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Welcome to the website of Oakley Capital Investments Limited (“OCI”) of Mintflower Place, 3rd Floor, 8 Par-la-Ville Road, Hamilton HM08, Bermuda. 

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OCI has not been and will not be registered under the US Investment Company Act of 1940 (as amended) and, as such, holders of shares in OCI will not be entitled to the benefits of that Act. Shares in OCI have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States. Shares in OCI may not be offered or sold within the United States or to, or for the account or benefit of, US Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and in a manner which would not require OCI to register under the US Investment Company Act of 1940 (as amended). Shares in OCI have not been, and will not be, registered under the securities laws, or with any securities regulatory authority, of any jurisdiction outside the UK.

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This website is for information only. It is not an offer or invitation to buy or sell, or a solicitation of an offer to buy or sell, or a recommendation to buy or sell, any securities mentioned. Nothing on this website should be taken as an invitation or inducement to engage in any investment activity. Information on this website does not, and should not be deemed to, constitute investment, tax, legal or any other advice.

Investment Risk

The value of securities and any income from them may go down as well as up, and an investor may not get back the full amount of money invested. Past performance is not a reliable indicator or guarantee of future performance. There is no guarantee that the market price of OCI’s shares will fully reflect their underlying net asset value or that OCI’s investment objective will be achieved. You are strongly encouraged to seek individual advice from your professional adviser(s) before entering into any agreement to buy or sell any security or making any financial or investment decision.

Shares in OCI are traded on the Specialist Fund Segment of the main market of the London Stock Exchange and are intended for institutional, professional, professionally advised and knowledgeable investors primarily seeking exposure to private mid-market UK and Western European businesses through investment in the Oakley Capital Private Equity funds (or successor funds) and: (a) who understand and are willing to assume the potential risks of capital loss associated with investments in such companies, (b) who understand the illiquid nature of private equity compared to other asset classes, (c) for whom an investment in OCI’s shares would be of a long-term nature constituting part of a diversified portfolio, and (d) who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.

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12 month return - UK listed private equity sector
Oakley Capital Investments
Listed private equity provides access to superior investment returns.
Steven Tredget
Partner, Oakley Capital
03 Mar 20

If you had invested in the FTSE All-Share Index this time last year, you’d have made a return of about 5%. Invest five years ago and you’d have made a compound annual return of about 2%. Ten years ago? Just over 4%. If you wanted more impressive returns, then, you would have looked to private equity, which has been the best performing asset class globally in recent decades. Had your investment tracked a global private equity benchmark instead, you’d have made a return of 10% over the past twelve months, an annual growth rate of 13% over five years and 15% over ten.

Despite this consistent outperformance, private equity remains maligned and misunderstood. Even over a decade on from the financial crisis, it is viewed by many as the ‘bad boy’ of the financial services industry, or a hunting ground where ‘vultures’ and ‘locusts’ seek their prey, generating returns through using excessive levels of cheap debt. Some even associate private equity with investing in high-risk, illiquid and unprofitable start-ups – perhaps unsurprising when you consider the number of high-profile companies exposed in 2019 alone.

However, if you strip away the stereotypes, what you find is that private equity is simply investing in the privately-owned businesses that we all see and interact with every day and maximising their potential to create value. The returns for investors are superior, and sustainable too, as more companies seek private capital rather than tap the more costly, unpredictable public markets to fund growth.

Global private markets have continued to grow in recent years. They grew over 11 per cent in 2018 according to Fidante Partners, while investments in global listed markets fell by 8.3 per cent. The pool of opportunities for private equity is larger than ever and still growing rapidly. Add to this the fact that private equity investors are essentially ‘permanent insiders’, with a level of knowledge, engagement and influence that is unrivalled by the public markets, and it is no wonder that private equity outperforms.

So how do you access private equity funds if you aren’t a well-connected billionaire?

One option is listed private equity – buying shares in a listed investment company which commits that capital to private equity funds. Going back to where we started, had you invested your money in an index of UK listed private equity, over the last twelve 12 months you’d have made 24% . Over five years, a compound annual return of 6%, and over ten years, 12%. Listed private equity too, then, has outperformed the FTSE All-Share by some margin.

Listed private equity can provide access to a proven manager and the performance of the funds they manage. In our case, this sees shareholders in the publicly-listed Oakley Capital Investments (OCI) gain access to a focused portfolio of 16 high-quality companies through its investment in the Oakley Capital funds.

Of course, there are factors to consider with listed private equity. First and foremost is manager selection. While private equity has outperformed all asset classes in recent decades, it is vital to select top performing managers that can source and execute attractive deals in a competitive market while maintaining a disciplined approach to leverage.

Fees are also a point of contention. They are higher than those of an active public equity fund, but this reflects the cost of management and levels of performance. With OCI, for instance, shareholders pay to access a large, experienced team that monitors opportunities for years, many of which are rejected. Once invested, engagement with portfolio companies is significant, from sitting on boards to advanced strategic planning. The better a fund performs, the more the manager receives in fees, such that the best performing funds will (rightly) have the highest fees.

Another issue to address is that many listed private equity company’s trade at a discount to net asset value. This is due to the asset class being under-owned by investors, as many have limited awareness of listed private equity companies and the opportunity they present, and because of the reputational damage caused by the historic failures of managers that no longer exist.

But as performance and knowledge of the sector improves, these discounts may close, presenting an opportunity to buy into high-quality portfolios of investments at attractive prices.

Private equity has a misplaced reputation that needs to be addressed using facts. As an investment in recent years, you could not have made a better return. There are many ways in, but listed private equity is the most straightforward and once investors understand the opportunity, it is hard to argue against it.

Published by Spears https://www.spearswms.com/priviate-equity-opinion/

Listed private equity provides access to superior investment returns.
Steven Tredget
Partner, Oakley Capital

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