Oakley Capital Investments has reported an NAV return of 24% for 2022, way ahead of comparable indices. Unfortunately, discount widening left investors with a return of +1%. However, even that compares favourably with an -8.1% return on the MSCI All Countries World Index, for example. The company uses the All-Share as a performance benchmark, that returned -3%. The dividend was maintained at 4.5p.
The discount widening came despite 2.2m shares being bought back and cancelled at an average price of 407p, and board members/staff increasing the percentage of the company that they own to 13%. [We have said before that wide discounts in the private equity sector look irrational and would reiterate that in this case.]
The largest driver of the trust’s returns has been organic EBITDA growth within the companies in the portfolio, this averaged out at 22% for 2022. In addition, there were five realisations at an average of about a 70% premium to the latest available book value [reinforcing our consistent message that, if anything, private equity NAVs are understated because their valuations are conservative].
An €800m commitment was made to Oakley Fund V and a €30m commitment to Oakley PROFounders Fund III during the year. Total outstanding commitments as at 31 December 2022 were £929m most of which is expected to be deployed within five years or be left undrawn. The chairman says that “cash at year-end of £110m and an unused credit facility of £100m together with proceeds from anticipated, future realisations provide OCI with sufficient liquidity to meet expected drawdowns over the next few years. Additionally, the board reiterates our previously stated intention to realise, at the appropriate moment, our direct investments in specific portfolio companies as we focus entirely on committing to the Oakley Funds. We are pleased to note that both North Sails and Time Out [two direct investments] have delivered performance improvements in 2022 as the impact of the pandemic recedes.”
The statement lists the largest underlying individual drivers of returns as German education business IU Group, which added 64p to the NAV, cloud hosting business Contabo +26p (as Fund IV sold its stake), and Grupo Primavera (now Cegid as it was absorbed by the company) +21p.
OCI : Stunning 2022 extends Oakley’s track record of outperformance