James Carthew: Oakley Capital isn’t complex, it’s good at private equity
I have talked about the usefulness of capital markets days before and last week I made time to go to one held by Oakley Capital Investment (OCI). This is an investment company with a great track record, sitting alongside HgCapital (HGT) at the top of the private equity leaderboard over five years, yet the shares trade on a much wider discount of 31.6% versus HGT’s 3.3%.
HgCapital is perhaps better known, but the main difference is that OCI trades on the specialist funds segment (SFS), whereas HGT has a main market listing. As many readers have found to their frustration, the obstacles placed in the way when wanting to invest in SFS stocks are considerable. Fortunately, OCI is exploring securing a main market listing and I see no real reason why it should not get it. Once it does, perhaps that gap to net asset value (NAV) will narrow dramatically.
OCI had a great run in 2022 but last year was a bit more subdued. That really is just a timing issue and comes down to it writing up the value of its German university business IU Group in 2022 ahead of a transaction in that company in 2023. OCI’s share of the proceeds of that deal was £240m, 13.7 times gross on the amount it had invested. Remarkably, OCI has done even better than that on four occasions.
However, OCI fund managers continued to see considerable upside from IU Group and so about £66m of OCI’s money was reinvested into it. Rapid growth in online student numbers in Germany, Switzerland and Austria, and the establishment of new toeholds in markets such as the UK and Canada, mean that it has already been written up to £90.7m, making it OCI’s second-largest investment.
There have been quite a few negative headlines about the health of the private equity industry. Currently, the focus is on…
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