MIDAS STOCK TIPS UPDATE: Our private equity shares are up 18%, but they’re still a bargain for investors

When the Prince and Princess of Wales sent George and Charlotte to Thomas’s Battersea, they had in mind not only the academic standards of the preparatory school, but also its emphasis on kindness, courtesy and creativity.

Initially a nursery school in a church hall, Thomas’s was founded more than 50 years ago by Joanna and David Thomas.

With a growing cluster of schools, the group is now led by Thomas’ sons, who recently decided to sell a minority stake to a private equity firm Oakley Capital.

Private equity has a bad name and is accused of emptying companies, firing employees and making millions off the misfortunes of others. Oakley strives to be different, focusing on helping companies grow, working with management and taking a conservative approach to debt.

Last year, the 28 companies in Oakley’s portfolio added 1,000 employees and this year should see more of the same. The group is known for its collaboration with founders, often family businesses that would like to go to the next level, but need outside support.

Founded by Peter Dubens, a feisty entrepreneur himself, Oakley has worked with around thirty founders over the years, many of whom continue to put their money into the company.

Last month, two new investments were added to the list: France-based ProductLife, a healthcare consultancy, and Germany’s Vitroconnect, a broadband company founded by go-getter Dirk Pasternack, in his forties.

Just over 7 percent of German households benefit from fast fiber optic broadband, one of the lowest rates in Europe. But rapid changes are planned over the next decade and Vitroconnect is playing a key role in this process.

Oakley Capital plans to help both companies expand. The company has taken shape in the technology and healthcare sectors, with several successful deals in the UK and abroad. Importantly, Pasternack’s decision to partner with Oakley underlines the affinity its founders feel for this company.

This year, another series of investments have been made. Barcelona-based Horizons Optical provides software to create the highest level of progressive lenses. Steer Automotive is the UK’s largest independent car repair group.

Founded just five years ago by Richard Steer, the company has created a network of more than 100 locations and employs 2,300 people. But there are around 3,500 car workshops in Britain, Steer is in the process of acquiring it and Oakley will provide support and advice along the way.

Oakley shares have risen 18 per cent since Midas recommended them two years ago, but at £4.90 they remain a bargain. According to an independent analysis, the group’s investments are valued at £6.93 per share, almost 30 percent higher than the share price.

The discrepancy reflects widespread skepticism about private equity firms, which are 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 their value on the books.

Midas judgment: At £4.90, Oakley Capital shares have delivered returns for investors who bought in 2022, but there’s more to come. An attractive share for new and existing shareholders.

Traded on: Main market ticker: OCI Contact: Oakleycapitalinvestments.com or 020 7766 6900