When the Prince and Princess of Wales sent George and Charlotte to Thomas’s Battersea, they were not only thinking about the academic standards of the prep school but also its emphasis on kindness, courtesy and creativity.
Initially a kindergarten in a church hall, Thomas’s was founded more than 50 years ago by Joanna and David Thomas. With a growing group of schools, the group is now run by the Thomases’ children, who recently decided to sell a minority stake to a private equity firm. Oakley Capital.
Private equity has a bad reputation, accused of bleeding companies dry, laying off employees and making millions from the misfortunes of others. Oakley strives to be different, focusing on helping businesses grow, working with management and taking a conservative approach to debt.
Last year, Oakley’s 28 portfolio companies added 1,000 employees and this year we should see more of the same. The group is known for working with founders, often family businesses who want to go to the next level but need external support.
Founded by Peter Dubens, a struggling entrepreneur, Oakley has worked with around 30 founders over the years, many of whom continue to invest their money in the company. Two new investments were added to the list last month: ProductLife, a healthcare consultancy based in France, and Germany’s Vitroconnect, a broadband company founded by the ambitious 40-something Dirk Pasternack.
Reversal: The Welsh at Thomas’ School in Battersea
Just over 7 percent of German households benefit from fast fibre-based broadband, one of the lowest rates in Europe. But rapid changes are planned over the next decade and Vitroconnect is a key player in the process.
Oakley Capital intends to help both companies expand. The company has a background in the technology and healthcare sectors, with a number of successful deals in the UK and abroad. Also important to note, Pasternack’s decision to partner with Oakley underscores the affinity the founders feel with this business.
Another couple of investments have been made this year. Horizons Optical, based in Barcelona, provides software to manufacture lenses for premium progressive glasses. Steer Automotive is the UK’s largest independent car repair group. Founded just five years ago by Richard Steer, the company has built a network of more than 100 sites and employs 2,300 people. But there are around 3,500 car workshops in the UK, Steer is in the process of being acquired and Oakley will provide support and advice along the way.
Oakley shares have risen 18 per cent since Midas recommended it two years ago but, at £4.90, they are still a bargain. According to an independent analysis, the group’s investments are valued at £6.93 per share, almost 30 percent above their market price.
The discrepancy reflects widespread skepticism about private equity firms, accused of imposing overly optimistic valuations on their assets. In the case of Oakley, however, the opposite is true: the group sells its investments for an average of 50 percent more than they are valued on the books.
Midas Verdict: At £4.90, Oakley Capital shares have delivered returns for investors who bought into 2022, but there is more to come. An attractive stock for new and existing shareholders.
Traded in: Main market Heart: OIC Contact: oakleycapitalinvestments.com or 020 7766 6900