# Oakley Capital Investments: 1H’22 results prove NAV real, resilient and growing

- Link: https://www.directorstalkinterviews.com/oakley-capital-investments-1h%e2%80%9922-results-prove-nav-real-resilient-and-growing/4121083211
- Published: 2022-09-21T08:01:14+01:00
- Author: Amilia Stone

We believe a significant driver to the whole listed PE sector trading at a large
discount to NAV is investors’ concerns about whether the NAVs are real and conservative,
and whether they can grow. For **Oakley Capital Investments Limited** (LON:OCI),
the detail in its latest results disclosure should, once again, abate any of those
worries. In particular, we highlight i) realisations, on average, 52% above carrying
value, ii) 18% growth in investee company EBITDA (which accounts for around three
quarters of NAV growth), iii) a PEG ratio of 0.8x, iv) 93% of multiple expansion
driven by exit uplifts, and v) average EV/EBITDA ratings below listed market levels,
despite subsectors that attract high ratings. Oakley adds value to companies in 
all economic environments, especially uncertain ones.

 * **Robust valuation:** Inter alia, this report reviews why investors can trust
   the current valuation. Putting aside independent checks and balances, the bottom
   line is that other investors pay more for the assets than that at which Oakley
   values them (uplifts on exit), and there is no incentive for Oakley to inflate
   the valuation.
 * **Sustained outperformance:** Oakley Capital Investments’ five-year NAV total
   return CAGR to June 2022 was 23%. It is focused on structural growth sectors 
   and subsectors with proven economic resilience. Oakley’s operational, strategic
   and financial support is incrementally more valuable in a downturn than in good
   times when rising tides lift all boats.
 * **Valuation:** Against the adjusted June 2022 NAV, OCI trades at a 36% discount,
   despite its absolute (five-year CAGR 23% total NAV return) and relative performance.
   Any one-off closing of the discount is the “icing on the cake”, rather than the
   reason to buy (the long-term NAV CAGR). We expect a stable 4.5p dividend (yield
   1.1%).
 * **Risks:** While OCI’s costs are slightly above-average, post-expense returns
   are still market-beating. Sentiment towards the global economic cycle is likely
   to be adverse, even though outperformance has been delivered in downturns. OCI’s
   portfolio is concentrated, and we believe its permanent capital is right for 
   private assets.
 * **Investment summary:** Oakley Capital Investments provides investors with liquid
   access to the attractive PE market, enhanced by Oakley’s incremental origination
   and active management skills. Oakley Funds focuses on mid-market, tech-enabled
   European companies that operate in the technology, consumer and education sectors.
   This space provides structural growth, as well as opportunities for Oakley Capital
   to add operational, strategic and financial value to the business acquired. Accounting
   and governance appear conservative, with an average 52% uplift to carrying value
   on exit since inception. There are risks – primarily sentiment-driven – around
   costs and cyclicality, as well the liquidity and valuation of the underlying 
   private assets.

[DOWNLOAD THE FULL REPORT](https://hardmanandco.com/research/corporate-research/9395/?dm_i=49CL,1ETON,6NAI95,6J446,1#report-download)

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