LONDON (Alliance News) - Oakley Capital Investments Ltd, the AIM-listed company which invests in two unlisted private equity funds established in Bermuda, said pricing is the "biggest challenge" facing private equity firms, with asset valuations and investor confidence remaining high even amid increased volatility in financial markets.
"Private equity firms are under pressure to deploy capital, but there is a general scarcity of primary deals especially in the UK mid-market," Chairman Christopher Wetherhill said in a statement.
"High valuations need not necessarily cause concern for private equity funds, since they tend to be more confident they can improve portfolio company performance and therefore valuations. However, in these conditions private equity firms may struggle to meet the growth expectations of investors if they cannot find a way to meet the pressure to deploy capital and the requirement to maintain pricing discipline," Wetherhill said.
Oakley Capital Ltd, the investment adviser, "maintains pricing discipline" when considering and executing deals, Wetherhill said, with its emphasis on "proprietary deal flow" becoming more significant as a way to take some control over pricing.
The chairman's comments came as Oakley Capital Investment said its net asset value per share rose by 9.9% to 200 pence between June 30 and December 31. NAV per share was 201p at the end of 2014.
"I am pleased to report that the underlying performance of the funds' portfolio companies has been strong, reflected in the 33.6% like for like growth in the fair value of their investment portfolios over the last twelve months, driven mainly by substantial Ebitda growth," Wetherhill said.
Shares in Oakley Capital Investments were up 2.2% at 139.00p on Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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