Oakley Capital Investments Limited (OCI) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Oakley Capital Investments full year results investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it is appropriate to do so. These will be available via our Investor Meet company dashboard, and we will send you an e-mail to notify you when they are ready for you to review. I'd also like to remind you that this presentation is being recorded. Before we begin, I would like to submit the following poll. And if you could give your attention, that would be most grateful. And I'd now like to hand over to Steven Tredget. Good afternoon -- good morning, Steven.

Mark, thank you for inviting me to join today, and thank you for all those that are joining us online. Apologies, there is no official connections fee today, so you're at least lucky on that front. So as Mark said, my name is Steven Tredget. I'm a partner at Oakley Capital. And in short, Oakley Capital manages private equity funds. And the public company we're here to talk about is Oakley Capital Investments, or OCI, and that vehicle invests in the funds that Oakley manages. And that allows private investors like you or I to gain exposure to private equity returns to the stock market. So as described, OCI is what is known as a direct-listed private equity company, and that's in contrast to fund of funds. And it's comparable to peers like 3i, HgCapital Trust and Apax Global Alpha. So turning to our first slide. And to give you an immediate flavor of the type of businesses that OCI gives you access to, I've pulled up 3 pictures here that really represents the kind of companies that are key to our investment themes. And that first picture there is a lady who is staring at an advertising board. But essentially, she is studying online, and she is looking at the Career Partner Group's online software. And Career Partner Group is Germany's largest and fastest-growing university, and it's just one of the examples of digital businesses that make up the Oakley portfolio companies. It's achieved its growth, thanks to its focus on online education. And it provides designed-for-purpose, completely flexible student-orientated learning. And as a result, in the 3 years since we acquired Career Partner Group, student numbers have grown from 15,000 to 60,000, and EBITDA has grown threefold. It's been one of the largest contributors to OCI in 2020 as a result of this value growth. And I can confidently say it'd be one of the -- most likely one of the biggest contributors to growth this year and next year as well. Moving to that second image there. That is the Gymondo fitness app. Gymondo is part of the 7NXT Group that we acquired recently. And it's another example of a digitally native business and another example of how when a business is constructed for purpose, that's to try and purposed to operate digitally, how much significantly better your operation is if you're trying -- as opposed to just trying to convert to the digital environment. They provide -- they're the leading app of its kind in Germany and actually was Apple TV's app of the year. And it provides guided online fitness subscriptions to a predominantly female user base. Over 90% of subscription base are female. And it has an incredibly extensive library of video workouts and training plans. Its subscriber base in 2020 were close to doubled across that last 12 months. And it really pays to not just what's happened as a result of COVID, but also an increasing change in the preferences of people to exercise in the privacy of their own home and have the flexibility of training when they wish and also with a wider group of kind of friends and connected people. And we think this is a trend we think that's going to -- we can confidently predict will move in that direction. It's also, I think, one of the reasons why I draw your attention to beyond is that whilst Oakley has had an incredible reputation to date and track record to date of accessing great opportunities, the fear is your ability to continue to do so and continue to uncover value, particularly in companies that are now becoming quite highly rated. And so I bring this up as one of our most recent investments, and it demonstrates Oakley's ability to repeatedly access attractive investments. And it does this thanks to a network of business founders that we'll talk about shortly. And third and finally on this page, that is a photo from the materials of Ocean Technologies Group. This is a group that we -- is an example of the buy-and-build platforms that we have created at Oakley. And in this case, we combined 6 companies together to build the kind of clear market leader in regulated maritime e-learning. So that essentially is providing your crew onboard your tanker with the training -- remote training they require in order to meet your compliance requirements. And what we've been able to do is not only provide the dominant player and provide pricing strength for that group but also start to expand the product that we can offer crew, not just in training but hopefully moving into other areas of HR and support. That hopefully gives you a flavor of the kind of businesses that we invest in and some -- our investment strategy. I'm very aware that our audience today spans most -- very well our existing shareholders and some of them are being introduced to OCI for the first time. And so on that basis, I will cover off just briefly in the next 30 minutes, at the start of that period, why private equity, what is so appealing about this asset class; talk a little bit about Oakley Capital's investment strategy and how it continues to originate companies; and then we'll finish with an overview of the OCI's full year results to December and talk a little bit about the prospects of the business. So why private equity? Well, I've joined -- I put 3 key reasons here on the screen. It's far from exhaustive, but I think these are kind of 3 of the key reasons. One is the superior returns that this asset class achieved. I put up 2 examples here. It's crude, but I've given you the FTSE all-share annualized over the last 10 years, which is about 6% compounded. And I put up the global private equity benchmark, which has grown at 14% annualized over the last 10 years. Now the global private equity benchmark covers all of the PE world. So how does that look in terms of those that give you a listed access? Well, in fact, that is the LPX Europe, which is essentially the index of those companies listed here in Europe to give you PE access. And that's performed in line, if not slightly under, kind of global benchmark. I guess, more importantly, for this discussion, OCI has grown almost identically to the global PE benchmark on a 1-, 5- and 10-year basis. So you've got superior returns, and also the listed vehicles can give you access to that. The second point here I made is value creation. And that really just kind of talks to the difference in a public market investor versus a PE investor in that a PE investor is not only, in many cases, certainly taking the majority stake, taking positions on the board, is taking a meaningful role in the creation of value such that there is significant -- or there's a lot more control over the outcome than you might have if you're a public market Investor. And finally, on this page, PE increasingly captures a larger pool of companies. So it's representing a much greater investment choice and opportunity. We've put here just the stats that compare the U.S. market when they were last kind of published at the end 2019. But you can see -- and if I was to bring up a chart at this time, it would show not only is there a significant more private equity, but the trend is that the number of public traded companies is declining and the number of private equity-backed companies is increasing. So why is that? Well, my epiphany came in 2016 when I was in the investment banking stockbroking world for a number of years, for nearly 15 years. And in 2016, I had literally driven up the M40 to present to the management of a private company, a successful logistics firm based in Solihull. And I confidently arrived in my city suit and tie to meet these gentlemen to tell them all about the wonders of becoming a listed business and that they should actually consider an IPO. And it didn't quite last out the building, but it was very clear to them that the IPO was very much a secondary -- second-class option to the one of a private company. And as they described it, as they described it for me, we'll pick up from the points they kind of relayed back then in 2016. I should say at this point, 2017, I left the stock market and -- or stopped broking and joined Oakley Capital such as my experience. But here is what -- why I think more companies are remaining private. I mean, firstly, kind of 10 years ago, if we were having this discussion, private equity, particularly here in the U.K., was a relatively nascent industry. There is a lot more capital available now and is more easily accessed for companies that are certain size and developed than there ever was. So I think that's the kind of first reason. It's the choice that you now have as a company. Secondly, if -- it's not just getting access to capital. I think when you get a PE investor, one, you're more often not getting a single investor. That is a much easier relationship to manage. But with that capital comes the expertise and support to help your business develop and grow. So it's less of a decision of, I just want money and where can I get it from. Or I just want to exit. And this speaks a little bit to the second point and certainly, one of the points made by that company back in 2016 to me, is that you have significant information about you as a private company, which you relinquish as a public company. And so then in contrast, to go public, you have to wrestle with the kind of headwinds of compliance, increased regular reporting requirements and the kind of investor relations that comes with that, the increasing cost of being public. You've got M&A restrictions. You have management incentive restrictions. And you have that pressure of live pricing, which I think leads to significant short-term pressures on businesses to behave and grow in -- at all costs, which isn't always to the benefit of the company. So hopefully that gives a little sense of kind of maybe why private equity, why a vehicle like OCI provides an interesting opportunity. Here, we'll just touch on Oakley Capital and how it goes about investing in what areas, what's its investment strategy and how is it originating. So first off, it's just to kind of give you a sense of the scale and the jurisdictions and sectors that Oakley focuses on. We have 2 fund families here: the kind of flagship fund, Fund I, II, III and IV. We're currently on vintage #4, and the Origin Fund. They essentially have the same investment strategy that allow us to invest different sums of equity value into the businesses. Enterprise values, we tend to target up to that EUR 400 million, EUR 500 million. So very much the mid-market, and it goes down to the lower mid-market. In terms of geographic focus, it tends to be Western or Southern European focus with particular expertise in Germany, Italy and Spain, to name 3. We're not exclusive to that region, but that's certainly where our expertise is and where the biggest connection of our kind of connection to business founders is really kind of focused. And then we focus on 3 sectors, and they are technology, consumer and education. And when I reference those kind of sectors, they're obviously particularly broad searches, those 3, but technology covers -- it starts in our heritage in kind of telecoms and web hosting and has evolved into a track record of backing technology-led business service solutions. And the other side of technology is really digital services, and that is businesses that are really taking advantage of the ongoing shift from consumers to -- from traditional off-line channels to online platforms. And online platforms for us is typically price comparison websites. So for example, the money supermarkets of Italy, for example, or Germany in the past; or real estate classified businesses, the right move of Southern Europe as an example. In terms of consumer, that's investments that capitalize on the value captured by that balance of power shift towards well-managed brands and the increasing ability of those brands and companies to trade directly and digitally with their customers. And also, we're really capturing the kind of power of social media-led marketing. When it comes to education, we started off with premium schools with a group called Inspired. And we've now really traveled across the kind of wide range of the business sector. And that has included tertiary; after-school education; online education, as we've referenced already; after-school tutoring for children of school age in Germany; and career-based training. Moving on to touch on origination. And I think this is important to how we originate, but our ability to still access value, which I think is -- which is -- this is important. And I've referenced this slightly already. But one of the key elements of Oakley's success to date has been the fact that we have strong -- a strong network of business founders, individuals that have established businesses and want an investor to come alongside them to help them grow that business. And after having a level of success with us, they've done 2 things. They've actually gone on to invest in the funds themselves and have gone on to find additional opportunities for us to invest alongside them. In some cases, in the pool of 20-odd business founders that we've backed, some of them we've now backed for the third or fourth time. And I think the other key thing is, actually, as I mentioned, in terms of being -- going on to invest in the fund, they've invested up to nearly EUR 200 million of their own funds into the funds that we manage, which creates a great alignment of interest, and it also reveals the unique and strong relationship we have and the partnerships we formed with the individuals, the entrepreneurs that we have backed to date. I can't overstate that enough as being a kind of a clear differentiator for us. And then also, alongside them and how we do our deals, is the fact that we do not mind tackling complexity as a result of how we're getting involved in a transaction. And where might complexity be? I think a lot of transactions happen via a competitive auction. The company has been prepared. Its accounts, its documentation, anything about it, have been prepared perfectly in preparation for an exit, which will be competitively managed by a third party. In many of the cases, of the businesses we're looking at, there isn't a formal process in place. The business want to be prepared in that manner. It may be a carve-out of an existing payment, and it means we have to get our hands dirty in order to put that transaction together. The significance of that is that we are often doing transactions that are off-market. So 70% of the investments we have made to date have been uncontested. 40% of them have been carve-outs. And that means we're able to unlock a significant amount of value in that process. It will be unseen to anyone else at the moment or anyone if it wasn't part of a -- it'd be very different. The information of ours will be very different if that's part of a competitive process. I've also touched on this, but it's very much about forming a new partnership. The owner of the business is not always looking for that moment of our entry to be a value-maximization exercise. They're not looking for the highest price necessarily. They're looking for the right partner to provide them capital and help develop that business to the next stage of its growth. In 85% of the cases, we are the first private equity investor that has come on board a business, which I think is significant. In fact, someone described it to me that Oakley tends to buy, build and develop -- grow businesses, which ultimately become a target of larger PE firms. And then finally, I touched on in relation technologies, but the other way we can alert value is in buy and build. That's initially acquiring a platform in a fractured market and then unlocking value by buying smaller orphan assets to combine with that one and, as a result, lowering our entry multiple. That covers a little on the subject of origination. Here, I picked out 3 of the investment themes, which you'll typically see us play in. I would state upfront that the events for the last 12 months, whilst they have caused a lot of change and disruption, they certainly won't have affected how we go about investing and what our targets are. First up, I've kind of mentioned that kind of direct-to-consumer kind of theme. I've touched on this with Gymondo and with Career Partner Group. But there's this incredible opportunity now for businesses, particularly in areas where there hasn't been that disruption of a digital platform, and there are still plenty of industries where that's the case. Suddenly, you're creating a frictionless, lower-cost opportunity to trade with your own customer. You can finally and effectively measure your return on digital marketing. So from a professional investor like ourselves, it means we can actually understand and analyze the returns we can get from investing. And more importantly, companies now have the power of data about their customers. And that is one of the most kind of valuable commodities on the planet for a business and enables them to interact with them to know exactly what they have purchased, when they purchased, what they respond to and what's the kind of big detail to the mix. Another key trend for us is being repeat play in different geographies. And that's often investing behind the digital disruption curve. To give you an example, Money Supermarket, as I mentioned before, in the U.K. is a -- is highly developed, is in a mature market, and there'll be limited scope for growth -- structural growth in this market at the moment because it's highly penetrated. We first invested in price comparison websites in Germany, where it's significantly behind the maturity curve to the U.K. And now we've been able to go on from there with our expertise to invest in Italy and now subsequently across Southern Spain in similar platforms, where the penetration has been low. To give you a simple example of that, Facile is the leading price comparison website in Italy. One of the -- one of its leading verticals is car insurance. In the U.K., 70% of car insurance is arranged or renewed on some form of online platform. In Italy, going into 2020, it was more like 12%. So we're not making a bet on the economic or cyclical cycle in Italy. We're making a bet on the continued penetration of a platform of that nature. And we've certainly been able to enjoy the increasing adoption of a platform like that as a result of the events of 2020. And then finally, kind of buy and build in those fragmented markets. This is the opportunity, as we've done with WebPros and web hosting software, Ocean Technologies in marine learning and Ekon in business service software in Iberia. We've built a sector champion. We've managed to kind of realize the synergies that come with the bolt-ons. We've increased the pricing power as we bring competitors together to operate in one business. And we've unlocked value by creating a kind of scale player. Moving on just in terms of the -- Oakley's ability to kind of keep active during a disruptive year. It really hasn't kind of slowed down the pace of investments or realizations for that matter. There were significant realizations in the period. And probably most notably, as we go on to talk about, was the premium to the book value that those realizations were achieved. And also, we've continued with investments. There were 4 platform investments in the year, and there's already been 2 new investments at the start of 2021. We have a significant pipeline of opportunity, probably the largest pipeline we've had in our history. But I think the most significant stat about the size of the platform is that 70% of that pipeline is made up of proprietary opportunities, i.e., they're ones that have been brought directly to us, we have unearthed through screening or we've unearthed through a kind of continued relationship with a business founder. COVID has provided a catalyst but maybe not in the sense of like bringing us distressed businesses that are in need of funding. It's more that maybe business models have been accelerated over the last year or so. And as a consequence, companies are now considering that next leg of growth, that next opportunity, whether that comes in M&A, internationalization. Maybe they now want to or need to grow a digital channel because of their experiences last year or maybe they just want the greater certainty of being part of a bigger group and, therefore, are up for the first time to being acquired. Well, over those reasons, we've certainly seen kind of COVID provide an extra source of opportunities over recent months. So let's turn to OCI and the full year results. Here on the screen, you'll see the kind of headline numbers. Net asset value growing to GBP 728 million and a NAV per share of 403p. I think what's pleasing about the performance is that total NAV return, which is the growth in the NAV plus the dividend paid, is 18%. And I think what's particularly pleasing about that is that wasn't in a year where everything went right. Of the 17 companies that we -- that were in the portfolio at the end of the year, 7 of those, as we can touch on a little bit, didn't perform in line with their expectations. Some modestly and some significantly. But the fact that despite that, we can still produce return, a sustained return like this, that's in line with or slightly in excess of our 5-year average, I think that's reasonably commendable. Here shows that kind of NAV progression over the year -- over the years, over the last 10 years. And I wanted to bring this up because I think it just shows the progression that OCI has gone on in terms of those kind of early years when there was a lot of cash. And for various reasons, that provided a drag. You've also only had kind of 1 or 2 funds operating. And then from 2017, you see the maturing of the investment strategy. You see the maturing of the portfolio. You see a lot more regular investment and realization activity year-on-year. And we've seen that consistent growth start to bear out and the performance you've seen in the NAV over the last kind of 5 years. Here is we talk about that growth in NAV, and I wanted to kind of highlight what I thought the positive and negative impacts on the NAV have been over the last 12 months. First off, and I think most importantly, is the average EBITDA growth, the average earnings growth of the portfolio of companies. There are, as I said, 17, and they grew at an average -- earnings an average 20%. Now I mean that is a respectable growth in EBITDA. It's lower than you might expect for an Oakley -- average Oakley portfolio company. The last -- the years prior to 2020, the average has been more like 28% and 30% in the prior 2 years to 2020. But still, it's still respectable. And the biggest contributor in terms of performance was Career Partner Group, which added 34p per share to the NAV. The other significant driver to value is in exits. And we had 3 significant exits in the period. And notably, they were an 89% premium to the book value. It's not unusual at the point of sale that there is a release of a value that you cannot necessarily guarantee or multiple expansion -- earnings multiple expansion that you can't guarantee so that you can't necessarily hold the companies at that kind of value. When the exit comes along, you get that price discovery and you get the opportunity for uplift. It's a bit like the uplift you see in an IPO when you get that kind of initial kind of pop of performance. The average long term -- I'm not suggesting we're always going to get 89% premium. The average weighted premium since inception of all the deals that we sold has been 44%. So you can see, and we'll go on to talk about the discount we trade to NAV. There's a double discount there because there's also the discount to the realized price that we ultimately go on to achieve. The OCI Board has remained committed to a share buyback program. We bought back 18 million shares in 2020 at a significant discount to NAV, and that enhanced the NAV per share by 13p. I'll touch on this a little more, but 7 of our portfolio companies kind of lagged our expectations, most notably Time Out at a rescue raise in May of last year. And for obvious reasons, with Time Out's kind of markets being closed and advertising slumps, you see an impact to NAV there of 30p in the year. It was a positive that we had a large amount of cash going into COVID. We sold -- in selling WebPros and Inspired, a large cash inflow came in to OCI. And whilst that was great when they had the uncertainty and the initial kind of lockdowns in the wave of COVID, now I think we consider it to be a drag on performance. And I think key is seeing that cash deployed into the funds as the funds draw down. So here, we've taken the GBP 728 million of NAV, and we've divided it into the 3 asset types, if you like, that currently prevail. Let's deal with that cash first. 31% of NAV at the year-end. It's fallen slightly from there but only slightly as a result of the investments that we've made since the year-end, thanks to also there being a realization and a refinance. The long-term average for us is around of cash as a percentage of NAV is around that kind of 15%, 1-5, 15% to 20% level. And you should expect us to return into that range in the relative near future. As a result of the sale of those assets, the Oakley funds themselves, we currently got about 50% exposure to them, and that's where we really want to maximize the most exposure to. We've got the IRR there of the funds being about 26% net of nettable costs. In the last year, it's more like 36%. So you can see that as much exposure we can get to the funds as possible, the better. Now direct investments are investments that we have made directly into existing portfolio company, debt or equity. It was conceived as a strategy kind of a number of years ago when we had a lot of cash and we were deploying for the first time and making short-term investments into those companies was a great way of reducing the cash drag. It has brought significant success over the period in terms of investing more in companies that have outperformed. But as we stand today, the IRR of the direct investments lags the funds. And I think we've now got enough fund strategies to invest in, in terms of flagship fund, the Origin Fund, that we're confident enough that there is enough ways for us to deploy the cash we have got into the fund. What this is saying is that our plan is -- well, the plan is to stop new direct investments and to realize our existing ones. We won't get to do it immediately. It's a process that's ongoing. The GBP 150 million of direct investment at the moment has already fallen to GBP 130 million as a result of the realization, and our plan will be to wind down. There's only really 2 outstanding ones. There's direct debt into North, and there's equity into Time Out. And certainly, in the case of both -- certainly in the case of North Sails, we would hope to be in a position to have refinanced North in 2022 and to see a return of that capital. I think that will achieve a number of things, and we'll maybe go on to talk about this particular point when we talk about the discount. But I think what we're hopefully looking at then at a year or 2's time is 15% to 20% of the NAV in cash and 80% to 85% of the NAV in the Oakley fund. Here, we split the NAV up differently here. And this is showing you, as an OCI shareholder, your exposure to each of the 17 portfolio companies, the equity exposure to each of those companies. Of note is the relative even split between the kind of 3 sectors. But I think probably more importantly, rather than the sectors, is the fact that over 70% of those companies deploy their products and services via some kind of digital solution. The other significant stat is a similar percentage. 71% of that portfolio enjoys some kind of subscription-based or recurring revenue. Or if they don't, in both those cases, if they don't necessarily deploy their services or they don't have a subscription-based revenue, then we identify the opportunity to introduce one. To provide some stats of companies I've already referenced, the average EBITDA growth across the entire portfolio, I'd say that Fund IV, which is one of our newer funds, the average EBITDA growth in those companies we identified more recently is 40%, which talks to how kind of strong the investment strategy is and how we developed it over recent years. Average net debt-to-EBITDA, I think it's good to kind of focus on that or feature it in that one of the concerns that private equity is generating its returns via overreliance on debt and cheap debt. This has been a pretty stable multiple for us. I think it was 30 -- 3.8x net debt-to-EBITDA in 2018, 3.7x in 2019 and 3.9x. I think the more important feature of any kind of net debt multiple is the nature of the EBITDA, how fast it's growing and more importantly, how much of that converts to cash. And when you're talking about businesses with a technology or digital bias, then there isn't a huge amount of cost other than kind of interest in tax that sits below EBITDA. So a lot of that fast-growing EBITDA converts to cash, and we're very comfortable with that level of indebtedness. And it compares to the kind of average in kind of broader global PE being more like 7x. The EV/EBITDA multiple, I think, is notable in how relatively low it is, kind of just shy of 12x EV/EBITDA when you consider not just the growth that we achieved -- average growth we achieved this year, but what the typical average growth has been in previous years in a non-COVID year. That multiple hasn't increased. It was about 12.1x this time last year and reflects the fact that they're not creating NAV growth by increasing the multiple of the earnings that we're holding businesses in. Their value is increasing, thanks to the growth in their earnings. Here, we've divided up the portfolio into their kind of COVID impact buckets. The left-hand bucket there shows the businesses that have really either performed as expected or thrived in a kind of lockdown environment because of their kind of digital solutions. To pick out some that have really outperformed in that period, I think any of the hosting businesses, certainly being the case, whether that's Contabo, it's a hosting provider; or WebPros, which provides software into the hosting industry. Both have performed incredibly well. WebPros is growing at north of 45% -- is only north of 45% in that period. And you can imagine why as more individuals and small businesses require more hosting requirements by virtue of the channels and the environment they now have to operate in. The other outperformer was Wishcard. This provider is in Germany. This is Germany's leading retail gift voucher. And this is a a voucher that you would acquire -- you would purchase and give to someone, and the recipient gets access to over 500 retailers in Germany. The reason it particularly spiked in terms of its performance was because its channels, route to market, typically, are kind of supermarkets, et cetera, groceries. And they obviously were one of the few channels that remained open during the lockdown in Germany and still open today. There is increasing adoption of a relatively new industry as well, which I think has -- which has helped. And as a result, their voucher sales doubled over the course of the last year and has really accelerated the stage at which Wishcard opening up kind of new opportunities sooner than we anticipated. Ocean, I've touched on. Facile is a great example of a business that has now benefited from the increased adoption of its services in Italy. It actually -- its business slowed in the first half of 2020 as there was less -- you didn't have to reinsure your car in Italy during a lockdown. So clearly, you didn't have to use Facile or anyone during that period. But it managed to catch up all that lost business and actually meet or slightly exceeded the expectations for the year. In that modestly impacted bucket, you've got companies where like TechInsights, where maybe their labs were closed during that period, where they do their analysis of semiconductor equipment; Daisy and Ekon, where they have not been able to get on-premise to deliver or implement a new customer kind of project or customers that delayed their decision-making around taking on a new project. In this case, for Ekon, that would be taking on a new software solution or moving from a license model to an in-the-cloud model, for example. Those big project decisions have clearly extended the sales cycle, and we imagine that as soon as kind of lockdown ceases in Spain, then the business will pick up. Schülerhilfe, again, has struggled as kind of scores of shutdowns. Schülerhilfe provides after-school education. One of the real catalysts for Schülerhilfe was that you -- as a parent, you're alerted in the year in advance if your child is unlikely to meet the required grade in any given year. If they aren't, then they're held back a year. So it's quite a Draconian process. And clearly, you're motivated to get additional tutoring for your child in that position. If exams have stopped so there's an uncertainty around the exam grading system, then it removes that obvious catalyst. Also, of course, do you really want your child having to spend more screen time or school-based screen time? Probably not. Now clearly, as we've emerged from lockdown and exams will be reinstated, then we expect the kind of business to pick up where it left off, although it may take a year to kind of catch up. Finally, there's those that have been significantly impacted. Time Out, as a listed business, they report their results on the 30th of March. At this point in time, all the markets are closed and advertising has been hit. But I think when we look to the months ahead, we see a number of things. One, obviously, the opening of the market. The first of those markets opens in Miami in a couple of days' time. And we'd expect the remainder to open in late spring. I think the other key thing with the markets, businesses are focused on management agreements rather than spending capital and opening our own capital, opening new sites. This is using the capital of real estate developers and us managing both sites for them. It's capital light. We get a guaranteed return. And also, it's a recurring earnings stream for Time Out, so I think it'll be positive. In terms of the impact on the OCI NAV, I kind of feel like the impacts happened with COVID. It's there. It's in the price. The share price of Time Out sits at the price of the rescue raise back in May. And I think once you've got clarity over the opening up of the business again, once you got clarity over any kind of future funding risk of Time Out, then you as an OCI shareholder have the upside of recovery, but there's not an awful lot of kind of an [ impediate ] can do to the OCI performance. Time Out is now circa 4% of NAV. North Sails, again, was impeded by the fact that sailing that, that has -- have stopped. North Sails is the provider of premium race sails, also self sails into the leisure market, but that's really its kind of strong sector position. Clearly, they're a bit like Formula 1 tires, the premium sail expensive bit of kit. You can use them to race for a season, and then you have to replace them. Clearly, raising stock and sale replacement cycles slowed. One area that North did perform well was in kite and windsurfing as kind of individual outdoor activities were one of the few things that kind of prospered relatively in the kind of COVID environment. And the other thing that was -- whilst there was -- whilst they're impeded by the fact that their retail networks were closed, the North Sails apparel business has managed to kind of grow its kind of wholesale sales, its online sales, and we emerged into 2021 with that area of the business now being profitable for the first time in quite a number of years. So the outlook for North is extremely positive for this year and beyond. That's a quick tour of the portfolio company. I recognize that we want to get to questions. So I'll just touch on one last there, which will no doubt feature in the questions. Now I would preface this section by saying the appeal for me of OCI is the fact that the portfolio companies are high in quality. They're growing. And it's the growth in NAV that I think is the thing that we have control over and provides the future value for any shareholder in OCI. That's the basis I would encourage anyone to own shares of OCI, and we're incredibly optimistic about the continued growth in those businesses. We can't avoid or not reference the fact that OCI's share price trades at a significant discount to the NAV per share of 403p of NAV per share compared to nearly GBP 3 of share price. So roughly speaking today, about a 25%, 26% discount. Now clearly, whilst we can't specifically control that, we can do whatever we can to try to close it and to address the issues that may have led to causing it. You can review this slide at your leisure kind of post the presentation, but I wanted to outline here. A lot of the issues that we -- or the concerns that we identified back in 2017 when we already started to kind of focus on this point with OCI and the different measures that we've taken to address them, from discounted share issuance, I'm saying we'd ever do that again, from greater alignment of interest between the Oakley -- partners of Oakley Capital and the OCI Board, but then combined now only over 10% of OCI. We've returned cash. We have a share buyback program now which cancels the shares and is now kind of regularly buying back kind of year-to-year, which usually increased our transparency. This is no longer, as with most listed PE firms, a black box. There is clear visibility to the underlying businesses. We have a Capital Markets Day in which people can meet and interact with the CEOs in those businesses. And we provide as much detail as is possible without undermining the kind of competitive advantages of those companies. Share concentration has been a big issue. I mean a few years ago, top 10 shareholders owned north of 90%. The top 2 shareholders owned 55%. And essentially, that shareholder concentration, for all kinds of reasons, funds leaving the industry, funds closing or changing their remit, we've tried to turn over a lot of that register. And today, we have a much more sensible shareholder concentration, a much more suitable shareholder base. But that's taken a lot of time, a lot of interjection to get through. And arguably, we're still kind of just getting through the tail of that. There's a lot of buying interest in the stock since removing that. Daily volume has really started to improve. It was 500,000 a day in the last 12 months. Now that was slightly skewed by some big block trade. But we're even witnessing that this year as more retail, wealth managers and more retail participate in OCI shares, so we're seeing a healthier day-to-day trading in the shares. We moved from AIM to the SFS. We'll talk about a little bit more about the next move from there. The Board has completely changed in its independent composition over the last kind of couple of years, and we removed all fees from the direct investments. So that leads us to what can be achieved from here. And these, I think, are some of the kind of outstanding issues that we can address. First of all is those direct investments. I think they create focus around the businesses that are not the strongest. They're not outperformers of the business in Time Out and North. Now they could be -- no doubt, will prove to be great investments. But they're certainly not the kind of the champions of the funds, the greater fits of the funds that really should draw attention to. Secondly there, a drag on performance compared to the cash and the funds. And thirdly, they create concern around conflicts of interest. Is it in OCI's best interest to be invested in those companies, write debt in North Sails? Or is it in the company and Oakley's best interest? If we resolve that, we remove that element of doubt, I think that will be significant for OCI, and we hope that's something we'll be in a position to do by 2022. We have traditionally reported our NAV on a half yearly basis. And I think one of our concerns is that only giving 2 points in a year when we update on NAV is too few and also creates kind of -- often, you find sellers wait for those particular points. And as a result, you don't see the share price track with the NAV growth. Our plan is, as soon as we're able to, is to move to quarterly reporting. And when we do, we'll be talking about, maybe unlike our peers, but going for a full revaluation of funds on a quarterly basis. The earliest we hope to be able to instigate that is from Q3 onwards. But it's certainly -- if it's not then, it will be soon afterwards, which I think will be helpful. The asset move to the SFS, the Specialist Fund Segment. But not all retail platforms, and that includes Barclays and Halifax, are -- permit their customers to trade on SFS under the best -- as it is for expert investors only. Now most platforms allow you to confirm you're an expert investor and trade on the SFS to do that, and that clearly obviously restricts some investors participating. Our aim is to move to the main list. We weren't able to move because -- primarily because of the concentration of the investments. The list, the authorities view it on a basis of concentration in funds as opposed to the underlying portfolio. When we moved to SFS, we only really had 2 funds where OCI's kind of capital was concentrated. The hope is in a year or so's time, there'll be a much more -- with a large number of funds, there'll be diversity in investments, and that will allow that move to the main list, which I think will be helpful. And the other thing is investor profile. I mean we -- despite the fact that we perform pretty much in line with, if not better, than our peers, and I mentioned them earlier, 3i, Apax and HG, we changed in the top 3 across the 1, 3 and 5, but were pretty much similar. And yet, each of those 3 now trade at or a premium to that NAV, and we trade at a 25% discount. So clearly, we're just not as well known. I think our performance is not as well understood. And I think that's something that is shifting. And we are doing a lot more communication, engagement. A meeting like today is a great example of that. So to conclude the presentation today, I'd like to kind of touch again on that 18% NAV return and the fact that it's achieved in a year of disruption. Key to that performance and the ongoing performance is that over 70% of the portfolio delivers its solution digitally. I think in order to give you confidence about our ability to continue to repeat that performance in terms of new investments, we've got that large proprietary pipeline of over 150 opportunities that we're currently reviewing. And whilst I don't necessarily -- I can't guarantee you that this discount will close or when it will close. I'm confident it will. But clearly, we've got a program that's set out to continue to address that discount. And I can see the appeal of it. If the NAV grew at 85% and the discount closed, your shareholder return will be high 50s, nearly 60% for 2021, if it's achieved. Now who knows when and where? But we know that Apax was trading at a double discount not that long ago, and now it's trading at a small premium. So that draws the presentation to a close and...

That's brilliant. Thank you very much, indeed, Steven. Sorry to cut you across. I was only going to say that, obviously, there's a number of questions coming in. So I just want ask you take a few seconds. [Operator Instructions] But just while Steven takes a few moments to review investor questions submitted already during the meeting itself, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via our Investor Meet company dashboard, and we will send you an e-mail again telling you when that's ready for you to review. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations.

Steven, I know that's not an awful lot of time to give you, but I don't know if you've clicked on the Q&A tab just on the right-hand side of your slides. Can you see those questions now?

I have, yes. I do, yes.

Perfect. If I could possibly ask you to read out the questions and who it's from and give response where it's appropriate to do so. And if I start at the top, I'll just start at the top and I'll meet you at the bottom. And then, as I say, we'll look to redirect investors. We're coming up to the hour, but feel free to take on as many questions as you've got the time to give today.

Thank you, Mark. Yes, I'll go through -- there's quite a lot of questions here. I'll go through them as quickly as I can, some of which, hopefully, we've already tackled as part of the presentation. And if there's a possibility to speak with them kind of privately, I'm happy to take up any of these points if I've not addressed them in full. First off, Youssef asks if I can talk about the trading performance of the Time Out markets and anything on North Sails. So I've touched on the fact that the markets currently are closed, that Miami is due to open this week and that the rest of the markets we should hope should open between May and June of this year. [ Rary N. ], he asks, "How do you see the current investment opportunity set in the U.K. versus the other markets that you look at?" So we're based here. We don't have a U.K. base. We're certainly not averse to investing in the U.K. I think one of the 2 things that we find with the U.K. is that, one, there's a lot of PE competition here. It's a mature private equity market. And therefore, there's a lot of competition. And therefore, it's hard for us to find 2 things, which is value and for us to have information advantage. Now that's not to say that we wouldn't invest in the U.K. if we found those opportunities. And we certainly are -- within our pipeline, there are a number of U.K. opportunities. But I think you're more likely to see a still bias towards kind of Western and Southern Europe going forward. [ E.M.B. ] asks, "Is Brexit a long-term plus or minus for the Oakley business?" I mean I think Oakley Capital as a PE operator, I think our ability to do our job it hasn't kind of really changed. We've got a Munich office, we're opening a Manhattan office and we have a London office. So I think we're kind of spread in terms of our ability to take advantage of the opportunities that come up as a result of Brexit or otherwise. Our ability to continue to operate from London hasn't been impacted. The funds themselves are administered out of Luxembourg. So that certainly doesn't change anything for us. If Brexit is going to create some disruption and opportunity, then we're absolutely in a very strong position to be able to take advantage of that. So whilst day-to-day I'd say it's neutral for the prospects of Oakley and the portfolio companies, I think that it does provide opportunity, then we'll be well positioned to take advantage of it. [ Paul ] asks, "Please define the dividend strategy." It's -- we are basically committed to maintaining the 4.5p of dividend that we started in 2016, '17. The mentality behind that is that the general feedback from our investors is that they'd much prefer the return of cash via buyback as our dividend. Now that's not going to be the same for everyone, and different people have different tax focus. But that is generally our chosen approach for the time being. But we have committed to at least maintain that 4.5p annually. [ John A. ] asks, "How are you going to reduce the discount to NAV?" And hopefully, that final slide has tackled the kind of many ways in which we're going to address that. John A. says, "How long is the average holding period? And what is the average ROI from each holding?" John , the average holding period of realization is about 3.5 years. And the average holding period of the portfolio to date is about 3 years. The average return on investment, I don't have that number exactly to hand. I know that the minimum we require is 25%. And I'll come back to you, John , if I may, on the exact average to date since inception. John A. also asks, "Could you elaborate on why Oakley historically has had more European opportunities? From an investor who doesn't know until today, I'm surprised by the diversity of the geographical portfolio. One, why the U.K. proportion has been a low share. This is not a complaint but an observation." John , hopefully, I've touched on this to some extent. I think we found that there was less value opportunities available to -- in the U.K. in a market where PE has proliferated for a number of years. And there's been more value opportunities, more -- and certainly, our ability to invest in less mature markets, learn from what we knew about the U.K. and, to some extent, kind of Germany and look to see the same opportunities but at an earlier stage, develop in other countries. Again, in our pipeline, there's a number of U.K. opportunities. It's about the strength of the investment opportunity, not about the region. It certainly isn't -- it's certainly a decision not to invest in the U.K. And also, the more you invest in a region, the more you gain trust and profile with the business owner-operator in the area, the more expertise you get about understanding that landscape and the opportunities around it. And so one successful deal just typically leads to another business founder relationship and a knowledge of more opportunities. So the more you do in a region, the more you then tend to do in a region, if that makes sense. [ Richard A. ] said, "Are you aware that Halifax [indiscernible] do not allow investment in the stock?" And yes, we do, and we know that's because they restrict trading on the Specialist Fund Segment. We have lobbied them to change, and they have chosen not to. And in time, by us moving to the main market, we'll hopefully resolve this particular problem. [ Youssef ] asks, "Do you think the discount would narrow if the management presented the results directly and answered questions directly? We don't see the management very often." Well, the management of the companies, clearly, there is a lot of those. There's now 19 of those. And we as OCI or the manager or Oakley Capital kind of sit between them. It's their job to manage the business, not to report to a wider audience. We do make them available. They do present during the Capital Markets Day. So that is the opportunity. We've kind of focused them on doing that. And certainly, where required, we will start maybe producing more films with them so there's an opportunity for you to have them speak more directly about their businesses. The challenge is as we grow in scale, there is just a lot of those companies. And there is just the feasibility of having them present. It's a bit like the CEO of a business and us -- you want him to speak to all the senior management that head up all the verticals underneath. It's just difficult for that to be a practical solution. [ John A. ] asks, "When you sell the investments, what kind of percentage do you expect or typically see in terms of selling positions, private sale flotations?" Okay. So typically, to date, most of our exits are private. In fact, more specifically, they've been to private equity. And I think that reflects a couple of things. Private equity can move very quickly. There is a lot dry powder in that kind of large global private equity fund base, and floatations do suit some companies, and it certainly, at the time, suited Time Out. But I think that will be a rare exit for us unless there is a real compelling reason to go down that route. [ Bill H. ] asks, "How big is OCI in terms of the total assets managed by the Oakley Capital Group?" Total assets under management are about EUR 4 billion. And the total asset base of OCI is EUR 428 million. Bill , typically, you would expect OCI to be broadly somewhere between 20% to 30% of a new fund in the future. [ John A. ] asks, "Could you give a short summary why I should invest in Oakley compared to your peers?" I think the 3 obvious peers that I've highlighted, 3i, HG and Apax, I mentioned those 3 because they're the obvious direct listed PE peers. They also have, particularly in the case of Apax and HG, they also have a kind of tech -- digital kind of software bias. Certainly, it's more focused in business software for an HG. And as a result, you've seen similar performance across those businesses. I think if we have an edge on them -- and quite frankly, I would happily invest in all of those -- in all 3 of those companies. If we have an edge, it's in the way we originate. It is a distinct advantage. And in fact, if anything, an HG or Apax might be an acquirer of one of our assets rather than someone we compete against. And look, they're in a position where they're currently trading at NAV or above their NAV, and we are trading below. As I say, I would happily own OCI today for its NAV growth, but you do have that additional option. [ Bill H. ] asks, "Now that you're running down in your direct investments, OCI is becoming just like another private equity fund of funds. Why would it be better long term to invest in a fund like HarbourVest?" Well, I think it's still very much a direct. It's a direct -- we're investing only in one manager. It's very clear the specifics in which geographies we're investing in. For that, historically, directed PE companies have outperformed fund of funds. If you want greater diversity and you want thousands of underlying portfolio companies and you want a greater geographic diversity and you want more sector diversity, then you absolutely should invest in a fund of fund. But I don't think -- I think they both provide good opportunities, and you have more clearer, defined investment strategy within a direct vehicle. [ Roger F. ] asks, "What are the challenges in value in portfolio companies?" Look, I guess, they're significant. I mean, fundamentally, there is a third party which essentially evaluates and confirms all our value. So it's a process which ultimately is concluded out of our hands. The problem you have is particularly -- it's finding the appropriate peer group in order to value against. Now of course, one of the things that we talk about with private equities is getting access to private companies into sectors, which may not be reflected on the public market. So there isn't necessarily a public peer group to invest against. And I guess in addition to that is that one of the challenges as well is that you typically are pegged to the value that you -- the multiple you bought the business at. But as you well know, when we come to exit it, we realize a big uplift in the multiple. I apologize. There is at least 10 more questions, and I unfortunately have to move on to the next investor presentation.

Steven, that's absolutely no problem. And again, thank you to those investors that submitted those questions. We'll obviously make all of these available after. And if there's any way you feel it's appropriate to answer, of course, we can publish that alongside the ones that you've answered during the meeting itself. I know investor feedback is important. Perhaps ahead of, I guess, closing the session, perhaps I could ask you for a few words to wrap up. And then, as I said, I'll divert investors to give feedback.

Mark, look, I mean, I think, hopefully, in that overview, you've got a sense for the investment strategy of Oakley Capital, the strength of the positioning of those businesses and where we hope earnings growth will return to this year and following. I think the prospects for the Oakley funds and therefore, OCI, look extremely strong at this point. And we have sufficient cash to deploy into those funds as they make those investments. We recognize there is a well-thought program to continue with in order to help close that discount. But in the meantime, we hope to continue growing NAV and to welcome more of you as shareholders.

Steven, thank you very, very much indeed for your time today and your presentation. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback. If you accessed this meeting via our website, the feedback page will appear. But if you accessed the meeting via the link sent to you by e-mail, just simply click on the link, and it will ask you to submit your thoughts and expectations. On behalf of the management team of Oakley Capital Investments, I'd like to thank you very much indeed for attending today's webinar. That now concludes today's session. Good afternoon to you all, and thank you for your time.