We talk to Oakley Capital, a UK firm with a particular approach to tapping into private market investments, doing so via the route of a listed fund.

Investors may be getting more discerning about private market opportunities than they were a few years ago, but the sector is far from having peaked, UK-based Oakley Capital says. 

With listed equities in the US and elsewhere under pressure amidst all the worries about US tariffs and geopolitical shenanigans, it is perhaps understandable that advocates of private assets are drawing attention to this area.

Steven Tredget (pictured), partner at Oakley Capital, says the past couple of years haven’t been particularly easy, but he remains ebullient about his firm’s investment philosophy. 

“I do think the market has become more discerning,” Tredget told WealthBriefing in a call. His experience on the fundraising side is that there is still plenty of demand, especially from institutional investors.

Tredget talked about London-listed Oakley Capital Investments, a closed-ended fund that is on the specialist funds segment of the London Stock Exchange. OCI’s performance is linked to that of funds managed by Oakley Capital. It primarily holds unquoted, pan-European firms which the investment advisor thinks have the potential to lead in their field, or have already achieved that status. 

Oakley Capital focuses on education, digital consumer, business services, technology sectors, and on opportunities where there are chances of add-on acquisitions and improvements in performance. Investors in OCI also have access to other funds managed by Oakley, spanning Venture Capital and Growth Tech. There are 33 portfolio companies underlying OCI in total.

OCI’s board recently announced an annual recurring share buyback programme of at least £20 million ($25.5 million); the board thinks that OCI’s shares are “grossly undervalued.” OCI has acquired and cancelled £72 million of shares since 2019. OCI’s board decided to cancel a dividend payment and concentrate on buybacks instead.

The board also announced a €500 million commitment (£420 million) to Oakley Capital VI, which closed at its hard cap of €4.5 billion ($5.9 billion). The commitment is expected to be deployed over five years, with the first significant capital drawdown not anticipated to take place until 2026. Fund VI will follow the same strategy as Oakley Capital V, which is currently about 70 per cent deployed, investing in mid-market, founder-led, private European businesses across technology, digital consumer, education and business Services.

According to its December 2024 factsheet, OCI’s market capitalisation stood at £880 million, generating a total shareholder return for the full year (2024) of 2 per cent, and had a net asset value of £1.226 billion. (When foreign exchange effects are removed, performance was 6 per cent.) NAV per share was 695 pence, up from 6.84 pence in 2023 and 6.62 in the previous year. 

The Oakley funds are focused, high-conviction investment portfolios. They are limited to a maximum of 10 per cent being invested in any one investment and will typically hold between 10 to 15 investments in each. 

Stronger
OCI has invested the equivalent of 40 per cent of year-end NAV over the last two years, Tredget said, adding that he is getting more positive that results will improve through 2025 as a younger portfolio begins to mature and contribute to NAV growth. 

The existence of funds such as OCI is useful for those in the wealth management and private banking space seeking relatively straightforward access to private markets, he said. 

“I don’t think we are anywhere close to being at the top of this [trend],” Tredget said.

With rises – and then some easing – of interest rates, coupled with economic shifts, deploying capital has not been straightforward. That said, investors want to be able to exploit opportunities that come from disjointed markets, he continued. 

Looking across the landscape of companies in Europe, for example, highlights that the vast majority (96 per cent of businesses with revenues above $100 million) are privately owned, he said. When it comes to firms seeking a business exit, private equity offers one of the few options. “It has been an incredible place to be,” he said. 

Sectors in need of disruption
Oakley Capital sees sectors such as financial services and technology as ripe for change in Europe. Italian consumers, for example, have barely begun to embrace the digital revolution and the shift online. More broadly, a wide number of European businesses are still employing Excel spreadsheets for accounting and other processes.

There has been a fair degree of turnover and movement in the underlying portfolio companies that feed into OCI, and the average duration of holdings is at the youngest it has been for years.

Tredget mentioned the possible shift of OCI to the main market of the LSE. 

“The OCI 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,” he said.

Asked about leverage limits, Tredget said Oakley takes a “prudent approach to leverage with year-end net debt: EBITDA at 4.1x vs typically 5 to 6x across the wider private equity market. Our head of capital markets works directly with portfolio companies to help maximise balance sheet efficiency, lock in lower rates and diversify sources of finance. This can help lower overall interest cost.”