Oakley Capital Investments has published results for the 12 months ended 31 December 2023. They show that the fund produced an NAV return of 4% for the year, matching the return on the All-Share Index. However, a narrowing discount meant that the return to shareholders was 18%. The dividend for the year is 4.5p.
Once again, the underlying companies in the portfolio delivered strong earnings growth, with a 14% organic uplift in portfolio EBITDA and additional growth through M&A activity.
The chair’s statement compares the valuation on the underlying, largely tech-enabled portfolio of 16.4x EBITDA to the year-end multiples of c.28x for the Nasdaq and c.25x for the S&P 500.
The fund invested £175m during the year and realised £266m from the portfolio. Fund III’s exit from IU Group realised a 13.7x gross money multiple on the amount that it had invested in that company. The adviser’s enthusiasm for that business remains and Fund V reinvested in the company alongside third party investors. The value of IU Group was written up in 2022 ahead of its sale in 2023.
The cash position rose to £207m, which when coupled with the undrawn £175m revolving credit facility gives liquid resources of £382m. £243m is expected to be called over the next 12 months and a further £532m is expected to be called over the following four years – which is expected to be covered by further portfolio realisations. If it turns out that realisations run ahead of expectations, it may be that the board feels that it is appropriate to fund further buybacks (£57m worth bought back since 2020).
The adviser says that it is taking advantage of relatively weak markets to build positions in new investments at attractive prices. There are now 28 positions in the portfolio and Steer Automotive will soon be added to that.
IU Group, North Sails and Idealista were the top contributors to NAV growth (+10p, +9p and +7p, respectively). These were offset slightly by falls in the value of Daisy (-4p) and Bright Stars (-3p).
The position in Time Out that was held through Fund I is now held directly by Oakley Capital Investments and all the assets in Fund I have now been distributed.
The £147m of loans and accrued interest that Oakley Capital Investments had made to North Sails have been converted into preferred equity. The underlying business is trading well, hence its positive contribution to the NAV.
[While the headline NAV growth figure is modest in relation to the returns of the past few years, it is great to see progress in a difficult environment. The discount narrowing achiveved during the year was well-deserved and has further to go we think.]
OCI : Oakley Capital Investments makes solid progress in 2023