Chair’s statement
Continuing to generate positive outcomes
In 2024, OCI delivered another period of positive performance, with a Total NAV Return per share of almost 2% (net of foreign exchange impact), against a backdrop of weak global economic growth and continuing macro and geopolitical uncertainty.”
Caroline Foulger Chair
Market backdrop
Our prediction 12 months ago that market uncertainty would persist in 2024 proved correct, with ongoing macroeconomic and geopolitical turbulence continuing to shape the investment environment. I'm pleased Oakley Capital Investments (OCI) navigated these challenges, once again returning a positive performance.
While global public markets enjoyed a buoyant year, the concentration of gains in US and European markets masked a mixed picture, with standout performers overshadowing more muted general performance. Caution among investors and businesses also contributed to a dearth of IPOs and it is no surprise that the decline in the number of listed companies extended. In London, the number of listed businesses dropped to fewer than 2,000, a decline of 25% compared with a decade ago. The story is similar across Europe.
This dynamic means that across the UK and Europe there is a wealth of opportunities for private equity managers. Europe has an extremely large pool of private businesses, with 96% of companies that generate Revenue in excess of €100m being privately owned. Oakley’s experience in partnering with founders, usually as a firm’s first institutional investor, positions it well to capitalise on the appetite for private equity investment from growing companies, and OCI of course benefits from that. In 2024, Oakley invested in eight new platform companies, as well as a significant number of add-on acquisitions to its existing portfolio.
As many companies will never join the public markets, including many of the fastest-growing businesses in highly attractive sectors, the opportunity cost for investors who lack exposure to these companies is growing. Listed private equity investment companies like OCI offer investors a route into these attractive businesses at the forefront of innovation, with strong fundamentals, and the outperformance that derives from those attributes, all while benefitting from the liquidity of public markets.
The Board is optimistic about the performance for 2025 and beyond, given the quality of the underlying portfolio.”
Caroline Foulger Chair
Performance
In 2024, OCI delivered resilient performance and NAV growth, in the face of the prevailing macroeconomic headwinds. Our total NAV return was 2%, or 6% excluding foreign exchange impacts, with a total shareholder return of 2%. We provide both numbers as we recognise that many of our investors choose OCI for our European focus, albeit we report in UK Sterling. Whilst returns in 2024 were relatively muted versus historic performance, the Board is optimistic about OCI’s performance outlook for 2025 and beyond, due to a number of factors as discussed below.
Underlying Portfolio Investments
The Board was pleased with the performance of the underlying portfolio investments in 2024, underpinned by strong operating performance, a number of realisations, and continued investment in growth trends. Not all of this has yet been reflected in our performance at year-end as an amount equivalent to c.40% of OCI’s NAV has been invested in the last two years, as the macro-economic environment created conditions particularly favourable for capital deployment. These additions to the portfolio are already performing well and delivering EBITDA growth. As they mature, they will quickly become more significant contributors to OCI’s performance, as valuation uplift typically accelerates through the duration of an Oakley investment. You can read more about this in the Investment Adviser’s report.
Our more established underlying portfolio continues to deliver a robust operating performance, with LTM EBITDA growth of 15% in 2024. The Portfolio overview section of this report provides more details, and highlights include Phenna Group, IU Group and Dexters, which benefitted from increasing demand and growing market share.
Our investment adviser continues to harness key technological trends to enhance the portfolio. Artificial Intelligence ("AI") is already catalysing additional growth across portfolio companies, by streamlining operations, reducing costs and creating demand for new services. Examples include VLex, whose Vincent AI tool efficiently interrogates case law, IU Group which deploys its Syntea AI tutor to deliver highly personalised education, and TechInsights, which is seeing strong demand for data and analytics on essential AI hardware. Our portfolio also benefits from exposure to companies at the forefront of AI innovation through the investments of Touring Capital, a dedicated investor in the next generation of software companies powered by AI.
Realisations
Realisations from exits during 2024 delivered £159 million to OCI, a positive outcome against the challenging economic backdrop and subdued M&A market, highlighting Oakley’s ability to deliver across cycles and generate liquidity for both our committed investments and capital allocation. The Board was particularly pleased that the assets were all realised close to the prevailing NAV, underscoring the robustness of underlying valuations.
£179 million
Robust returns
OCI's look-through share of proceeds for the period was £179 million, including £159 million of realisations from exits, as improved macroeconomic conditions began to support deal flow.
Direct Investments
As investors are well aware, direct investments are no longer part of our ongoing strategy. The Board remains very focused on maximising the value of its two direct investments, North Sails and Time Out, receiving regular reporting from both companies and periodically attending in person meetings. We have instructed the Adviser to progress these investments in 2025 with a view to having resolutions by the end of 2026.
Time Out continues to deliver growth in its established food markets and convert its strong pipeline of new markets, with a second New York market having recently been signed and commercial negotiations to sign a London market ongoing. Prospects for the media business are also improving with requests for proposals tripling since the beginning of 2025. The Board is optimistic about a realisation of this asset and we believe the current share price significantly understates the true value of the company, primarily due to very limited liquidity in the stock.
North Sails delivered another year of strong performance, with healthy order volumes, improving gross margins and significant trading momentum. During the year North Sails completed two strategic acquisitions, buying Quantum Sails and Doyle Sails, both leading designers and manufacturers of high-performance sailing products. The combination of strong underlying performance and recent acquisitions creates an exciting growth platform for North Sails, and the Board therefore took the opportunity to convert $107m of preferred equity to ordinary equity to participate in the expected future equity upside. You can read more in our Direct Investments section.
Capital Allocation and Liquidity
The Board’s primary objective is driving strong returns for OCI’s investors and capital allocation is a key element of this. As noted above, realisations were positive in 2024 and no new Fund commitments or financing to direct investments were made. However, as we move into 2025, we will continue to balance the consideration of outstanding commitments, expected cashflows and forecast returns, while ensuring there is adequate liquidity in place to enable OCI to fully participate in Oakley’s investment opportunities.
At the year-end, commitments across all Oakley Funds totalled £646m, compared with approximately £1bn of commitments at the 2023 year-end. Remaining commitments at the end of 2024 will be deployed into new investments over the next five years, with approximately £200m not expected to be drawn down based upon current forecasts. Liquidity as of December 31 was £225m, comprising £103m of cash and £122m of undrawn credit facilities.
The Board closely monitors these measures and is confident that current liquidity, combined with proceeds from future realisations and refinancing, provides OCI with the resources required to maximise shareholder returns.
Addressing OCI’s discount to NAV is a key factor in the Board’s assessment of its capital allocation strategy. The continued discount to NAV is disappointing in light of OCI’s consistent delivery and repeated evidence of the integrity of the valuation of portfolio companies. However, the Board remains confident that the discount will close over time. While it exists, the Board plans to take advantage of the discount by conducting share buybacks when appropriate.
Healthy capital deployment
c.40%
an amount equivalent to c.40% of OCI’s NAV has been invested in the last two years, as the macroeconomic environment created conditions particularly favourable for capital deployment.
Healthy capital deployment
£299m
Invested across Oakley's four core sectors in 2024. £175m was deployed in 2023.
The Board will continue to explore other initiatives to close the discount, create further liquidity, and increase investors’ access to OCI’s shares. Importantly, this entails educating investors about listed private equity to eliminate misconceptions surrounding the asset class and questions around the strength of our underlying portfolio. To achieve this, we will continue to invest in communications and transparency, leveraging OCI’s own record of performance and that of our investment adviser to reassure investors around the quality of our underlying portfolio and the reliability of its valuation.
Main Market Listing
The Board has initiated a process to transfer OCI’s listing to the Main Market of the London Stock Exchange, a move which would expand access to a wider range of investors and should help to further boost liquidity. Aligned with this goal, the Board is pleased to welcome Steve Pearce, who was appointed as a Non-Executive Director in November. Steve has an impressive track record in public company corporate finance and capital markets, with over 20 years’ experience advising UK listed companies including investment trusts. As such, he brings fresh insight that will be valuable in the delivery of this particular project, in addition to the full range of the Board’s objectives. You can read more in our Board Governance and Composition section.
Responsible Investing
The Board and the investment adviser are committed to investing and generating returns in a responsible and sustainable manner. In June Oakley built on earlier work around this issue, producing its first Task Force on Climate-Related Financial Disclosures (TCFD) report. This report uses globally recognised metrics to allow companies to disclose climate-related risks and opportunities. In addition, Oakley issued its annual Sustainability Report, which explores the investment adviser’s approach to responsible investing, and remains an active member of Initiative Climate International, a network of private equity firms working together to tackle climate change. The Board welcomes Oakley’s focus on cyber security and climate risk, areas which build resilience in the underlying portfolio companies, protecting and increasing their value. Every portfolio company has been onboarded on to Oakley’s cyber monitoring platform, and also has insights into their carbon footprints.
The Board and the Investment Adviser are committed to investing and generating returns in a responsible and sustainable manner.”
Caroline Foulger Chair
Communication and Disclosure
The listed private equity sector has a strong track record of outperformance and providing access to dynamic and growing private companies. Despite this, the benefits of listed private equity investment companies are still not widely understood. Clear and informative communications are key to addressing this issue and attracting a broader range of investors to the sector. One of the Board’s priorities, therefore, is the continuous improvement of OCI’s communications and disclosures, not only to assist investors in their analysis of OCI, but to educate a wider range of existing and prospective investors about the advantages that exposure to private equity brings.
In 2024, we were pleased to see that our focus on this area gained further recognition, with OCI winning several awards for the quality of our communications and our innovation in engagement with investors. Notably, OCI was recognised by the Investor Relations Society for our innovation in IR, and by the AIC for the quality of our report and accounts.
With private markets growing in scale and significance, it is becoming more important than ever for investors to be able to understand, analyse and invest in listed private equity investment companies and we will maintain our focus on this area in 2025.
Outlook
After a year of significant investment activity with record capital deployment we expect these additions, which comprise c.20% of the underlying portfolio, to benefit from Oakley’s value creation and optimisation strategies, as well as organisational efficiencies derived from their incorporation into the Oakley portfolio. More mature businesses in the portfolio, which frequently have non-discretionary revenue streams and are also market disruptors, are also likely to benefit from more favourable trading conditions, with the portfolio having shown consistent earnings growth through unstable periods. Expectations of a return to more active M&A markets are also likely to support valuations across the private equity industry.
The Board is confident that its initiatives to strengthen the understanding, appeal and rating of OCI will continue to bear fruit in 2025. Combined, the above factors underpin the Board’s optimism that OCI will see significant NAV growth this year, putting us on the path to delivering investment returns ahead of our benchmark.
Caroline Foulger Chair
12 March 2025
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See Oakley Funds strategies
OCI is an investor in funds managed by Oakley Capital, which consist of 'Private Equity' and 'Venture' Funds investing across four strategies: Venture Capital, Growth Tech, Small-mid Buyout, and Mid Buyout.