August 2022 Monthly

The 2Q trading update noted i) NAV per share of 630p and NAV of £1,119m, ii) a total NAV return per share of 11% since 31 March 2022 (+61p) and of 17% since 31 December 2021 (+94p), iii) £30m in new investments during the period, iv) ca.£112m share of sale proceeds expected post period-end, and v) new £100m revolving credit facility adds flexibility and liquidity. 67% of the increase in the portfolio's value came from EBITDA growth and 33% from multiple expansion, the latter driven by signed exits in the period, all of which were at significant premiums to prevailing book value. Of the 63p NAV gain, 46p came from valuation gains, 11p from forex and 2p from dividends, and share buybacks added 1p.

• Transactions: OCI made look-through investments of £30m, attributable largely to the investment in Vice Golf. Oakley agreed the sale and reinvestment in web-hosting Contabo and the sale of Italy’s leading price comparison website, Facile, both at significant premiums to carrying values.
• Cash and commitments: OCI had cash on the balance sheet of £97m at 30 June 2022, comprising 9% of NAV. Total outstanding Oakley Fund commitments (over five years) as at 30 June 2022 were £993m. During the period, the company also agreed a £100m revolving credit facility.
• Valuation: Against the end-June NAV, OCI trades at a 38% discount, despite its strong absolute, and peer and market-beating, relative performance. OCI has delivered consistently, with especially robust performance through COVID-19, demonstrating its downside resilience. OCI yields 1.1%.
• Risks: While OCI’s costs are slightly above-average, post-expense returns are still market-beating. Sentiment towards economic cycles may be adverse, even though downside protection has been proved repeatedly. OCI’s portfolio is concentrated, and we believe its permanent capital is right for private assets.
• Investment summary: OCI provides investors with liquid access to the attractive PE market, enhanced by Oakley’s incremental origination and active management skills. Oakley Funds focus on mid-market, tech-enabled European companies that operate in the technology, consumer and education sectors. Accounting and governance appear conservative. There are risks – primarily sentiment-driven – around costs and cyclicality, as well as the liquidity and valuation of the underlying private assets. There is potential upside from the one-off closing of the discount, but this may be considered against the compounding benefits from NAV growth.