Oakley Capital Investments Limited

Good morning. My name is Stephen Tredgett. I'm a partner at Oakley Capital and it's my pleasure to welcome you to Oakley Capital Investments' 2026 interim results webcast. Thank you for joining us today. As usual, you can submit questions in writing during the webcast by following the questions tab on the right side of the video player. We will tackle as many of these as possible at the end of the session. As ever, you can download the presentations of you at your leisure by clicking on the downloads button. In today's presentation, as well as examining OCI's current asset breakdown and the drivers of performance, we'll also be joined by senior partner Samir Kumar to discuss the strategy and progress of the Oakley Turing Venture Fund. We'll then cover an investment activity review in which we'll introduce you to some of the new members of the portfolio before concluding with a review of liquidity and capital allocation. But first, though, a reminder of where OCI sits today with H1 2026 headline numbers to the end of June. That asset value stood at £1.29 billion, which is equivalent to 782 pence per share, and has resulted in OCI generating a total NAV return of 6% over the first half. And over the longer term, our 10-year total NAV return CAGR is 15%. More importantly, and not a coincidence, is that the shareholder return over the same period has tracked NAV growth, with a matching 15% annual compound return, in spite of a stubborn discount scenario persisting over this time period. The chart here of annual NAV per share performance helps give context to OCI's performance over the last decade. And while it's by no means scientific, we can see through performance phases. Firstly, the first phase we see is that refinement of the equity strategy and the building of the portfolio, culminating in the deployment of Fund 3 across 2017 and 18. We then move into a period of value creation and accelerated realisations as those investments mature, with the average age of the portfolio moving from 2.4 years to just over three years, tracking up with the growth in NAV. From late 2022, the cycle shifted again. Sum 5 represented a much larger amount of capital, which, alongside the launch of the Origin Strategy, saw two years of significant new investment across 23 and 24. As a result, the portfolio became much more weighted towards newer investments, which are typically held at cost for at least the first year of ownership. In addition, there were relatively fewer realisations in a more muted and exit environment. We're now seeing that balance start to restore, those investments are maturing and beginning to contribute more meaningfully to performance, something we saw in the first half when several of the more mature portfolio companies were important drivers of NAV growth. In that six months, the NAV per share grew from 738 pence at the start of the year to 782 pence at the end of June, encouragingly The principal driver of any regrowth over that period was underlying portfolio performance, with 56 pence of unrealised gains from the portfolio. 80% of that gain was driven by earnings growth and the balance from multiple movements, but only on a small number of assets. That was partly offset by 5 pence of realised investment losses, that is, there's a realised refinancing gain offset by expenses in the funds, and 4 pence from FX, reflecting OCI's exposure across sterling, euros, and dollars. Euro-denominated assets were adversely affected by the weakening of the euro against the pound. Shared buybacks added to the further 3 pence per share as shares were bought back and cancelled at a significant discount to NAV, a topic we'll return to later. We turn now to the investment breakdown by sector. OCI remains diversified across OCI's four focus areas. Business services is now the largest sector thanks to both investment activity and a strong growth in platforms such as Fenner and TechInsights. This is closely followed by the technology sector, reflecting the new investments made in the first half of the year, as well as now incorporating the touring of profounder investments from our venture strategies. Breaking the portfolio down by geographic exposure, the pie chart tells the story of where Oakley has built its longest downing track record, expertise, and founder networks. Of the 41 companies in the buyout funds, we have 7 and 10 portfolio companies domiciled in the UK and German-speaking nations, respectively. These markets will remain important areas of exposure, while Spain, Italy, and France are becoming increasingly significant. reflecting the depth of founder-led opportunities in those regions and the lower levels of private equity penetration. Here we see the asset value spread over those 41 underlying portfolio companies, as well as the constituents of the venture strategies. We cover many of the larger companies in the coming slides and will talk separately to the new investments. We're often asked which of the portfolio are some of the smaller, future rockstars to look out for. There are many to choose from, but I'd highlight strategic intelligence provider G3, a disaster recovery specialist, assured data protection, and premium panel equipment brand Knox, all of which have earnings growth exceeding 40% and a large runway for expansion. I'd also highlight our homegrown platforms. K-12, the premium private schools roll-up, Artemis in German insurance, and Tiger, previously ONHC, in Italy. There is much excitement around them and much more capital to be employed in these strategies, so expect them to feature more heavily in future NAVs. Here we highlight the key portfolio drivers of NASP. On the top, the three biggest contributors are Fener, NorthSouth and TechInsights. contributed a combined 30 pence to NAV for share. Fenner added 13 pence to the NAV for share. They had a positive first half of the year with continued organic growth plus strong M&A momentum. 15 acquisitions signed year-to-date brings the total during ownership to 71, scaling the business from 50 million of EBIT dialed entry to over 200 million pounds today. North Sours added 9 pence per share in the first half. Performance was driven by the mass and the premium segments performed at sale making. And Powell is continuing to undergo its transition with clear operational focus and initiatives in place to support sustainable, profitable growth. Investment and new initiatives across the group are expected to bear through in the coming 12 months. Tech Insights contributed 8 pence in a very strong period for the semiconductor intelligence platform, with significant subscription revenue growth supported by strong renewal rates from existing customers, as well as a more buoyant semiconductor market. The business also signed the acquisition of Synergy Research Group in the period, adding further capabilities in cloud and data center market intelligence. Not on the screen here, but particularly encouragingly, the fourth largest contributor is Exaforce, a constituent of the Turing Fund, the agentic cybersecurity solution whose AI agents triage, investigate, and respond to cyber threats, just closed $125 million around at double the valuation we invested a year ago. Given the rapid pace of progress in AI-native companies like Exaforce, We can expect to see more of the touring portfolio appearing in the OCI headlines, with Cust by Eye being the latest report of good news, which is one of the reasons we have asked Samir to speak with us as part of today's webinar. Underperformance in the portfolio was limited, with the largest value reductions coming from Sajid, IU and PLG. Starting with Sajid, down 4 pence per share. as the business's valuation reflects a recent contraction in software multiples. Notably, yesterday saw the announcement of the intention for Sajid to merge with Sile, a leading French payroll and HR software provider, primarily serving SMEs. An exciting combination that would create a 1.6 billion euro revenue European software leader with substantial synergies and growth potential. turning to IU Group, where affordability pressures in Germany have softened B2C intake. Management is investing in marketing to drive conversion as the funnel still remains strong. International expansion continues with the action of SFU in Austria, taking international revenues to over 100 million euros, while AI study assistants Tintia continues to show strong usage and retention. And finally, PLG. a provider of regulatory and compliance services to the live service industry, reduced now per share by two pence. Performance has been impacted by a challenging demand backdrop and integration issues following a rapid period of acquisitions. Management and systems have now been reset, but we're focused on cost reduction, execution, and restarting a creative M&A. Summarising some of the portfolio average KPIs. The average weighted EBITDA growth stands at 9%, lower than might be expected for Oakley. We'll look at this in more depth over the slide. Secondly, leverage remains conservative. Net debt to EBITDA across the portfolio is 4.4 times, which remains prudent. Balance sheets are structured to absorb volatility while still supporting investments. of the portfolio company debt, approximately 75% of it matures from 2030 onwards. We continue to hedge at least 50% of the principal on each debt transaction with a two to three year tenor. We continue to experience a deep and competitive credit market with recent refinancing for receiving very attractive terms. Finally, valuations remain stable with the portfolio value on average 16.4 times EV to EBITDA. a strong foundation for future performance. So let's take a look at some of the main factors influencing the 9% organic EBITDA figure. We've broken this down into four buckets, size and scale. As a number of the portfolio companies have benefited from Oakley Valley creation and successfully growing to a significant scale, the maturity of these assets has meant there is naturally more steady growth across those businesses. fall into this category. Then there's M&A. The 9% doesn't include the impact of M&A, including it takes growth closer to 17% to 18%. We are seeing an increasing number of investments in scalable platforms by building from the bottom up and spotting the right thesis and teams to do it with. Sena and Afinitas are two great examples of scarce, valuable assets that we're creating. that are building scales through M&A and highly fragmented markets. And whilst they're organically growing fast in their respective industries, budgeted organic growth is single-digit. Thirdly, there are those businesses in the early years of ownership in which we're investing for growth at the cost of near-term reports of EBITDA. Assured data protection is one example where to support their fast pace of growth, an employee count has been doubled in the last year here. giving them a near-term negative EBITDA, while sales were up over 40% in the first half. And then we have some underperformers with headwinds in the portfolio. As we've already mentioned, enrollments have been unmuted at IU Group, impacting top-line growth, and at Liberty, costs have been high post the period of expansion. But there is focus on optimizing the business over the next 12 months. No current corporate presentation can go without reference to AI. It's a topic we've covered in more depth at the four-year results and the Capital Markets Day. Through four years of investing through the lens of AI and thanks to the internal resources of the AI Lab, we believe our AI adoption and use cases are well ahead of many of our PE peers. Internally, with wide AI adoption and a proprietary platform, We've improved deal sourcing and enhanced investment decision making using our historic data, while supporting our portfolio companies through their AI journeys. In some cases, this has already led to significant AI-led transformations, as we saw at Velex prior to its acquisition by Clio. There are many less revolutionary projects underway that are making meaningful enhancements. For example, Hosting.com has launched its AI customer service solution. which now deals with at least 50% of all interactions and is achieving this at a higher customer satisfaction rating than the human solution and resulted in an annual cost saving of $3 million. Of course, no one knows the extent of the future hour revolution nor its likely impacts and knows out there'll be unexpected disruption within the OK portfolio. However, as comfort to shareholders, should be the extent of defensibility within the portfolio. As is illustrated here in this breakdown of the portfolio delivery mode, 70% of the portfolio involves some form of physical delivery. These are AI-insulated services that require a human in the loop. Filled services, education, and branded goods, to name a few. And whilst we believe that our software and data assets like Sajid have defendable positions as systems of record, which are taking advantage of AI to enhance their customer position. They're only 20% of asset value. Of course, when it comes to AI, the real excitement within Oakley is the AI-native investments that are being made in the Turing Fund. To give us an update on the fund's strategy and progress within the portfolio, we filmed a catch-up with Samir Kumar, one of the leading Turing Fund partners. Since it's based on the West Coast, we felt this was more civilised than waking up at 1am to have the conversation live. Hi Samir, thank you for joining today to give us an update on the Oakley Touring Fund and its portfolio companies. Hi Steve, it's great to be with you this morning. For those less familiar with the Oakley Touring Fund, could you start by outlining a strategy? and how the team and its approach is differentiated?

Absolutely. So we started Turing Capital in 2023, and this was right after the big Chuck Chippity moment, which is the start of the current AI wave that we're in. And we're investing in AI-native software companies focused on B2B and focused on enterprise software. And what does it mean to be AI-native? It means companies that have fundamentally transformed in terms of how they build software but also the kinds of product experiences and services that they can offer their customers. So it's AI-native both in the product, but also in how it's been built. We are doing mostly Series A and Series B, and we're seeing companies getting to scale product market fit much earlier in this AI-native era than we've seen in prior technology platform shows.

Samir, to give us a sense of this strategy in practice, could you give us an overview of the current portfolio and how it's positioned?