14 March 2024
Oakley Capital Investments Limited
Final results for the Year Ended 31 December 2023
Oakley Capital Investments Limited1 ("OCI" or the "Company") today announces its final results for the year ended 31 December 2023. OCI is a listed investment company providing consistent, long-term returns in excess of the FTSE All-Share Index by investing in funds managed by Oakley Capital2 ("Oakley").
The Oakley Funds3 invest primarily in unquoted, profitable, pan-European businesses with recurring revenues, and across four focus sectors. Oakley's origination capabilities with proven value creation drivers help management teams accelerate growth and produce consistently superior returns for investors.
Strong growth and investment activity in a period of macroeconomic uncertainty
Highlights for the year ended 31 December 2023
| ● | Net Asset Value ("NAV") per share of 684 pence and NAV of £1,207 million |
| ● | Total NAV return per share, including dividends, of 4% (+27 pence), or c.6% before the impact of foreign exchange |
| ● | Total shareholder return of 18% |
| ● | Investments of £175 million and share of proceeds of £266 million |
| ● | Outstanding commitments of £1,015 million |
| ● | Year-end cash and available credit facilities of £382 million |
| ● | Final dividend of 2.25 pence, taking dividends declared to 4.5 pence |
Portfolio highlights
| ● | Average portfolio company year-on-year EBITDA growth of 14% (2022: 22%) |
| ● | Average portfolio company valuation multiple (EV/EBITDA) of 16.4x (2022: 15.9x) |
| ● | Portfolio value increase was driven 65% by EBITDA growth, and 35% by multiple expansion |
| ● | Average net debt/EBITDA ratio of 4.2x (2022: 4.3x) |
| ● | The key drivers of NAV growth were: |
| ‒ | IU Group (+10 pence): enrolments grew 30%+ to 140,000+ students |
| ‒ | North Sails (+9 pence): revenue and profits hit record and ahead of target |
| ‒ | Idealista (+7 pence): strong results across core markets in Southern Europe |
| ‒ | Foreign exchange: (-12 pence): 2+% change in EUR:GBP |
Portfolio overview
OCI's portfolio of private equity investments delivered robust trading during the period:
| ● | Earnings - an average 14% organic EBITDA growth demonstrates the portfolio's ability to sustain performance through economic cycles |
| ● | Valuations - the average valuation multiple modestly increased to 16.4x, partially reflecting strength in peer multiples. The 4% increase in total NAV reflects a cautious approach to trading outlook and portfolio company valuation multiples |
| ● | Leverage - average net debt/EBITDA declined to 4.2x which compares to a private equity industry average of between 6 to 7x |
Read more about the Portfolio's performance in the Annual Report here.
Proceeds
OCI's look-through share of proceeds from exits and refinancings during the year totalled £266 million, consisting of:
| ● | Realisations - £240 million - IU Group at gross return of 85% IRR |
| ● | Refinancings - £26 million - idealista and Cegid completed debt refinancings |
Investments
OCI made a total look-through investment of £175 million which included:
| ● | New platform deals - £50 million - Thomas' London Day Schools, Liberty Dental Group and Webcentral |
| ● | Reinvestment - £66 million - IU Group, benefitting from the next phase of the company's growth which is focused on leveraging AI and internationalisation |
| ● | Follow-on investments - £35 million - in addition to vLex's acquisition of Fastcase, and the acquisition of 7Mind by 7NXT which owns and operates fitness platform Gymondo, 22 bolt-on acquisitions were completed by portfolio companies |
| ● | Venture investments - £24 million - investments in Oakley Touring Venture Fund and PROfounders III portfolio companies |
Read more about OCI's new investments in the Annual Report here.
Post balance-sheet events
| ● | Further new platform deals - c.£80 million - investments in Alerce and Steer Automotive Group. These transactions are expected to complete within H1 2024. |
Direct investments
The Board continues to work towards the resolution and value maximisation of OCI's two direct investments of Time Out and North Sails. Developments in 2023 included: the receipt of an in-specie dividend of Time Out shares from the ongoing closure of Fund I which rationalised OCI's Time Out holdings in a single direct stake, giving greater autonomy over the holding; and converting OCI's outstanding North Sails loans and accrued interest into preferred equity. This was done alongside a wider organisational and capital restructure of the North Sails Group which improves OCI's overall security, creates an incentive for redemption and helps simplify the North Sails' capital structure, enhancing the attraction of the business to future investors. Time Out recently publicly reported strong half year results while North Sails delivered another record year for 2023.
Read more about OCI's direct investments in the Annual Report here.
Cash & commitments
OCI made a total commitment of $100 million in Oakley Touring Venture Fund and €190 million in Origin II, taking the total outstanding commitments to the Oakley Funds to £1,015 million as at 31 December 2023. This will be deployed into new investments over the next five years. OCI's total liquidity as at 31 December 2023 was £382 million, comprising £207 million of cash on the balance sheet and £175 million in undrawn credit facilities. The Board closely monitors anticipated fund drawdowns and projected liquidity and will continue its long-term commitment to share buybacks when appropriate.
See OCI's Balance Sheet in the Annual Report here.
Outlook
The underlying portfolio is expected to continue generating strong earnings growth in spite of the prevailing macroeconomic uncertainty, while investment activity is anticipated to remain robust after a busy period:
| ● | Portfolio companies continue to benefit from long-term trends including the consumer shift to digital search and spend, businesses' shift to the cloud and to outsourcing, and resilient demand for education and up-skilling |
| ● | There remains a strong environment for new investment opportunities with five new deals signed in the last four months, laying the foundations for future earnings and NAV growth |
| ● | OCI's enhanced balance sheet and liquidity means it can fully participate in the Investment Adviser's strong pipeline with opportunities in due diligence weighted towards Southern and Western Europe, and Technology, Education and Business Services sectors
|
Caroline Foulger, Chair of Oakley Capital Investments, commented:
"It is testament to the resilience of the underlying portfolio and Oakley's active management that, in spite of the unsettled nature of the global economy, the Company continued to deliver. Most importantly, total shareholder return was 18%, taking the annualised five-year total shareholder return to 24%. OCI continues to offer one of the most accessible ways to gain exposure to pan-European private equity through one of the industry's best performing managers."
Peter Dubens, Managing Partner of Oakley Capital, commented:
"We are in a period of sustained uncertainty, triggered by macroeconomic volatility but also technological disruption not least with the advent of generative AI. While this can create challenges for our portfolio companies and the entrepreneurs we partner with, it can also create opportunities. Many of our existing investments are already leveraging AI to boost productivity and, in some cases, to completely pivot their business models.
"Meanwhile, our approach to partnership and strong track record in value creation continue to make Oakley the partner of choice for ambitions founders and management teams who are building disruptive leaders in often highly fragmented markets."
The Annual Report and Accounts are available on the Company's website at https://www.oakleycapitalinvestments.com/2023-annual-report/
A video overview of the 12-month performance is also available here https://www.oakleycapitalinvestments.com/news-and-media/videos/
The Company's Q1 2024 trading update is expected to be released on 24 April 2024.
- ends -
Results presentation
A live presentation of the results, delivered by Oakley Capital Partner Steven Tredget, will take place at 9:00am today, Thursday 14 March 2024. The presentation will be available to view via video webcast at the following link: https://www.investis-live.com/oakley-capital/65d47bebd0d520120031aad6/ozre
Dividend
The final dividend declared in respect of the year ended 31 December 2023 is 2.25 pence per share (following the interim dividend of 2.25 pence, bringing the full-year dividend to 4.5 pence per share.)
| Ex-dividend date | 14 March 2024 |
| (date from which shares are transferred without dividend)
| |
| Record date | 22 March 2024 |
| (last date for registering transfers to receive the dividend)
| |
| Dividend payment date | 26 April 2024 |
For further information please contact:
Oakley Capital Limited
+44 20 7766 6900
Steven Tredget
Greenbrook Communications Limited
+44 20 7952 2000
Rob White / Michael Russell
Deutsche Numis (Financial Adviser & Broker)
+44 20 7260 1000
Nathan Brown / Matt Goss
Notes:
LEI Number: 213800KW6MZUK12CQ815
1 About Oakley Capital Investments Limited ("OCI")
OCI is a Specialist Fund Segment ("SFS") traded investment vehicle that aims to provide shareholders with consistent long-term capital growth in excess of the FTSE All-Share Index by providing liquid access to private equity returns through investment in the Oakley Funds.
A video introduction to OCI is available at https://oakleycapitalinvestments.com/videos/. The contents of the OCI website are not incorporated into, and do not form part of, this announcement.
2 Oakley Capital, the Investment Adviser
Founded in 2002, Oakley Capital Limited has demonstrated the repeated ability to source attractive growth assets at attractive prices. To do this it relies on its sector and regional expertise, its ability to tackle transaction complexity and its deal generating entrepreneur network.
3 The Oakley Funds
Oakley Capital Private Equity L.P. and its successor funds, Oakley Capital Private Equity II, Oakley Capital Private Equity III, Oakley Capital IV, Oakley Capital V, Oakley Capital Origin Fund and Oakley Capital Origin II, are unlisted lower-mid to mid-market private equity funds that aim to provide investors with significant long-term capital appreciation. The investment strategy of the Funds is to focus on buy-out opportunities in industries with the potential for growth, consolidation and performance improvement. The Oakley family of funds also includes Oakley PROfounders Fund III and Oakley Touring Venture Fund, which are venture capital funds focused on investments in entrepreneur-led, disruptive, technology led companies.
For more information on the Oakley Fund strategies in which OCI invests, please click here.
Important information
Specialist Fund Segment securities are not admitted to the Official List of the Financial Conduct Authority. Therefore, the Company has not been required to satisfy the eligibility criteria for admission to listing on the Official List and is not required to comply with the Financial Conduct Authority's Listing Rules.
The Specialist Fund Segment is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.
This announcement may include "forward-looking statements". These forward-looking statements are statements regarding the Company's objectives, intentions, beliefs or current expectations with respect to, amongst other things, the Company's financial position, business strategy, results of operations, liquidity, prospects and growth. Forward-looking statements are subject to risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly the Company's actual future financial results, operational performance and achievements may differ materially from those expressed in, or implied by, the statements. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements, which speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the Company's expectations with regard to them or any change in events, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules or Prospectus Regulation Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
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