Peter Dubens was just 18 when he founded his first company, selling T-shirts that changed color as their wearers got hotter or colder. That was in 1986. Within five years, Dubens had sold the business for £8million. The young entrepreneur went on to found and run a string of successful businesses, steadily adding to his fortune along the way.
By the early 2000s, Dubens had earned hundreds of millions of pounds, not just for himself, but for his backers and investors. It was then that he started Oakley Capital, a different private equity firm – started by an entrepreneur to help like-minded business owners build and grow their businesses. Since then, Oakley has raised £3.5bn and used the money to support 43 businesses, from Parship, Germany’s first online matchmaking service, to WebPros, a Swiss/US company that manages £85m. of websites around the world.
Normally, individual investors are excluded from the world of private equity. But Oakley Capital has a publicly traded arm, Oakley Capital Investments, in which anyone can invest. The shares are £4.15 and are expected to grow significantly over time as the group now owns 22 businesses, which are growing on average 30% per year and are expected to show resilience even if the economic climate gets tougher. deteriorated.
Aim: Oakley Capital Investments bought Vice Golf, which sells golf balls online, earlier this month
Oakley focuses on companies that follow a dominant trend: the growth of all things online and digital. Some of its portfolio companies help businesses master technology, through subscription-based software products and website support. Others allow consumers to purchase goods and services online, from insurance to pitchers of water. And some provide access to quality education.
One of Oakley’s fastest-growing investments, for example, is IU Group, a German university that offers online and on-campus degrees. Oakley bought IU in 2017, when there were around 15,000 students. Today, more than 80,000 people, most of whom are between the ages of 20 and 30, are studying online to gain new qualifications. Courses are offered in German and English, many students are based outside of Germany and the number is expected to increase as IU becomes more international.
On the consumer side, Oakley looks for companies that offer something slightly different from their peers. In the UK, for example, around 80% of motorists buy car insurance online. In Italy, only 15% of drivers take this route, even after the Covid pandemic. However, preferences are changing fast and Easy, Italy’s largest price comparison site, backed by Oakley, is riding the crest of the wave.
Dubens and his team are also on the lookout for quirky companies, such as Vice Golf, a Munich-based company acquired earlier this month. Founded by two young professionals in 2012, Vice sells high-end golf balls online for far less than its competitors, and sales have grown more than 40% annually in recent years.
Many of Oakley’s businesses are in Europe, but there are also investments in the UK, including Globe-Trotter, a British luxury luggage company, whose suitcases are popular around the world, and ICP Education, which manages over 40 nurseries across England.
Often, companies backed by Oakley are owned by the original founders, who may be reluctant to sell to impersonal investment firms or larger rivals. With Oakley, however, they take comfort in the group’s entrepreneurial tendencies and reputation for treating business owners with respect.
This allows Oakley to reach businesses that other investors can’t, like Alessi, the Italian designer company that was in family hands for generations before selling to Oakley in 2019. Since then, the group moved from losses to profit, moved away from old-fashioned items such as tea trays and a dramatic increase in online sales.
Last month, Oakley announced that its portfolio was valued at just over £1 billion or £5.71 per share. Oakley executives are conservative, so they tend to value their businesses by the price they paid for them, even though businesses have generally grown significantly since then. Therefore, when companies are sold, the average price is 50% above the price at which they are held on Oakley’s books.
That should mean Oakley’s portfolio is holding up, even if financial markets become more turbulent. The company also pays a small dividend, with 2.25p paid for 2021 and a similar figure expected for this year.
Midas verdict: Oakley Capital seeks dynamic companies in sectors offering long-term growth prospects, regardless of economic cycles. At £4.15, the shares are undervalued. An attractive purchase in these uncertain times.
Traded on: main market Teleprinter: BEC Contact: oakleycapitalinvestments.com or 020 7766 6900
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