Investment Trust Insider: As LBOs return Oakley is the pick of pre-crash PE

In December that year, they bought a stake in Verivox, a European price comparison website. Then in September 2010, they sold the rest of Host Europe for £222 million. The initial purchase of Host Europe had turned out to be a fantastic deal for the fund but the money they had raised at a discount had not been deployed.

They were quite busy over the next few months. In November 2010 they bought BDO Investment Management (later renamed Broadstone Pensions and Investments) and a 50% stake in Time Out.

They added to this by buying a majority stake in Time Out New York in May 2011. In March the same year they took a stake in Emesa, a European online auction site for leisure activities such as holidays, event tickets and restaurant bookings, and in November bought a web-hosting business, Intergenia.

Share price falls

In the summer of 2012 the share price began to fall again, hitting a low of around 114p –equivalent to a circa 35% discount. They tackled this by buying back a few shares.

Oakley is still at an attractive discount (over 20%) but anyone considering investing in it today has to make a judgement on the portfolio. The trouble is, as always when looking at private equity, getting up to date information on a bunch of unquoted companies is difficult.

Time Out was the largest holding at the interim stage, valued at £30 million (a small discount to Oakley’s purchase price). It has been in the headlines over the past few months as it replaced its paid-for magazine with a free but slimmed-down version. This has a much larger print run to make it more attractive to advertisers. The company is also trying to direct readers to its websites.

This was quite a big gamble to take with such an established brand. It is a model that has started to work for others (for example, Short List and Metro) but it is a crowded market and so far there does not seem to be much evidence of an uptick in the usage of its website.

Verivox has been trumpeting a big rise in German consumers switching electricity provider, which should be boosting its revenues – good news if it is true, as volumes had been depressed at Oakley’s H1 stage.

Daisy, a quoted company, is loss-making but says it is starting to generate free cash flow and hopes to pay its first dividend later this year. Its share price is up circa 5% since 30 June 2012.