View the article online at http://citywire.co.uk/wealth-manager/article/a658589
Investment Trust Insider: As LBOs return Oakley is the pick of pre-crash PE
by James Carthew on Feb 19, 2013 at 00:01
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.
News sponsored by:
Today's top headlines
The Citywire guide to investment trusts
Investment trusts have proved to be a highly effective way to invest in the market. Citywire has interviewed the experts to find out more.
More about this:
Look up the shares
Look up the investment trusts
More from us
On the road
J.P. Morgan Elect on investment growth, income and cash. More information on J.P. Morgan investment trusts.