An important step towards progressing OCI’s position in Time Out was the liquidation of Fund I at the end of 2023. Fund I was the first Oakley Fund established in 2007, OCI was the cornerstone and largest investor with a 70% holding. Immediately prior to liquidation the Fund’s final remaining investment was in Time Out. Additionally OCI had an outstanding loan plus interest to Fund I. Several steps were required to arrive at a single direct investment in Time Out which creates a stronger position for an OCI realisation in due course.

In summary, both the loan to Fund I and the investment in Fund I were settled to OCI, along with the other Fund investors by way of an inspecie dividend in Time Out shares. Following the liquidation of Fund I, OCI now has a direct equity holding of 38% of Time Out (previously a 37% beneficial interest through a direct and indirect holding) and a direct loan to Time Out of £6 million. This represents a first step towards OCI’s objective of a realisation and value maximisation, with OCI now having greater agency over the investment in the business and better positioned for next steps.

In 2023, the business performance of Time Out improved significantly as it continued its post-Covid recovery with further progress in driving profitability and operational cash generation, as well as multiple avenues to drive future growth, including the opening of more markets, growing the media audience and further integrating the media and markets divisions to drive additional revenues and improve the audience experience. The quoted share price increased from £0.375 at year end 2022 to £0.535 at year end 2023. Time Out was the fifth largest contributor to NAV growth in 2023.

See update on Time Out's performance

OCI holds an indirect equity interest in North Sails Group through Fund II. Additionally, OCI had, from 2014, provided loan financing to different parts of the North Sails Group. At the beginning of the year, the outstanding loans along with accrued interest amounted to £147 million. As part of a group wide organisational and capital restructuring of the North Sails Group the OCI loans (and accrued interest to December 31, 2023) were converted into preferred equity in a newly created North Sails holding company.

The Board’s primary objective is to secure accelerated repayment of the £147 million of preferred capital from North Sails with incentives created to achieve this by June 30, 2025. Under the conversion terms, the preferred equity will initially carry a 0% coupon increasing to 5% from January 1, 2025. In return for the reduced coupon rate, OCI obtained warrants equivalent to a 5% strip across the group, exercisable on or after June 30, 2025. The warrants are reduced proportionally by the value of any redemption of OCI preferred equity before June 30, 2025. The conversion of the loans to preferred equity improves the security position of OCI, incentivises earlier redemption and provides potential additional equity upside in a business that is now performing strongly. Additionally, the simplification of the North Sails Group capital structure, positions the business more attractively to external investors.

North Sails achieved revenue and EBITDA growth of 18% and 32% respectively over the prior year and was one of the largest contributors to OCI NAV growth in 2023.

See update on North Sails' performance