Oakley increases 2024 disposals to £175m with Schülerhilfe exit

Oakley Capital Investments (OCI ) continues to prove it is possible for private equity investors to make attractive realisations in the current environment with the £40m sale of Schülerhilfe, which increases this year’s total proceeds to £175m.

The £1.2bn shop window to European private equity investor Oakley Capital sold to Levine Leichtman Capital Partners its majority stake in the provider of professional tutoring services to students across Germany, Austria and Switzerland. The sale reflects a 1% uplift to the September net asset value (NAV) of 693p per share.

Since investing in Schülerhilfe in 2017, Oakley has helped the company strengthen its position as a provider of tutoring services for K-12 students in its core markets by focusing on quality in-person tutoring, complemented by an online offering and language courses for adults. More recently, Schülerhilfe completed the refinancing of its debt.

The sale follows that of Spanish online property portal Idealista and maritime software provider Ocean Technologies in line with their estimated carrying valuations earlier this year, generating expected proceeds of £120m.

‘Schülerhilfe has succeeded by delivering on an ambitious expansion strategy without sacrificing the quality of its tutoring,’ said Oakley Capital co-founder and managing partner Peter Dubens. ‘The business has expanded into new geographies and services, and today is a key partner for students striving for education success.’

In a third-quarter update earlier this week, Oakley reported that NAV total returns had tumbled 2% over the three months to the end of September, which was driven by foreign exchange movements. NAV gained 7% before accounting for currency movements.

Steven Tredget, a partner at Oakley Capital, said the underlying businesses in the portfolio ‘continue to perform in a low-growth, uncertain macro environment’ and that ‘their disruptive business models enable them to take market share across the economic cycle, supported by Oakley’s active management and engagement’.

He added that Oakley supported the portfolio companies in accelerating growth and creating value through mergers and acquisitions (M&A), increasing the quality of revenues and the application of AI tools to boost productivity.’

Over the period, Oakley made £28m of look-through investments which continued a period of significant activity for the fund, including an investment in German broadband open-access platform Vitroconnect.

Since the end of September, Oakley also invested in Assured Data Protection, a managed services provider focused on disaster recovery and cyber resiliency as a service. The investment will be completed by the end of the year and the fund anticipates its look-through investment will total £26m.

Proceeds from recent sales will be put towards outstanding commitments, which total £777m. The trust also has £108m of cash and £57m of undrawn debt facilities to call upon. Since period end, it has increased the credit facility available to the fund by £50m, taking the revolving credit facility to £225m.

Tredget said the money will ‘be deployed into new investments over the next five years’.

Last month, the trust said it could revive its share buyback programme given its earnings growth and run of disposals had failed to re-rate the shares, which currently trade at a discount of 27.4% to NAV.

Tredget said that the board closely monitored anticipated fund drawdowns and projected liquidity and would continue its long-term commitment to share buybacks when appropriate.

The fund has seen its NAV grow 62.4% over the past three years but the shares have only gained 38%, according to Deutsche Numis data. However, over five years, shareholder returns have surged 141%.

Panmure Liberum’s Shonil Chande noted that while the Schülerhilfe exit was not as ‘eye-catching’ on a premium that Oakley has regularly delivered, total distributions this year were impressive within the realisation environment context.

Referring to the trading update, Chande noted that 2024 had been a big investment year for the trust, with £238m drawn on the Oakley funds.