A robust trading update from private equity trust Oakley Capital Investments (OCI ) showing portfolio growth over the latest quarter has failed to bring its 38% share price discount in line with its sector peers, which trade at a 30% deficit on average.

The £740m Bermuda investment company’s net asset value per share of 679p reflected portfolio returns of 2.5% including dividends over the quarter to the end of September, driven by a 14p in valuation uplifts and 5p in foreign exchange gains.

Writing in the update, manager Stephen Tredget emphasised that the underlying companies continued to trade robustly in what remains an uncertain economic environment, reflecting their resilient business models, typically asset-light with recurring revenues, strong market positioning and conservative leverage, as well the strength of the megatrends they invest behind. 

The trust, which is shortlisted for a Citywire award, invets across four core sectors: technology, consumer, education and business services. The companies are largely across Europe, with German-speaking regions, Germany, Austria, as well as Switzerland, Spain, the UK and Italy making up the majority of the portfolio.

OCI invested £23m over the period, which were attributable to portfolio company bolt-on acquisitions, as well as Pixis, an artificial intelligence-powered marketing platform and the first investment for Oakley Touring Venture fund, which was launched in August.

As of 30 September, OCI had total outstanding commitments of £1,053m, or 88% of assets, with net cash sitting at £222m and the £175m revolving credit facility undrawn.

Since period end, the shop window to private equity manager Oakley Capital has announced two investments, including a £3m indirect contribution in Australian domains, hosting and email provider Webcentral, and £9m in Spanish transport and logistics software business Alerce, both of which were made through the Oakley Capital Origin fund I.

Excluding FTSE 100-listed PE behemoth 3i Group (III ), Oakley’s performance over the last five years leads the sector, with underlying portfolio returns of 178% and shareholder returns of 151%.

While members of the board have been buying shares, according to stock exchanges notices, the trust is yet to launch a formal share buyback programme to reduce the deficit.

In the past, it has said ‘the manager says it is focused on driving NAV growth and thinks that continued outperformance will eventually drive the discount down’.

Five-year performance

Source: Morningstar