Oakley Capital Investments (OCI)

11/03/2022

Results analysis from Kepler Trust Intelligence

Oakley Capital Investments (OCI) announced its final results for the year ended 31 December 2021, in which strong earnings and realisations drove significant NAV growth of 35% on a total return basis, and a share price total return of 48%.

76% of the increase in the portfolio's value was driven by earnings growth, with underlying investments maintaining their pattern of strong growth. Average EBITDA growth over the year was 28%, underpinned by digitally enabled businesses and recurring revenues.

Oakley Fund commitments at the year-end were £404m, increasing to £740m when including the initial commitment to Fund V announced post year-end. The Chairman states that "With…a rich pipeline in place, OCI has the resources to help finance new Fund investments in the coming years, using balance sheet cash as well as proceeds from anticipated future realisations".

Kepler View

Oakley Capital Investments (OCI) offers a concentrated, but unique exposure to a number of very interesting growth companies. Certainly, the world has changed markedly from the year end date, but the underlying themes which have driven such strong earnings growth over the last year, seem unlikely to be derailed. At the year end, the portfolio exposure to consumer companies lay at 44%, with the rest of the portfolio relatively evenly balanced between technology and education.

When compared to the LPE peer group, OCI is relatively highly committed as a proportion of NAV. However, on the same day as the results announcement, the board announced they had authorised a buyback programme up to an aggregate consideration of £20 million, potentially an indication of the value they see in the shares (currently at a c. 30% discount to NAV), and their confidence on their balance sheet position.

Oakley Capital's focus on active management and value creation has helped its tech-enabled portfolio to continue generating strong earnings growth. Its unique deal sourcing network means they are able to find promising investments at attractive valuations. In the current period of geopolitical, market and economic volatility, we share the board's confidence in Oakley's "capabilities as a leading private equity investor, as well as the long-term potential of the Oakley Funds, to continue generating superior returns for investors" which have delivered a five-year compound annual growth rate of 19%.

OCI's shares have de-rated with the market this year, and now trade at a discount to the 31/12/2021 NAV of c. 30%. One change this year is the move to quarterly NAV announcements, the first of which is expected to be announced on 27 April 2022 (for the NAV as at 31/03/2022)…

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