Telegraph article part 120 Nov 2021 16:07
Part 1
A select band of private equity investment trusts offer a heady combination of market-beating returns and cheap shares – and are increasingly catching the eye of DIY investors.
Oakley Capital Investments is one such fund. Shares in the trust have risen by 123pc over the past three years, double the return of the global stock market, yet they trade at an 11pc discount to its assets.
DIY investors have taken notice and bought in over the past year; they now account for around a fifth of the £689m trust’s shareholders.
Oakley Capital Investments offers access to private companies, those that have not yet listed on the stock market. But it comes at a price: the trust levies a 2.46pc annual charge.
We speak to the manager, Steven Tredget, to find out how he seeks out hidden gems across the world – and how he justifies his fee.
Who is the fund for?
People who want to invest in private businesses that are not easily accessible elsewhere, be they large institutional investors such as pension funds or DIY savers managing their own money.
Why are you attracting more DIY investors?
People are learning that a lot of the best businesses in the world are staying private for longer before they float on the stock market, with the result that there are fewer attractive listed companies to invest in. Coupled with the relatively impressive performance of private equity funds during the pandemic, it is leading investors to shed some of their preconceptions of private equity as an “asset-stripping” exercise.
How do you pick companies to invest in?
We build very close relationships with the businesses and entrepreneurs we back and help them grow. In nine out of 10 cases we are the first private equity backers of the companies we invest in. We typically buy in when businesses are growing fast and are profitable but still little-known, when we can help their progress. This can be through our expertise in mergers and acquisitions or help with expanding internationally, for example. Investing at such an early stage means there are risks to our approach, but it enables us to tap into those rapid first stages of growth.
Is there a common theme to the investments you make?
We think about the megatrends changing how the world works when determining which companies to invest in.For example, the boom in online spending: Britain leads the way and European countries have a lot of catching up to do. So we are investing in the companies that will expand as digital consumption rises across Europe.Idealista, Spain’s answer to property website Rightmove, is a good example of this, as is Facile, Italy’s version of comparison service Moneysupermarket. Both are top-five positions in the trust.
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