1, particularly when viewed against tough comparators (weighted average organic EBITDA growth of 22% in FY22). About 70% of underlying revenues are recurring or subscription-based, with the focus on digital disruption reducing the need for wider market growth.During the holding period, the valuation multiple for Oakley's portfolio companies tends to remain relatively close to the acquisition multiple (average entry EV/EBITDA multiple of 13.9x at the end of FY22). The most recently disclosed EV/EBITDA weighted average multiple was 15.9x at 31 December 2022. While a repeat of the five realisation events in FY22 as unlikely this year, there is potential for fewer but more individually impactful events.     While we regard the 30% discount to NAV as attractive, the strongest reason for owning the shares, over several years now, has been NAV growth (+23% annualised over five years - the best amongst AIC alternative funds). Too much weight can be placed on the potential for discount narrowing as a source of returns. Ultimately, the quality and durability of the portfolio holdings drive performance. We have a BUY rating on the shares with a target price of 653p, based on a 15% discount to the 12m NAV per share forecast of 767p.  
Posted at 09/3/2023 10:56 by davebowler
Liberum Note: Delivering leading NAV growth
Analysts: Shonil Chande and Ciaran Donnelly

Mkt Cap £842m | Share price 474.0p | Prem/(disc) -28.4% | Div yield 0.9%

Event

EBITDA growth was the principal driver behind OCI’s 24% NAV total return in FY 2022, contributing 65% of the uplift to portfolio value. The 35% contribution from multiple expansion predominantly reflected five completed exits, achieved at a c.70% average premium to book value and there is potential for attractive realisations in 2023. The key driver of NAV growth will continue to be EBITDA growth and this is a portfolio characterised by 70% of look-through revenues being recurring or subscription-based and with a focus on digital disruptors exposed to megatrends. Placing too much weight on a discount that has persisted for years (29% currently) takes away from the main reason for owning the shares, which is NAV growth. We upgrade our TP to 653p and reiterate our BUY recommendation.

Posted at 27/1/2023 14:23 by 1968jon
Classic OCI share price action prior to and then after numbers. Run up in the stock as supply seems thin - 7ish percent in a couple of weeks this time - and then settles, goes nowhere and supply reappears. Numis currently have plenty to go at 352 against a hopeless yellow strip of 348/358. Probably be here for a while. No criticism, just an observation.
Posted at 25/1/2023 10:28 by davebowler
Liberum-Attractive FY22 NAV growth deliveredMkt Cap £799m | Share price 450.0p | Prem/(disc) -32.0% | Div yield 1.0%EventOakley Capital Investments' NAV per share at 31 December 2022 was 662p, reflecting a +1% NAV total return in Q4 and a +24% NAV total return (including dividends) since 31 December 2021. In the twelve months to 31 December 2022, 65% of the increase in the portfolio's value was driven by EBITDA growth. The remainder was attributable to multiple expansion driven primarily by exits. The largest contributions to the NAV growth came from IU Group which enjoyed further strong growth in enrolments, reaching 100k students. Contabo, whose sale was agreed in June at a 105% premium to its carrying value, and the valuation uplift in Grupo Primavera following its strategic combination with Cegid.OCI's underlying portfolio has continued to perform well and deliver earnings growth against a more difficult macro backdrop. OCI's focus on disruptive business models targeting long-term megatrends is expected to continue to deliver resilient trading in 2023. OCI's look-through share of proceeds and refinancing during the year amounted to £244m. This included five exits, including Contabo, TechInsights, Facile, Wishcard and Seedtag (partial) totalling £234m. These were completed at a 5x average gross money multiple and an average premium to carrying value of c.70%. Refinancings of Wishcard and Idealista generated proceeds of £10m. OCI continued to originate proprietary opportunities for its Funds across its focus sectors. OCI made total look-through investments of £269m. New investments were made in Affinitas, TechInsights (reinvestment), Phenna Group, CTS, Contabo, Facile, vLex and Vice Golf across various funds. These totalled £214m. Follow-on investments included Group Primavera (now part of Cegid), Alessi, TechInsights (acquisition of Strategy Analytics), Time Out (direct) and North Sails (direct).     OCI's total liquidity at 31 December 2022 was £210m (18% of NAV). This comprises £110m of cash on the balance sheet and a £100m credit facility. Total outstanding Oakley Fund commitments as at period end were £929m. This follows the recent €30m commitment to Oakley Capital PROfounders Fund III. Outstanding commitments will be deployed into new investments over the next five years.Liberum viewThe key takeaway from FY22 is that OCI's portfolio performance remains strong and resilient. The portfolio benefits from a high proportion of recurring or subscription-based revenue streams and exposure to a number of accelerating megatrends, such as the growing global demand for high-quality education. Highlighted by the 65% growth in NAV attributable to the EBITDA growth. The remaining 35% of the NAV growth was a result of multiple expansion primarily driven by exits. We also believe the increase in the multiple will be a reflection of the progress towards realisation for a number of portfolio companies. The trends that delivered the strong performance in FY22 remain in place entering FY23 and we are confident in OCI's ability to continue to deliver consistently strong NAV growth.OCI's five-year annualised NAV total return of 23% is the strongest amongst all AIC investment companies with a market capitalisation above £50m. While the discount has persisted over several years, NAV growth has driven shareholder total returns (+24% annualised over five-years).?The combination of the conservative valuation approach, potential realisation activity and resilience of the underlying business models underpins our belief that OCI will continue to generate attractive NAV growth. We regard the 32% discount as attractive, particularly as it implies that the discount applied to the PE portfolio is a few percentage points higher, on the basis that cash amounted to 18% of NAV at the year-end.
Posted at 10/11/2022 00:10 by tudes100
From AGT FY financial review....OAKLEY CAPITAL INVESTMENTS (Contribution: +0.36%)
Classification: Closed-ended Fund
% of net assets1: 6.3%
Discount: -42%
% of investee company: 9.2%
Total return on position FY22 (local)2: 7.2%
Total return on position FY22 (GBP): 7.2%
Contribution (GBP)3: 36bps
ROI since date of initial purchase4: 106.6%
Oakley Capital Investments (OCI) was one of the largest contributors in FY22 generating a NAV total return of +45%. The discount widened from -20% to -42% in the broad market sell-off, leading to a share price return of +6%. OCI has now achieved an impressive five-year NAV CAGR of +23%. Encouragingly, the majority of returns have come from EBITDA growth, which has averaged +18% across the portfolio over the last twelve months. Alongside this, OCI has generated further upside from realised multiple expansion due to exiting portfolio holdings at an implied valuation above book value.

Oakley, like all PE managers, are paid fees on committed/invested capital rather than mark-to-market gains and have no incentive to unduly mark up, and we believe Oakley are very much at the conservative end of the peer group when it comes to valuations. We note OCI's portfolio is currently held on a very reasonable 14x EV/EBITDA. In H1 alone, OCI achieved portfolio value growth of +13%; with a quarter of this from realisations. In an environment where questions have been raised over private company valuations, OCI has successfully proved the conservatism of its NAV to the market through exits at premia to carrying values, averaging 60% since 2018, and 67% over 2022.

It was a busy year for OCI, with four new investments, four follow-on investments and one partial exit, as well as bolt-on deals and refinancings. New investments were Vice Golf (leading direct-to-consumer digitally native golf brand), Affinitas Education (a private school group), Phenna Group & CTS Group (two leading platforms in the Testing, Inspection, Certification, and Compliance sector), and vLex (an online legal information subscription platform). With 70% of the portfolio now delivering services digitally, and with 75% having subscription-based or recurring revenues, OCI's portfolio should prove resilient in economic downturns.
The crown jewel of the portfolio is IU Group, Germany's largest private university group. It boasts the largest portfolio of Bachelors and Masters degrees in Europe, offering both digital and in-campus learning across 28 German cities. As of this year, the group has over 100k students enrolled on its 200 courses, growing from just 23 enrolled students during the university's first semester in 2000. IU Group provides high-quality, German state-accredited degrees, recognised by universities and employers globally.
Approximately one third of IU Group's revenues come from its Business to Business (B2B) segment, which involves providing degrees/vocational courses to 10,000 partner companies. These partners can range from major corporations such as VW to small German enterprises. The students sign up to work in an apprentice-style role with a company, earning a small wage while earning a degree. IU Group provides a matching service to link students to businesses offering this scheme, which creates a high barrier to entry as this would be difficult to intermediate. The rest of the company's revenues come from standard university student enrolment.
IU Group is held on a very conservative 14x EV/EBITDA vs recent transactions in the sector closer to 20x. This is despite the business being one of the few education assets of scale globally, being the fastest-growing university on the continent, and having unique sticky B2B revenues as a result of Dual Studies programme in Germany. In our view these attributes mean that IU Group should warrant a premium valuation to its peers. As a business that is growing its top-line, EBITDA, and student cohort 30-50% year on year, and with a three to six-year lifetime for its customers, IU Group is a very exciting asset. The Group is now actively marketing its B2C segment outside of Germany, only increasing the trajectory for future growth and prospective returns
OCI offers a fast-growing, high-quality portfolio with attractive growth opportunities and recurring revenue businesses, backed by a manager with a distinct deal sourcing strategy, and all available at a discount of 42%. We remain enthusiastic holders of OCI.

Posted at 26/10/2022 08:50 by davebowler
Liberum;
Oakley Capital Investments

Q3 update highlights resilient NAV growth

Mkt Cap £677m | Share price 381.0p | Prem/(disc) -39.4% | Div yield 1.2%

Event

Oakley Capital Investments' NAV per share at 30 September 2022 was 655p, reflecting a +4% NAV total return in Q3 2022 and +22% since 31 December 2021. In the three months to 30 September 2022, 76% of the increase in the portfolio’s value was driven by EBITDA growth. The remainder was attributable to multiple expansion as a result of recent transactions.

Portfolio activity in the quarter included the partial sale of Seedtag at a significant premium to its carrying value and OCI made new investments of £46m, which were largely attributable to look-through investments including the acquisition in vLex, an additional investment in Grupo Primavera. Additionally, there were bolt-on acquisitions by its portfolio companies, these include, TechInsights acquisition of Strategy Analytics and further schools acquired by K12 education platform Affintas. OCI signed and announced the acquisition of Phenna Group and CTS Group to create a leading TICC platform. Oakley announced the reinvestment of Facile alongside Private Equity investor Silver Lake. These transactions are expected to complete in Q4 and OCI’s total look-through investment from these acquisitions is expected to total c.£115m.

Post-period end, OCI announced that it has completed the sale of part of its stake in Wishcard retaining a residual shareholding in the business. OCI’s share of cash proceeds from this transaction will be £37m.

OCI’s cash at 30 September 2022 was £49m (4% of NAV). This excludes the anticipated £153m of cash proceeds from transactions announced to date, which are expected to complete post-period-end. Total outstanding Oakley Fund commitments as at period end were £979, They will mostly be deployed into new investments over the next five years, funded with existing balance sheet cash as well as expected proceeds from exits announced during the period and future realisations.

Liberum view

The key takeaway from the quarterly update is that OCI's portfolio performance remains strong and is resilient. The portfolio benefits from a high proportion of recurring or subscription-based revenue streams and exposure to a number of accelerating megatrends, such as the growing global demand for high-quality education. This was highlighted by 76% of the valuation uplift being attributable to EBITDA growth. The valuation multiple has risen slightly in the period, accounting for 24% of the NAV growth, but it will remain at the low end of the peer group range despite consistently high EBITDA growth. We also believe the increase in the multiple will be a reflection of the progress towards realisation for a number of portfolio companies.

The recently announced completed sale of its partial stake in Wishcard highlights the potential for further realisations activity this year. Oakley has several portfolio companies which are relatively mature, offering scope for further realisation activity. The average premium to book value at exit since 2018 is 60% and recent realisations have tended to be in excess of this.


The combination of the conservative valuation approach, potential realisation activity and resilience of the underlying business models underpins our belief that OCI will continue to generate attractive NAV growth. We regard the 39% discount as highly attractive.

Posted at 28/7/2022 09:10 by davebowler
Liberum;
Partial exit of Seedtag

Mkt Cap £764m | Share price 427.5p | Prem/(disc) -32.1% | Div yield 1.1%

Event

Oakley Capital Origin Fund has agreed to sell part of its stake in Seedtag to Advent International. OCI's look-through share of the proceeds will be £13m. The transaction will add 4p per share or 0.6% to NAV.

Seedtag is a contextual advertising platform in Europe and Latin America. The business was founded in 2014. The company helps brands and agencies deliver digital advertising that is directly relevant to the content that readers are consuming. The business delivered strong results in 2021, growing revenue and EBITDA by 79% and 90% respectively.

Oakley first invested in the business in September 2021. Under Oakley's ownership, Seedtag has launched in North America and completed the strategic acquisition of KMTX in France. OCI's look-through share of the investment was valued at £9.2m at 31 March 2022 (0.9% of NAV). The partnership with Advent will help accelerate the expansion into the US and provide additional firepower for M&A.

Liberum view

The transaction would represent the first exit for the Origin Fund. The uplift to the June book value has not been disclosed, but we estimate it would have been in the region of 50-60%. The partial exit follows two other accretive transactions in Q2 2022. These included the exit of the stake in Facile (23% premium to book value) and the disposal and subsequent investment in Contabo at a 105% premium to book value. The sales again underline OCI's prudent approach to valuations (14x EV/EBITDA multiple) and the potential NAV growth from realisations. OCI's 23% five-year NAV CAGR has been driven by EBITDA growth and uplifts on exit. Following the recent trading update, we believe OCI remains well-positioned to maintained its attractive NAV growth profile.

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