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

Good morning. My name is Steven Tredget, and I'm a Partner at Oakley Capital, and it's my pleasure to welcome you to the Oakley Capital Investments 2023 Full Year Results Webcast. Before we start the presentation, can I remind you that questions can be submitted in writing during the webcast by following the questions tab at the top of this broadcast window, and we will tackle as many of these as possible at the end of the session. You can also download the presentation from this broadcast window, so you can view it at your own leisure. Turning our attention to the year to December 2023, OCI's underlying portfolio of private European founder-led businesses have continued to perform well, driving growth in asset value in a challenging macro environment. Importantly, this uncertain environment, where trading headwinds and high interest rates is creating dislocation, uncertainty, and with it significant investment opportunity, which has laid the foundation for future asset growth. In the last 6 months, the Oakley PE Funds have signed 5 new founder-led platform deals in attractive, highly fragmented industries, including logistics software, dental laboratories, and automotive repair. Deals that have been acquired in uncontested processes at an average of circa 18% below their peer group ratings that are growing their earnings at an average circa 25%. Whilst the newly launched Oakley Touring strategy has invested in 4 new AI-powered software solutions, targeting areas like cybersecurity, fleet management, and digital marketing, and the pipeline of further attractive opportunities across the Oakley platform has never been stronger. We'll speak more to this later, but first, though, let's review the headline numbers for the year, which include an NAV per share of 684p and a NAV of GBP 1.2 billion, based on the portfolio being fully revalued at the end of December 2023, and when including the dividend paid, amount to a total return of 4%. This is more or less in comparison with a 5-year CAGR of 20% and reflects a cautious approach to trading outlook and portfolio company valuation multiples. Despite headlines of PE activity levels slowing again in 2023 across all areas, thanks to its industry-leading performance, Oakley has raised more funds than at any point in its history last year, whilst a significant realization led to proceeds of GBP 666 million for OCI and completed deals in the year, so OCI invests a look-through of GBP 175 million. The bar chart here shows the long-term progress of the OCI NAV per share, which over 5 years has compounded at a level second only to 3i. Just as importantly, the share price has tracked this growth with total shareholder return of 18% last year, which compares to a 5-year compounded return of 24%. It's worth noting that, that second from last bar, the 2022 NAV of 662p, included a near doubling of IU Group's valuation, which was marked up ahead of its sale in the June of last year, which then took place at the prevailing book value. So the growth which would have been ordinarily split over 2 years was largely recognized in one. Let's now have a closer look at the NAV and how it breaks down by asset type, geography, sector, company, and review the portfolio company KPIs. In its most basic breakdown, the GBP 1.2 billion of NAV includes GBP 853 million of equity investments, of which the majority sit within the Oakley Funds, with the exception of Time Out, GBP 270 million -- sorry, GBP 207 million of cash and GBP 147 million preferred equity in North Sails. We'll go into more detail with regards to direct investments and the changes that have taken place during the year later in the presentation. Looking to the equity portfolio, it breaks down by the following regions, geographies, where we have longstanding track records, expertise, and founder networks, with Germany continuing to represent the largest proportion of the asset value with 8 of 28 companies headquartered there. Spain and Southern Europe remains a fast growing region for Oakley, with idealista being one of the fastest growing companies in the portfolio, vLex completed a transformational piece of M&A, and Alerce has been added to the table to the stable post period end. We have also added a new region in the period with the acquisition of Liberty Dental, which is headquartered in the Netherlands. The region whose exposure has increased the most year-on-year is, in fact, the U.K. With the addition of Phenna and schools group, Thomas's, they signal a growing opportunity set in the country where we have previously struggled to find both value and quality in a highly intermediated region. The top 4 countries represent where we subsequently now have office space, this being London, Munich, Milan, and Madrid. Based on the base currency of investments, the offsetting underlying debt in the portfolio companies in cash, the NAV currency exposure splits down 20% pounds, 53% euros, and 27% dollars. Splitting the asset value by theme, we see it's reasonably balanced across our key focus sectors. The biggest growth based on new investments was within business services, which now stands at GBP 169 million of value, following the acquisition of one of the U.K.'s largest testing and inspection groups, Phenna, and dental labs group, Liberty. There's more to come with the recently signed and soon-to-be-completed automotive repair group, Steer. Whilst no new consumer investments were made in the period, the sector exposure has grown organically, with idealista, North Sails, and Time Out featuring in the top 5 portfolio contributors to NAV growth. The overall technology exposure has remained broadly flat in the year, and whilst education assets continue to be some of our most attractive, the size of the investment in the sector fell in the period with the reduced exposure to IU Group following its sale and minority reinvestments. Now, for the perennial favorite, the asset value split by the now 28 PE portfolio companies, which helps us see which assets are we are now most exposed to and have the near-term potential for the biggest impact on NAV, with the top 5 names being Cegid, IU Group, Phenna, Time Out and WebPros. There was little in the way of performance concentration with robust delivery across the portfolio with circa 70% of the companies owned for more than 12 months increasing in value, thanks largely to growth in earnings. We see for the first time a designation for venture investments made by the Oakley PROfounders and the newly launched Oakley Touring Fund. Given these are relatively small deals, we have combined the 8 investments as one. Whilst they are comparatively small, they are nonetheless an exciting possible driver of growth for OCI in the future. Of the PE portfolio, the top 3 contributors to NAV growth were IU Group, which added 10p to NAV per share. Germany's largest and fastest growing university grew enrollments over 30% in the period, increasing student numbers to 140,000, up from 15,000 at the time of Oakley's original acquisition in 2018. Financial performance has tracked this growth trajectory with revenue and adjusted EBITDA growing at 30% and 35%, respectively, versus last year. North Sails added 9p after a strong performance from across the leading water sports business led to targets being exceeded for the year, with earnings growth of 32%. The apparel division continues to develop with EBITDA more than double the prior year, with sales and mass also continuing to trade well. Lastly, we have property portal, idealista, the third largest contributor. Sales growth came from all 3 of its core geographies, Spain, Italy, and Portugal, and in each market, growth came from a balanced mix of price, volume, and ancillary services. Online property listings for the group have now reached [ 1.4 million ]. In contrast, the worst performers were Daisy, which saw a fall of 4p per share, whilst the Daisy Communications division saw strong performance from mobile, Hosted Voice and Cloud IT. This was partially offset by the expected decline in legacy products, such as fixed call usage and bundles. Management continues to explore options to right-size the capital structure, given the high leverage levels and increasing cost of debt, which continue to erode the equity value. Bright Stars fell 3p in NAV per share terms, reflecting a further equity investment to fund future M&A, which was strong in the period with 10 nurseries acquired, bringing the total nurseries acquired during Oakley's ownership to 54. Trading in the year was robust, with a slight market softening towards the end of the year as a result of general cost pressures driven by increasing inflation. Windstar was down 1p per share. Whilst it has suffered in a challenging trading environment, driven by lower retail footfall, global supply chain disruption, and a reduced flu season, the performance is now improving, driven by consumer brands -- consumer brands business, which achieved double-digit revenue growth versus prior year and surpassing reduced budget expectations. Now, an overall health check on this portfolio. The organic average EBITDA growth of the portfolio was 14% in the last 12 months. Whilst this was down from 22% in 2022, it still reflects robust trading against a challenging macro backdrop. Being organic, this figure doesn't account for growth via M&A, which, in companies like Phenna, plays a large role in value creation with over 10 acquisitions during the year. Oakley's approach to debt within deals remains comparatively conservative, with the average net debt to EBITDA in the portfolio companies standing at 4.2x, which compares to PE market averages in the range of 6x to 7x, circa 40% of the portfolio debt hedged. We have a newly appointed Head of Capital Markets now actively monitoring and managing capital structures across the underlying portfolio companies. The average EV/EBITDA valuation now stands at 16.4x, a slight increase from last year's 15.9x, partially demonstrating strength in peer group ratings, but is actually down from 17x at the half year, reflecting our cautious outlook going into the end of the year. These KPIs compare favorably to publicly listed enabled companies -- sorry, publicly listed, tech-enabled companies. By comparison, the Nasdaq 100 is rated on circa 28x, with an average EBITDA growth below that of OCI's. Next, we'll update on the progress made with regards to the direct investments and review the available liquid resources and outstanding commitments to the funds. For those less familiar with the history, in the wake of -- well, certainly when it comes to direct investments, in the wake of the GFC activity levels froze, the Oakley Funds deployed modest levels of capital and OCI suffered significant cash drag. To reduce it, it began making direct equity and debt investments into the then existing portfolio. This practice has long ago ceased and the Board has stated its intention to resolve the 2 final positions, an equity investment and a small debt position in Time Out and a mezzanine debt investment in North Sails. During the year, progress is made with regards to the structure of these investments as work continues to resolve and maximize the value of both. Time Out was the last remaining asset in Fund I, a fund in which OCI was the largest investor at 70%. In order to close the fund, rationalize OCI's Time Out position into a single direct stake and give the Board greater autonomy over the holding, 2 things took place in the year. One, the investment in Fund I was settled to OCI along with the other fund investors by a way of an in-specie transfer of Time Out shares. There was a Fund I loan facility and interest outstanding to OCI, which was settled also in Time Out shares, the only asset available to the fund. The result now is OCI has a consolidated direct investment in 38% of Time Out equity, previously at 37% beneficial interest, and a direct loan to Time Out of GBP 6 million. This represents 5.7% of NAV. Now to North Sails. OCI had from 2014 provided loan financing to different parts of the North Sails Group and at the beginning of the period, the outstanding loans along with accrued interest amounted to GBP 147 million. In order to secure accelerated repayment of this amount, the Board negotiated its conversion to preferred equity with incentives for Oakley to secure a sale by 2025. Under the terms, the preferred equity carries a 0% coupon from January '23, increasing to 5% from January 1, '25. In return for the reduced coupon rate, OCI has obtained warrants equivalent to a 5% strip across the North Sails Group, exercisable on or after June 30, '25. This was done in conjunction with a wider organization and capital restructure of the North Sails Group, which improves OCI's overall security, creates an incentive for redemption, and helps simplify their North Sails capital structure, enhancing the attraction of the business to future investors. If we take a look at the trading, for Time Out, the business has continued to show positive momentum with the recently announced half year adjusted EBITDA for the group increasing 150% to GBP 6 million, with both media and markets delivering positive earnings and increased margins. North Sails achieved revenue and EBITDA growth of 18% and 32%, respectively, over the prior year. As already mentioned earlier in the presentation, it was one of the largest contributors to OCI's NAV growth in 2023. Historically, distributions from the fund as a result of realizations, the purple bars on the chart, have broadly matched the capital calls required to fund investments, the black bars. The high level of proceeds in the year as a result of Fund III sale of IU Group provided a timely boost to the OCI balance sheet. Looking to this chart of liquid resources and commitments. And first, taking the right-hand bar in this chart, we see that at the year-end, the balance sheet retained GBP 207 million of cash, up 88% compared to December '22. And in the half year -- in the half -- second half of the year, OCI renewed and expanded its revolving credit facility, raising total committed lending to GBP 175 million, significant vote of confidence in OCI from its lenders in what is a tight debt market. This brings total liquid resources to GBP 382 million. This compares to OCI's outstanding Oakley Fund commitments of just over GBP 1 billion. We show this number in the gray bar on the left-hand side, broken down by commitments to each Oakley fund, with recent additions including a commitment of $100 million to the Oakley Touring Venture Fund and EUR 190 million to Origin II, Oakley's lower mid-market buyout PE strategy. As could be seen, a significant majority of the outstanding commitment is to the mid-cap buyout flagship Fund V, which was launched in 2022. The middle bar in purple breaks this down into the expected timing of the drawdowns, i.e., when will the Oakley Funds need the cash committed to them. There is GBP 243 million expected to be called in the next 12 months, GBP 532 million to be called after 12 months and over a 5-year period, and finally, GBP 240 million that is not expected to be called. So, liquid resources can be reasonably expected to provide, let's say, 2 years of drawdown cover if the funds were not to generate further proceeds during this time and the funds continue to invest at a high level. Discussion around cash always prompts the question if and when further share buybacks will be made, especially as OCI has a strong track record in this area, making the second high in purchases in the sector over the last 3 years. The Board, as consistently stated, are predisposed to making buybacks and have outstanding authority to do so. The key consideration is not the cash level per se, but the excess cash level. To explain this further, the Board has made commitments to the funds in advance, based on expected cash flow in order to assure efficient use of cash and maximize shareholder returns. The expected annual drawdowns by the funds and the forecast proceeds are considered to determine the cash that is required to cover the activity levels in the near to medium term. Cash in excess of that is available for buybacks. Finally, in this section, we look at the current hold periods of the underlying portfolio companies. Oakley's job is not to time the market, but to deploy capital evenly over the cycle, and the chart demonstrates that. The average holding period of a realized Oakley investment to date is about 4.1 years, a slight increase on last year as a result of recent deals. And the average holding period of the current portfolio is 3.2 years. These stats and the hold periods in this chart suggest that within the next year of ownership, realizations could reasonably be expected in between 2 to 5 investments. With significant recent activity within the portfolio, we'll take a look now at recent deals, the trends we're banking on and our methods of origination. But first, what is Oakley's investment strategy today and how does this play out across the new investments? There are 5 core elements necessary for an Oakley deal. One, they are pan-European, lower to mid-market in size, so sub circa GBP 1 billion to GBP 2 billion enterprise value, and they sit in one of 4 sectors. 2, they are founder-led. We are backing proven business leaders with the same long-term alignment as us. 3, they're digitally disruptive companies, which means they take market share and do not rely on market growth. Plus, they typically have a recurring or subscription nature to their revenue, so their earnings and cash flows are predictable. Fourthly, we are a thematic investor, and a portfolio company must benefit from a clear, enduring megatrend. We invest behind 4 such trends. Business migration to the cloud. We see this, for example, in Cegid, a business which is taking the lead in business service software in large parts of Europe. Growing demand for high quality education. We play this theme in lots of ways. One of the most recent is our private schools roll up, Affinitas, which now has 13,000 students globally. The consumer shift to online. We talk about that with idealista in the property portal with its now [ 1.4 million ] property listings in Southern Europe, a region where Internet penetration and Internet solutions still lags that of Northern and Western Europe. And providing mission-critical tech-enabled services. A great example there is vLex and the legal database they provide to the legal, professional, and education universe. And fifth, and finally, there has to be the opportunity for Oakley to influence the investment outcome through value creation. This may come in the form of M&A, digitalization, internationalization, talent, and improvement in the quality of earnings. I'd like to briefly focus on one of these today. The importance to Oakley's origination performance on our founders. Oakley was established by founders for founders and has based our reputation on being trusted, empathetic, and entrepreneurial. We are the number one partner of choice for founders in Europe. They are the bedrock of Oakley's performance and account for almost 3/4 of the deal that we have done. It's meant that we are often the first institutional capital into our investing companies and in 76% of cases, the process of investment is uncontested, i.e., it's a bilateral discussion outside of an auction process. 75% of our families are first generation, so they are looking for support and investment for the first time. And their businesses are often innovative and, as previously described, very disruptive. The average age is between 45 and 50, which research will tell you is the point successful entrepreneurs typically begin to realize their full potential, and importantly, they retain an average equity holding in our portfolio companies of between 20% and 25%. After working with these founders multiple times in some cases, they go on to invest their own money into the Oakley Funds. We are very proud of the fact that the total funds committed by management to the Oakley Funds currently stands at EUR 300 million. As a review of the 2023 new platform deal shows, they each offer the 5 deal characteristics. They are in our sectors of focus. They're led by founders and if not, introduced to us by our founder network -- sorry, if they're not, they're introduced to us by the founder network, in the case of Webcentral. And all 5 were acquired outside of an auction process, which helped us secure them at attractive multiples. They also operate in highly fragmented markets, where there's the opportunity through consolidation to create a market leader. In the interest of time, I'll speak to just 2 of the recent investments. In December, Oakley signed the acquisition of a majority stake in the U.K.'s largest and fastest growing independent collision repair group, Steer, a U.K. business founded in 2018 by serial entrepreneur Richard Steer. Now, car repair shops may not sound particularly Oakley or digitally disruptive. But Rich's approach to the industry is Steer requires, on single-digit multiples, the typical single-site repair centers that exist throughout the country, and he systematizes their operations. In doing so, they achieve site accreditation with the car manufacturers. In fact, he has the highest number of approvals in the industry. And then, in turn, they qualify to access the work from insurance companies to whom Steer is a key partner. The outcome, incredibly, is a doubling of margin of site inside 12 months and revenue growth of over 100% in some cases. With just over 100 sites repairing over 115,000 vehicles, Steer has already created one of the largest national networks in an industry that has 3,500 independent repair centers in a market worth over GBP 5 billion. Another business services deal acquired in the year is Liberty Dental, the acquisition of 3 dental lab businesses and a carve-out from the European Dental Group. The company provides a comprehensive range of services, including the design, manufacture of dental prostheses and orthodontics, utilizing technology including CAD software, computer-aided milling and 3D printing, as well as local craftsmanship. Through Fund V's investment, the company will benefit from Oakley's extensive experience in digitalization, helping the company to capitalize on that technological innovation in the dental lab industry and the rapid digital transformation of the market. Oakley has partnered here with co-founder Hidde Hoeve. The collaboration between Oakley and the company's experienced management team will see the execution of an ambitious growth strategy, driven by organic growth, but also international expansion and targeted M&A. The existing portfolio companies were also active, making 2 transformational acquisitions in the case of Gymondo and vLex, whilst the rest of the portfolio made 22 bolt-on acquisitions in the year. Looking forward, this brings us to the third and final section of the presentation, as we look ahead to the prospects of OCI and the Oakley Funds. As you'll be aware, the underlying OCI portfolio companies sit within a number of Oakley Funds and strategies. It started with the mid-market flagship buyout fund, now Fund V. Then came the lower mid-market origin funds with Origin II, raised in 2023, and then the venture capital strategy PROfounders III. Rather than moving up the size scale to raise much larger funds to invest in much larger companies, Oakley has looked to invest across the company life cycle, partnering, as it always has done, with ambitious and proven founders. To this end, the identified gap in the Oakley Fund strategies was a growth technology solution, which would invest in Series B and C rounds of fast-growing software companies. Oakley Touring Venture Fund was launched in June to do just that. Now, the advent of the Internet, the iPhone, the cloud are all -- are accepted as the 3 biggest technological shifts in our lifetime and shifts that Oakley has invested behind countlessly over its 20-plus-year history. The fourth, in generative AI, is now here, and whilst it's in its early years, by its very nature, the speed of innovation and disruption is likely to be unprecedented. Speaking yesterday with some of the AI team at Microsoft at an Oakley forum, they described how ChatGPT 4, as an example, will soon appear very primitive with future iterations, for example, being able to respond to speech and sight, whilst Nvidia confirmed that 70% of all software will have embedded AI solutions by 2026. And it's a push, as well as a pull for this technology, as within 5 years' time, 75% of the workforce will be millennials and Generation Z, generations that have grown up with a smartphone and expect consumerized or personalized software solutions in their business and personal lives. Thanks to a growing aging population, we have a declining working demographic and so, AI automation is essential to filling that gap. With generative AI and large language models being such a relatively recent and fast-moving phenomenon, the public market, particularly in the U.K., offers few ways to gain access to this technology. But in the meantime, companies like Mistral have been built in the last 12 months by only 10 people and are worth over a GBP 1 billion in value. Oakley's existing portfolio has already launched AI solutions. vLex has launched its AI-powered legal assistant Vincent, and IU has its synthetic teaching assistant Syntea, which are transforming their customer solutions. And now, as part of the Oakley platform, we have Oakley Touring. Oakley has partnered with a team that built 3 global venture investing franchises, including Qualcomm and M12, Microsoft's venture fund. Over this time, they were the early backers of companies such as Zoom, Kahoot!, and Waze. And after only 6 months, they have already backed some exciting AI-powered software solutions, targeting areas like cybersecurity, fleet management, and digital marketing. It's a small part of the Oakley portfolio value today, but we believe it represents huge [ ups in ] value for OCI and, in turn, is allowing Oakley to keep abreast of a significant paradigm shift. Finally, we look at the health of deal origination, which remains one of Oakley's key differentiators. The funnel here represents the pipeline of near-term deals opportunities for the PE portfolio. 27 are companies in due diligence that are spread across 4 -- our 4 sectors, with technology and education making up almost 85%, representing key sector focus for the remainder of '24. 3 of the most recent deals signed have been the business services sector. So naturally, there is a lower percentage remaining in the pipeline. Notably, we when we look at the geographical split, 12 of those deals in diligence are in headquarters in the U.K., an area of increasing opportunity and deal flow for us. As we flagged at the start of today's session, difficult markets present great investment opportunity, investments that are set to be future drivers of OCI's outperformance. That brings this part of the presentation to a close. I should note, particularly to our team that have worked incredibly hard behind this, today, we've also published our results as a interactive, digital-first, web-based annual report, which is one of a few of its kind, certainly within the public markets, and I think the only one within PE investment trusts. So with that, I'll hand over to Rosanna to begin the Q&A.

Thank you, Steven. And thank you, everyone, who has submitted questions so far. For those of you who'd still like to do so, there is still time. Please submit your questions using the Q&A function at the top of the webcast page. Steven, so we're going to start with a question on EBITDA growth. Can you unpick that 14% EBITDA growth again? Which companies are the main drivers and which less so?

I think, firstly, when we talk about EBITDA growth, I think there's 2 things to note. One, 14% is an organic number. So it's very much focused on -- it doesn't take into consideration the other ways in which we might be growing EBITDA through M&A and creating value that way, particularly through multiple expansion. Now, EBITDA is one of our -- organic EBITDA is one of our kind of key drivers of value creation. If I look to the companies that have grown the quickest in terms of EBITDA, that kind of headline number, they are IU Group, as mentioned, in the high-30s. We have Seedtag, a similar percentage. North Sails, idealista, all in that kind of 25% to high-30% EBITDA growth. And if I look across the sectors themselves, there's no common thread. Interestingly, consumer, where you can see the macro environment has actually been a good performer, which, I guess, speaks to that disruptive nature of these businesses. The other thing to consider is that whilst top line performance is kind of robust throughout the portfolio, the other kind of key thing is a bit of -- is margin compression in the current environment. Won't surprise you to learn, particularly if you look at our infrastructure and service businesses, kind of web hosting and the like, they've probably been the most hit by kind of higher inflation and particularly, kind of energy costs, where that's a significant component of the service they offer. And whilst they can pass a certain amount of that on, it's not expedient to pass it all off. The other thing as well is, look, we'd like to think that -- with interest rates now stabilizing along with inflation, we'd like to say -- think that kind of margin improvement lies ahead for that Group. And then I mentioned this around M&A, there's also certain deals we're not buying initially, because they are growing at 30% immediately. Take for example, Phenna Group, which I happen to believe will be one of our most kind of exciting prospects over the next couple of years. And I think, conservatively, should make us 3x our money. Now actually, its organic growth today, although we're ahead of the market is kind of 8% to 10%. So, on a weighted basis, that will have diluted that earnings number. Now actually, the value creation there is through acquisitions. I mentioned it earlier, we've acquired some 10 businesses already. We've seen EBITDA go from GBP 60 million, GBP 70 million to kind of well over GBP 100 million in our first year of ownership, and we're acquiring those businesses at relatively modest multiples. That's our entry, valuation now stands at around the 14x, 15x. But the testing, inspection, and compliance business industry, I mean, that's rated somewhere between 19x and 21x. You get the kind of value creation that we're in the process of making.

Thank you, Steven. We've had a couple of questions come in about the revenue model for some of the businesses. What percentage of the revenue across the portfolio is recurring in nature?

The recurring level, well, 70%, 75% of the companies offer a recurring element to their revenue, and that could be in a range of different ways. It could be subscription-based revenue. Let's say, for example, like a fitness app like Gymondo, Tech Insights is 80% now subscriptions to their library of information content to kind of OEMs. And then you have educate -- you have schools. Now, in theory you're not subscribed to pay fees to a school. But it's one of the last things that you give up. And clearly, you're committed, particularly in a K12 to pay fees for the time in which your child passes through schools. So it is a significant and growing proportion of the revenue from the portfolio companies.

Thank you. On the theme of discounts, just wrapping these questions all into one, the discount is narrowing, but still there. What steps are you considering to narrow it further?

Yes. I think it's always worth initially, and this is a discussion that you could have an entire separate webinar on, on kind of discounts, why they persist and how you can potentially kind of counter them. I think they exist because of a number of factors. There's the kind of liquidity and scale. I mean, most of investment companies are relatively small. They're small, mid-cap, and consequently, this -- that small and mid-cap generally is indiscriminate kind of trading at discounts. So, the larger assets like ours become -- the more liquid they become, the more likely they are to kind of trade at a fair value. So, everything we can kind of do to drive that kind of helps. How do we drive that? I think there's a kind of -- the second point is also around PEs and particularly well understood. I mean, compare us to the U.S. I've just been speaking to investors in California in the last week. They would describe themselves as a kind of country, as a nation, as a cycle around private equity, to be when they say 10 years ahead of Europe. But let's say it's 5 years to 10 years ahead of Europe, just in terms of the perception of PE, the embracing of PE, the understanding of the importance of the asset class, in a way, that is completely in contrast here to the way that the media talks about the asset class or the understanding of that within the kind of average kind of person in the street. And it's also the structural problems here in the U.K. of being able to access the underlying performance, but also in cost disclosures that really, in many cases, completely restricts some funds and individuals or wealth managers' ability to invest. So, how do you tackle that? I mean, what can we do? We can kind of increase our communication, increase our transparency. One of the challenges of the sector is that it's quite hard. It's not necessarily easy to unpick and assess efficiently the underlying assets. For -- in OCI, it's as easy as most, because we have 28 portfolio -- main portfolio companies. And we tell you a lot about those companies, how they operate, how they're performing. We can give you access to the CEOs to do Capital Market Days with them in place. Now, that isn't the case for the -- for all of kind of listed PE, but it still is -- they're still private and there isn't the full information disclosure of a public company. And so, therefore, understanding them and valuing them is tricky. But the more we can do to kind of provide information, the more we can do to educate people around private equity, the better. And then essentially, there's performance. OCI has to -- the one thing we can control is continued, consistent delivery and driving confidence in that net asset value, the fact that it's growing and the fact that the valuations are not only what we say they are, but they are in fact an appropriate and conservative value. So, not only are we trading at discounts to the quoted NAV, but also when we come to sell the assets, it shows that the quoted NAV in itself is quite conservative. So kind of the continued realization of businesses at premiums to book value, I think, will continue to serve us as well. I see the public markets, in kind of like '22, there was a complete lack of confidence in valuations at all. There was this kind of sense that the public markets had kind of created, there was volatility laundering within PE, and there was no confidence around the values that not just OCI, but private equity in general were telling of the assets. Last year, we proved -- well, actually those valuations were conservative. There was plenty of white space between us and the public markets. There actually wasn't that many public market comparables for Oakley Capital's assets. And so, kind of consequently, in selling assets this year and showing the underlying performance, I think we've proven that the valuation is fine. 2023's issue was like, is the PE model broken? You're seeing higher interest rate environments, higher inflation environments, less activity levels. Can PE still continue to produce returns in that environment when the suspicion is that private equity is traditionally about financial engineering? Well, I think, and this is one of the things that I think, hopefully, will shift in terms of sentiment, this year has kind of proven that despite the kind of difficult environment, OCI has continued to prove that its underlying portfolio companies can grow in that environment, and they are disruptive and they can outperform their peers and kind of public market companies. So, I'd like to think that 2024 is kind of a year in which kind of private equity has proven, actually, we can trade through this. We can trade through difficult and disruptive sectors, and more investors and more capital will come to us alongside the hard work that's doing around cost disclosure, which, if you haven't followed this, kind of please do now. And letters recently in The Times and letters have been sent to [ H&T ] are really working hard to kind of change the regulatory environment for cost reporting. Now, look, there is capital allocation, and we retain a dividend, a modest dividend. We're not an income generator, so we're not a natural provider of dividends. We are more likely to do a capital growth generator. We will continue buybacks. I made relatively clear in the presentation, we are deploying a lot of capital right now at an incredibly attractive time to do so. We anticipated a certain amount of this and we have -- we committed to funds over the last 1 year, 2 years, 3 years in order to be able to deploy this cash. Now, in a year where we hope to see significant realizations, there is also the hope that, that will offer us with significant excess cash. And with that, will be the opportunity to take advantage of the discounts that prevail. Buybacks don't -- so through the buybacks narrow discounts per se, but they certainly give us the opportunity to enhance the NAV per share.

Great. Thank you so much, Steven. That was a very comprehensive answer. So we've covered off our -- I was going to ask about realizations. I think that's pretty much covered off there. So, thank you very much. I think that's all we've got time for. For those who -- anyone who's submitted questions that haven't -- we haven't got around to answering, we will be in touch with you afterwards. But for now, I will pass back to Steven to wrap up.

Thank you, Rosanna, and thank you very much for those that have attended today's webinar. I think, and hopefully, we have demonstrated that. We said, in 2024, we have a very resilient and attractive portfolio of investing companies whose kind of earnings growth we anticipate will drive NAV significantly in the coming year and beyond. Many thanks for joining us.