February 2022 Monthly

OCI’s trading statement to end-Dec’21 was extremely positive, noting i) Net Asset Value (NAV) per share of 538p, ii) an annual total NAV return per share of 35%, iii) an annual total shareholder return (TSR) of 48%, iv) investments of £137m and share of proceeds of £121m, v) year-end cash of £163m, vi) outstanding commitments of £404m (post year-end, OCI announced an initial €400m/£336m commitment to Fund V), and vii) the buyback and cancellation of 2 million shares. During the year, 76% of the increase in the portfolio's value was driven by EBITDA growth and 24% by multiple expansion, including realisations. The largest contributions were from IU Group and TechInsights.

• Proceeds (£121m): Realisations totalled £38m (exit of ACE Education, at 2.1x gross MM, the partial sale of Daisy Group’s stake in the digital wholesale solutions division and the repayment of debt by Daisy Group) and Refinancings totalled £83m (IU Group, Contabo and 7NXT).
• Investments (£137m): New investments were £106m – idealista, Dexters and ICP Education (Fund IV), and ECOMMERCE ONE, Seedtag and a reinvestment in ACE Education (Origin Fund). Follow-on investments were £31m – Windstar Medical (Fund IV), Grupo Primavera and Globe-Trotter (Fund III), and North Sails.
• Valuation: Against the end-Dec NAV, OCI trades at a 24% 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 1.2%.
• 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. We believe buying long-term, compounding growth is the key attraction, with any further closing of the discount to NAV an added bonus. The current 24% discount is less than one-year’s average recent NAV total return.