Good morning. My name is Steven Tredget. I'm a partner at Oakley Capital, and it is my pleasure to welcome you to the Oakley Capital investments 2025 annual results webcast. Thank you for joining us today. As usual, you can submit questions in writing during the webcast by following the Questions tab at the top of your screen, and we will tackle as many of these as possible at the end of the session. As ever, you can download the presentation to view 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 despite some challenging conditions, we'll also cover an investment activity review, in which we'll introduce you to some of the new members of the portfolio and highlight another busy period for Oakley despite the muted global PE market.
Oakley Managing Partner Arthur Mornington will then join us to spotlight AI and whether we should view this as a threat or an opportunity for the Oakley portfolio and its future performance. First, the numbers. As of the December 31st 2025, OCI's NAV per share stands at 738 pence representing a total NAV of GBP 1.2 billion. That equates to a 6% total NAV return in the year and takes our five-year NAV CAGR to 13%. While 6% may be significantly below our target and historic returns, given the market backdrop of a wider macro environment that is still struggling to find a stable footing and some detractors from the NAV performance that won't be repeated, notably the impact of Time Out's. This reflects a robust performance from a portfolio whose prospects we are very confident in.
Most importantly, OCI delivered a total shareholder return of 15% across the year, with the share price rising alongside the successful exit of vLex, the move to the main list and the OCI's inclusion in the FTSE 250, albeit gains that have been given up as a result of the recent market sell-off. Putting this performance in the context of NAV growth over the last 10 years, and we see a return to growth after a flatter year in 2024. Over the past decade, NAV per share has risen more than threefold from around 200 pence in 2015 to today's 738 pence. Most importantly, shareholder return has followed suit, with the 10-year return standing at 362%.
We've noted as well the weighted average age of the portfolio holdings to highlight any trends, particularly in the light of PE funds reportedly being forced to hold investments for longer given a muted exit environment. The global median hold period for PE deals is over six years now, with North America surpassing seven, numbers that have increased 1.5 years since 2020. For OCI, we haven't seen a big deviation in the average age of the OCI portfolio. 3.5 years today has moved up from 2.3 years in 2023. The last time we saw that rise was 2020-2 022, as we benefited from the performance of a number of maturing portfolio companies. For context, the average hold period of a realized Oakley deal is 4.2 years, so another 12 months of ownership would be expected to lead to a number of realizations.
To provide further clarity on the growth in NAV, we look at the breakdown of what has contributed to the NAV performance in the year to December 2025. There was GBP 0.22 of realized and unrealized portfolio valuation net gains, which we'll give more color on shortly. Notably, this was almost entirely the result of earnings growth, with multiple expansion coming only as a result of the vLex sale. This valuation gain would have been GBP 0.53 if it wasn't for the fall in Time Out shares. FX contributed GBP 0.11 as the euro strengthened against the pound. Conversely, U.S. dollar-denominated assets experienced a drag on their valuations as the dollar weakened during the period. The share buybacks for the year contributed GBP 0.11, thanks to the accretive impact of last year's GBP 50 million capital return, which was achieved at a 28% discount to the NAV.
As we look further into the performance of the portfolio and its current positioning, we turn first to the investments by sector. OCI remains diversified across Oakley's four focused areas. Business services is now the largest sector at GBP 486 million, reflecting both new deals and strong growth in platforms such as Phenna. It is a sector that Oakley has become increasingly focused on, given it can offer recurring, sticky cash generative revenue streams in fragmented markets with strong pricing power and significant buy and build opportunities. It includes niche market leaders like loan administrator GLAS, one of our latest deals, which we'll talk to in the next section. Technology remains a close second at GBP 374 million, where we continue to back highly scalable capital-light platforms with strong structural growth. This includes the recently acquired Brevo and Paraty.
Consumer, at GBP 293 million, has grown with the performance of North and the addition of James Perse to the Oakley stable, a deal two years in the making, finally convincing the founder of this quiet luxury apparel brand to allow an external investor into the equity ownership. It's a company with software-like margins of market-beating growth thanks to high sell-through, evergreen product lines, and limited wholesaling and discounting. Education stands at GBP 273 million, a narrow sector, but one we remain very positive on. By geography, the UK and the German-speaking nations remain the countries we are currently most exposed to, alongside a growing investment count in Spain, France, and Italy, where opportunities in the lower mid-market are particularly rife and PE penetration is lower.
The weighting of our country exposure does not in any way reflect an underlying view on the economic prospects of each nation. We are opportunity-led and then sector-led and assume no to low macro strength when we underwrite an investment. Over the slide, as is customary, we now break down the equity investments by portfolio company. If your eyesight's good enough, you'll see that each bar shows OCI's look-through value to each of the 39 portfolio companies held at the year-end. The four largest look-through holdings, which are spread across each of the sectors, are Cegid, North Sails, IU Group, and Phenna Group. We'll speak to North shortly, but providing a brief update on the other three, Cegid has further cemented its position as one of a handful of Europe's leading business service software providers.
As a reminder, it provides the unexciting but mission-critical business software across the likes of ERP, finance, payroll, tax, and more. Demand for these solutions has continued to grow, driven by the ongoing small business digitization trend across Europe and the need for businesses to stay compliant while running processes efficiently. Cegid has continued to consolidate its position through acquisitions across Europe, including one other, Shine, the French accounting platform. Combined, the group serves over 1 million small businesses and around 50,000 accountants. We remain positive on the forward growth outlook, supported by regulatory tailwinds across the key markets such as Germany, France, and Spain, where new e-invoicing and e-reporting requirements are encouraging SMBs to upgrade their finance, reporting, and compliance capabilities.
Phenna maintained its position as one of the fastest-growing testing and inspection groups globally, reporting double-digit organic revenue growth versus prior year, while continuing to be one of the top five contributors to OCI's total NAV return. This organic growth was broad-based across the group but led by the UK infrastructure division. 2025 was also a record year for M&A, with 26 acquisitions completed at an average multiple of less than 7.5x EV/EBITDA. These acquisitions include Phenna's first entry into continental Europe, with a team looking to build out their five core end markets across the region over the next few years. Finally, IU Group continued to perform, although muted by its standards, thanks to the headwind of overall new student degree enrollments falling in Germany. H1 revenues were slightly above prior year, while Adjusted EBITDA was up 5%.
IU continues to invest in maintaining its superior quality and student outcomes across all formats, supported by its AI tutor technology, which is scaling rapidly, processing circa 1.1 million student messages in December. At the same time, IU is significantly expanding its lecturer base to support an increased student demand for in-person teaching in its on-campus business. Further, its vocational training academy continued to deliver double-digit growth with strong profitability. On the page is a longer tail of smaller, younger, and fast-growing companies, names like Assured Data Protection, G3, Nox, and K&M, which are all expected to become bigger contributors to NAV growth in the years ahead, driven importantly by NAV growth that continues in the case of these four at over 40%. Within Venture, Oakley Touring made eight acquisitions with one disposal in the year.
The partial sale of SafeBase after only 12 months delivered a gross IRR of 50%. Oakley PROfounders was also active in the period, making five acquisitions, taking the combined total number of companies across both strategies to 28. While they are comparatively small, just over 5% of NAV, they are nonetheless an exciting possible driver of growth for OCI in the future and give us exposure to a highly attractive subset of generative AI-powered software companies. Looking now at the level of maturity across the portfolio, as we cited earlier, exited Oakley investments have had an average hold period of 4.2 years, and today the current portfolio sits at an average hold of 3.5 years. It reflects a portfolio balanced both in terms of duration and value concentration.
Most importantly, a third of the value at least is in companies acquired in the last two years and where there remains significant scope for value creation. This is across a range of value levers for Oakley, and in 2025, the most prominent were M&A and leadership development. In the last couple of years, we've supported the hiring of over 40 C-suite members to establish future-ready organizations and facilitate succession. Thereafter, the companies move into a realization phase. Four companies are in this phase, and these are predominantly in Fund IV. Here we highlight the key portfolio drivers of NAV. On the left side, the four biggest contributors were Clio, previously known as Felix, Phenna, TechInsights, and Bright Stars. They contributed a combined GBP 0.78 to the NAV per share.
As we have reported, legal tech platform Clio was the standout contributor, delivering a GBP 0.30 uplift to NAV. This was driven by the sale of the business in July last year in a transaction that valued the company at 3x our prior period book value and creates one of a few Spanish technology startups that have reached unicorn status. The company continues to scale rapidly, benefiting from the launch of its new AI-enabled products and strong customer adoption. We have already touched on Phenna's positive performance in the year, which contributed GBP 0.23 to NAV. TechInsights contributed GBP 0.13 as it enjoyed continued subscription revenue growth, supported by strong renewal rates from existing customers as well as a more buoyant semiconductor market. This is thanks to a surge in demand for logic and memory chips in AI, data center, and advanced computing applications.
Finally, Bright Stars, which contributed nine pence, grew its EBITDA 24% in the period, driven by price increases, margin improvement thanks to lower use of agency staff, and growth in government funding. M&A continues to remain strong, with 22 new sites acquired in the year, bringing the total settings to 95 acquired since Oakley's ownership, which is well ahead of the original target. On the negative side, Time Out share price fall led to a 32% share drag on the NAV. In 2025, the company was a tale of two halves, with the markets division continuing to grow while the media division suffered a number of headwinds. The year concluded with a discounted share issuance as the company strengthened its balance sheet and funded cost takeout. We cover the current prospects of the group from here on the next slide.
Steer Automotive Group, down 6 pence, operates in a car repair market which saw volumes drop 10%-15%. The results of a mild winter and more drivers not claiming for accident repair on their vehicles thanks to higher excesses and the fear of pushing up future premiums. In spite of this, Steer Automotive Group delivered a resilient performance, continuing to outperform broader market trends supported by its national scale and strong service levels. Steer Automotive Group also continued to lead the consolidation of the market, completing 15 add-on acquisitions since signing and expanding the group from 98 sites to approximately 200 sites as at December 2025. There have also been encouraging trading indicators in recent months, with job notifications at record levels.
ACE, down GBP 0.05, saw trading impacted by softer enrollments in the full year 2024/2025 and 2025/2026 academic years, mainly as a result of a contraction in the apprentice sales part of the market, which represented about a third of ACE businesses. In response to these challenges, ACE has strengthened its leadership team with the appointment of a new group president who brings strong sector credentials as well as multi-site operating expertise. Her impact is already being felt with both cost efficiencies and an early improvement in enrollment numbers. Lastly, Contabo also saw a GBP 0.05 decline as a result of the ongoing slowing of growth due to misjudged price increases and outages causing a rise in downtimes. Subsequent platform reliability issues have been resolved. Customer satisfaction is recovering, and appropriate pricing strategy has been now established.
Given that all or a portion of North Sails and Time Out is held on the OCI balance sheet, we pay extra attention to these two direct investments. North was the fourth biggest contributor to NAV, up eight pence. The group finished 2025 with strong momentum, with revenue growth outpacing budgeted expectations. The group has evolved into a high-quality platform with a combination of the three sail makers, North Sails, Doyle Sails, and Quantum Sails, strengthening North's leadership across premium, super yacht, Grand Prix, and performance sailing segments. While the core sail-making division, which is circa 50% of revenue, delivered particularly solid earnings, and the mast division, 23% of earnings, continued to excel through their technical leadership.
The most encouraging signs for future prospects came from the consumer divisions, namely Action Sports and Apparel, which have entered 2026 on much firmer footings with higher margins and encouraging revenue growth, in part driven by their formal merger into the wider group environment. Looking to the year ahead, a group-wide focus is on driving high-quality earnings that are expected to grow EBITDA by between 15%-20%, achieving this through product portfolio optimization, manufacturing expansion, and structural cost reduction. While we cannot be explicit yet about size and timing of possible liquidity events, there is the expectation that there will be the opportunity to rightsize OCI's exposure to North Sails in the year ahead. We have Time Out.
Following three consecutive years of improving EBITDA, in full year 2025, the media industry experienced a number of challenges which resulted in a low EBITDA for the business. While its market division delivered growth in 2025, with further expansion expected via a strong pipeline of potential new openings, including in Vancouver and Abu Dhabi in 2026. Its media division acted as a drag on performance, resulting in group operating losses. Time Out did, however, complete a strategic review of this division, which has included rationalization and rigorous cost control, which alongside a strong performance from the UK, has returned media to positive EBITDA. In December, OCI participated in an equity placing by Time Out alongside the other major institutional shareholders, which included an extension package on OCI's loan to the company that significantly increased the interest rate payable.
The board is actively pushing for a solution to maximize value and believes participating in the placing and extending the terms of OCI's loan will help and has helped preserve the value of OCI's investment in Time Out. While there are expectations that the market division alone could exceed GBP 50 million of EBITDA in the next couple of years, the current market cap of GBP 43 million implies there is little conviction in this being achieved. A valuation which has reflected the fact that Time Out is now less than 2% of NAV. For more details on the company's progress, look out for their interim results, which are expected to be released in the coming weeks. This slide summarizes the core operating metrics across the portfolio. Starting with EBITDA growth, the portfolio of 39 companies delivered at average LTM-weighted EBITDA growth of 11%.
Note this is organic growth. While growth including M&A is closer to 20%. This is pertinent as a number of our portfolio companies, particularly in the business services sector, are platforms focused on creating value through buy and build. While their organic growth may be modest, this isn't the key driver of returns. Secondly, leverage remains conservative. Net debt to EBITDA across the portfolio is 4.1 x, which we consider prudent. Balance sheets are structured to absorb volatility while still supporting investment. Finally, valuations remain stable, with the portfolio valued at an average of 16.3 x EV to EBITDA, a strong foundation for future performance. With the outbreak of further conflict in the Middle East and the restrictions to oil exports from the region, we once again face the specter of high inflation and the potential for rate rises.
This led us to look back to history for the impact on valuations and performance at the time of the outbreak of the war in Ukraine, the last time we saw a similar backdrop. As is typical in PE, valuations aren't nearly as volatile as the public market. They consider moves in public shares over months, not days, whilst public equity is only one source for comparables. That's if there is a direct listed peer for an invested company. Most relevant is privately traded comps, where control positions are being acquired. Oakley has also consistently acquired companies below peer ratings and maintained that rating through the early years of ownership. As you see from the graph, in contrast with the moves in the public market, the Oakley valuation multiples remained stable in 2022.
To support that approach is the fact that 5 realizations were executed in the year, all at premiums to the prevailing book values. On the subject of inflation, we say now what we said then, that the majority of the portfolio companies have proven they can pass on price rises given the relatively low cost of their mission-critical services, or they have premium product pricing power. On the subject of interest rates and fears of contagion in the debt markets currently, the brief summary of the portfolio position is that only one company of note has maturity in 2028, while 75% of lending matures from 2030 onwards. 50% of the portfolio company debt is interest rate hedged.
OCI has access to, as you're aware, GBP 325 million facility, which matures in four years and currently has a two-year interest rate hedge in place. After two slides on the subject of valuation multiples and debt, it's important to note that we do not rely on the deployment of debt or multiple expansion as part of our investment thesis. The pie chart breaks down the drivers of value creation across all of our 29 realized investments. The key point is that organic earnings growth accounts for 64% of total realized returns. In other words, the majority of returns have come from the underlying performance of the businesses, not from financial engineering or multiple expansion. Before handing over to Arthur, let's look briefly at Oakley's investment activity in 2025.
Oakley continued to deploy capital steadily throughout the year, making 10 platform investments, all in founder-led businesses, and supporting more than 80 acquisitions by our portfolio companies as part of their buy and build strategies. Fund VI first investment was made in June as Oakley acquired business service G3. A global strategic advisory consultancy which is seeing significant demand for its services as geopolitical tensions, regulation, and business complexity continue to increase. While within the tech sector came Paraty, Spain's fastest-growing hotel demand generation platform. Building on Oakley's extensive expertise scaling high-growth cloud-based platform businesses in Iberia. In consumer arrives Nox, a high-performance sports equipment brand best known for its padel rackets.
If inbound requests for discount codes or product samples we've had here at Oakley are an indicator of future performance, this is gonna be one of our best-performing investments. With revenue growing at over a 50% CAGR, as they sell over 400,000 rackets annually across 80 countries, in a fast-growing market, there is much to be excited about. Importantly, Oakley also delivered realizations, including the sale of its stake in atHome, and of course, vLex, which we touched on previously. If we take a snapshot of the Oakley deals completed in 2025, it will come as no surprise to those that follow us that all of these transactions across both our flagship and origin strategies are in companies led by their founders who created the business and who remain significant equity owners post our investment.
The other feature that remains consistent is the over 70% of the investment in our history that have been acquired in uncontested processes, with the founders choosing to have a bilateral engagement, prioritizing working with a partner they trust and value over maximizing the price. Let's speak to two of the new deals in a little more detail. We've chosen them because either they're a new market for us or a deal that requires more explanation. First up, GLAS is the trusted referee and administrator for business loans. We're talking large, complex corporate lending, including private credit, syndicated loans, bonds, restructuring, and distress situations, cross-border and multi-currency. You get the picture. A market that is large and growing. Providing a service which is critical and where accuracy, dependency, and trust are crucial, and the cost of failure is high.
Alongside a burgeoning market, the key factor to GLAS's success and EBITDA growth of 50% over the last three years is that it's independent. GLAS has no balance sheet exposure, in contrast to banks who can't act neutrally as they are also lenders. Secondly, they have a reputation for responsiveness and execution certainty, managing multi-jurisdiction and multi-lenders. This creates extreme stickiness and a strong referral flywheel, especially via law firms. Thirdly, scale and expertise in complexity. It's hard to automate this task, and even harder for smaller companies or competitors to service this market. As a result, today, GLAS operates with over 450 employees across 16 global offices, managing a portfolio of over $750 billion across its platform. Most importantly, behind the business success is founder Mia Drennan, UK Entrepreneur of the Year in 2025.
The third such founder with this accolade that we have backed. She is investing alongside us in a business she started in 2011 with GBP 6,000 on a credit card. We'll be supporting Mia with further international expansion, M&A, tech development, and AI solutions. Now to a deal we completed at the end of last year, Athena Racing. Investing in America's Cup sailing team would seem like an unusual step for Oakley, not least because the America's Cup is an old, antiquated competition in which competitors have spent $ hundreds of millions for little or no monetary return. First, we should be clear, this is not part of a specific Oakley sports investment strategy.
Our initial analysis of typical sports investment opportunities was that value, control, and our target returns would be hard to achieve in this space, and we didn't have a right to win. Secondly, the key to understanding the Athena opportunity is to understand the recent significant changes to the structure of the America's Cup. In short, and two years in the making, the America's Cup has been revolutionized to become a Formula One-style structure in which the teams form a partnership and share the economics of the competition. This is in stark contrast to the structure of the cup in the past. It was a once every four-year tournament where previous winners determined the rules, design, and technology within the boat and negotiated and kept 100% of the economics from the cup.
A losing team, as most are or most were, would be EUR 100 million circa worse off, have a boat with little residual value, and no team franchise value. It is no surprise, therefore, that only a handful of teams had the necessary backing to compete, and only four countries have ever won the Cup in its 175-year history. It is now being transformed, however, into a biennial tournament run by a professional and independent management team that set the rules and allow for fair competition. Most importantly, it can develop the Cup and leverage the magic of the tournament, increasing viewership and maximizing the revenue from venues and media rights that the initial six-team partnership will share.
Athena Racing is one of those six teams, and as a result of our relationship with team founder and the country's most successful sailor, Ben Ainslie, we were in pole position to become a control investor in an entity which will become incredibly valuable as the America's Cup grows in scale and popularity. Athena will race under the GB One name, with the next running of the America's Cup to be in Naples next year. Now I'm gonna hand over to Oakley Managing Partner, Arthur Mornington, to take you through Oakley's view on artificial intelligence.
Good morning, everyone, and thank you, Steve. Maybe just to set the scene for this. As we know, AI is creating a new industrial revolution. Fundamental assumptions that we've had for years, for generations, about how businesses work are being rewritten. The pace of change is disconcertingly fast. Actually, the direction is not new. At Oakley, we've been building a portfolio and Oakley capabilities for several years that can benefit from this revolution. As I think Steve said earlier, the portfolio is on average 4.2 years old, and AI has been on the agenda for three years already. Most of what makes up our NAV today has been invested with AI in mind. The big question is, of course, threat or opportunity. To address the threat part of the question, I think an important comment.
At a basic level, we have a highly diversified portfolio. Only 30% of the NAV is in assets with a pure digital delivery model, and even they are highly defensive, and I'll talk more about that later. Software has grabbed the headlines in recent weeks, but the AI revolution is not just about software. It will transform businesses in our other sectors as well. The opportunity exists across the portfolio, which can benefit hugely from AI in various ways, and we are devoting our best and our most concentrated resources to delivering that value for shareholders. On this first slide, just a quick look at what we are doing as Oakley to address this moment in time. The first thing is the formation of the AI Lab.
This is a team of leading technical go-to-market talent and services experts that are driving AI thought leadership across the firm. They are a full-time advisory group, part of our Oakley team, and they're acting as the internal North Star on these issues. They're staying ahead of the trends and the rapid release cycles of the major players. They're establishing best practices, a golden stack of tools and frameworks so that portfolio companies don't have to waste time reinventing the wheel. Of course, on governance, setting this ethical and legal guardrails for AI usage across the firm. We use them in two principal ways. Firstly, on due diligence, for the opportunities and the threats there. Integrating AI into an investment thesis is long since been optional. It's a defensive and offensive necessity now.
On every new investment, we're asking, what is the moat? Does this company have either the proprietary data or the incumbency benefits that will make it defendable? How much of this product can be replicated by a foundational model? Often in due diligence now, we're actually hiring third-party firms to try to recreate it using AI, to see how much they can do. Of course, all of that effort is led by the Oakley AI Lab team. There's operational alpha that they advise on. How can we immediately reduce OpEx post an acquisition to generate margin improvements? What is their evaluation of the technical debt? Of course, we also deploy them on the portfolio, and this is where the theoretical value of this becomes really the real growth.
We're doing an AI audit on all of the companies, assessing their AI maturity, identifying quick win opportunities, building proofs of concept of new products, for them, and critically upskilling the talent. As we know, when you want companies to be AI first, you need to get the right people in the right positions. There's a big war for this talent, so having access to their networks is critical. In the middle column, there's Turing Capital. As OCI shareholders, you already have exposure to Turing Capital and to the portfolio that these guys have put together. This team is incredibly credible, and with an enormous amount of experience. They come from Microsoft's M12, from the SoftBank Vision Fund, from Qualcomm Ventures.
They've previously backed unicorns such as Zoom and Applied Intuition, and they are a specialist VC fund targeting early growth stage Series B, C in companies that are integrating AI to solve industry-specific problems. Their portfolio already includes some high-impact AI stars like Numa in automotive, CuspAI in material science, and Netradyne in fleet management. In addition to their portfolio that they're building, of course, they bring with them a network, a founder ecosystem that is of huge benefit not only to them but to the wider Oakley group. Because we are trying to, and the whole point of having Turing as part of the Oakley group, is to integrate their expertise into all of our underwriting decisions. Then the third column is Oakley as a business.
If we have to practice what we preach, and the same standards we apply to the portfolio, we apply to ourselves. We are deploying the same value creation toolkit, and using AI to refine our sourcing, networking, and underwriting decisions. If we can go to the next slide, please. I think possibly the most important takeaway of the day on this topic is on the left-hand side here. Unlike some of our competitors, we have 70% physical delivery in the portfolio. We are not a tech fund, and diversification is built-in to the Oakley NAV. Within the physical and digital portfolio, of course, there's different levels of threat and opportunity in AI. Let's just have a quick canter through those.
If we take the physical delivery group on the right-hand side of the page, there are some categories that we feel we probably don't even really need to talk about, right? Field-based services as an example. We have testing and inspection companies such as Phenna Group, in which our technicians are visiting sites of physical infrastructure. They're taking samples to be analyzed in our labs. AI is not gonna do that. Auto repair shops such as Steer Automotive Group. I think that's pretty clear. In education, a similar point. We have K-12 premium or K-12 schools like Affinitas Group globally, where humans need to be in the same room as humans. Bright Stars Group, which is our early years education company.
Now, as the father of a toddler, I sort of wish AI could entertain my toddler all day long, while I'm at work, but that feels quite far away. In luxury and consumer goods, we have branded physical products that humans aspire to own, like James Perse clothing or North Sails. In tech infrastructure, we have the data centers and hosting that's needed to power AI. Luckily for those of us that are fans, a digital cipher of sports like the America's Cup doesn't work yet. I think all of that stuff, I don't think we really need to dwell on. In the professional services area, which are arguably a hybrid of physical and digital delivery, we should dive into it further, and let's go to the next slide.
Now, the AI native world has been very quick to proclaim the death of professional services. High-profile players such as Harvey AI, that some of you may already use, see their mission, as in part to dismantle the profit pools of legal, tax, and accounting services. Legendary VC firm Sequoia think that the next 1 trillion dollar company will be a software company that's pretending to be a services company. They think that because there is a massive amount of annual spend that is outsourced to these services companies that dwarfs the amount that's actually spent on software, probably depending on how you define it, somewhere between 10 and 20 x the amount that's spent on services, which are in some way human labor.
These outsourced services have a clearly defined budget layer, which therefore you know precisely what they cost. Much of them cover processes that have at least a substantive layer that is repetitive and where the tasks can be learned. That's why this has become a hot topic in this early stage of the AI revolution. How does Oakley's professional services portfolio stack up against that? The first thing is that there are some of these business models that are just specifically human to human. There are some business issues that can't be quantified and where responses to them can't be codified. I think G3 is a good example of that. It has a uniquely human to human business model in the task or in the field of risk consulting.
G3 was founded by two former MI6 officers. They were running human source networks on behalf of the British government, and they realized that you could turn those same skills into a corporate product. G3 today serves financial investors that are seeking enhanced due diligence on bespoke topics. It might be a regulatory issue, it might be the opinion of a government department that might affect your investment, it might be the local standing of a business partner. They're using their human source network to get contextual views on these issues which are never precise. This can't be ones or zeros. This is opinion. Most importantly, this is judgment. It is opaque. It is very hard, impossible I would say, to automate, and it relies on that human relationship building, and the tradecraft of human judgment.
This point about judgment rather than intelligence is important. Actually, it's Sequoia's own methodology that we use to distinguish between intelligence, which is what is required to complete the task, and judgment, which is what do you do next. Oakley's companies compete on trusted ongoing service delivery in judgment-heavy domains where you need regulatory knowledge, domain expertise, and that human touch. Good examples are I-TRACING and Bridewell, which advise the largest corporates and critical national infrastructure clients on their cybersecurity. Now, they don't own or make the tools themselves. The tools are provided by third-party vendors, but how the tools are architected and integrated and then deployed is determined by the judgment of the service provider, and there's hardly an area that requires more trust than your cyber defense.
Another good example would be on healthcare, which serves the multi-stakeholder healthcare plans in Italy. They sit between unions and employers to advise and negotiate on specialist healthcare insurance. Simple algorithmic brokerage does not work. This is messy, this is human, and delicate judgment is required. All of that is to say that we've invested in these companies precisely because we believe that they have the skills that are shielded from AI disruption. In fact, what AI will do for them in our next investment cycle is to increase margins by improving their delivery efficiency and their go-to-market efficiency. Of course, it's exactly those sort of issues that the Oakley AI Lab is working on with these founders to achieve those outcomes.
If we can go to the next slide, let's turn to software and data, which represents about 20% of the NAV. Now, I'll start with some things that of course you already know. Software has been a standout, probably the standout asset class for the last 20 years. It enters this moment of transition with moderating momentum. Growth overall for software is slowing as penetration matures, but gross retention rates and net retention rates remain resilient and have not shown any AI effects yet. What has happened is that AI has crossed from being copilot to agent or autopilot, and models now combine the sort of long-term, long-horizon reasoning with using different tools, the multi-step execution. All of that means that AI can now effectively manage end-to-end workflows in a way that was not possible before.
Public markets have, as we know, repriced software on those assumptions. The launch of Claude Cowork showed that end-to-end task management for even sophisticated enterprise applications, and it has effectively raised the specter of what really will be the terminal value of some of these software companies. That means that next twelve months revenue multiples are at 10-year lows. Although I think in this context, we should remind you that public market valuations have always been in a different sphere to private market software valuations. Even where they're trading now, they're still higher than the typical private market software comparable. Look, this repricing is understandable, but of course, the impact will not be uniform or, in most cases, immediate.
The transition towards AI is gated by a number of issues, by data and integration, by governance and regulation, by people and process, even if the tech is ready. A good corollary of this is that it took cloud more than 10 years to reshape the software industry, even though the underlying technology was available to all at that, at the very earliest stages. In effect, what it does is just widen the fan of outcomes for these SaaS software incumbents. Back to the point, that creates both opportunity and risk. How does the Oakley portfolio, software portfolio stack up in this rapidly evolving market? What we've done is to identify six characteristics of software businesses that provide moat against AI threat and also give, in some cases, these companies the right to be winners in an AI-first environment.
I'm sure you've been through versions of these with others before. The first one is vertical domain expertise. Are you horizontal? Are you vertical? If you have deep horizontal challenges, big prizes, the big categories, AI is gonna go after them first. When you've got deep vertical knowledge accrued over decades and embedded into the technology, that's a much harder target to aim at and a much smaller target to aim at. Second, are you a system of record with mission-critical processes? If your business has the authoritative source of business data on customers, on employees, on products that is accurate and is validated, and the business can't do without it, then you are secure. There is no scope for probabilistic outcomes. You need 100% accuracy, otherwise you've got a systemic business problem.
That's where these systems of record have a significant defensive barrier against what the AI tools can do. Thirdly, you all know this one, proprietary data. Do you fully own the data that is required? This is probably the best of all protections, a huge moat against competitors. Fourthly, regulatory lock-in. If you operate in regulated markets, maybe you could arguably say this is the second best one. Those barriers are very hard to break down. Fifth, the brand incumbency advantage, which is really about distribution. If you own these customer relationships, especially in SMB, where you've got very distributed large amounts of customers, very hard to access in any economically efficient way, if you have that relationship, if you have that distribution, if you have that incumbency, then it's yours to lose.
The last one is the AI leadership. If you are an AI-first company, if your processes, your products, your technology, is already pointing in that way, you are going to have a massive competitive advantage. Overall, there are differing levels of risk and opportunity, but each of our companies has at least some of these characteristics to build an AI strategy on. This portfolio has been, as I said before, constructed with these elements of AI defense in mind. Let's turn to a couple of specific examples. I've chosen two here, Brevo and Clio, because they both look at it from quite different perspectives. Brevo, what they do is they are providing small companies with email marketing automation software tools. They have about 1 million customers, a globally recognized brand built over 15 years.
Importantly, each customer is paying about EUR 1,000 per year, about EUR 600 per year in SME world, which is about EUR 50 per month. They get powerful ROI from this product. This is for a small business. Email is by far the most effective communication channel to their customers. It's the only domain that is not owned by one of the large tech companies. It is effectively free in terms of delivery, and so orchestrating that effectively is very powerful for these companies. Now, I've chosen Brevo to talk about because it is a horizontal function. It is therefore pretty close to the bull's eye of what people say AI will disrupt. We invested in this 9 months ago, fully aware of this risk and opportunity. Because of that, Brevo is now an AI business.
AI is embedded into everything they do. They have powerful incumbency, and they have the conditions to win and to protect that. They are a tech-first, AI-first company. They have over 400 people in the development team. All they're doing all day long is creating new AI products. There's 20 of them in the works right now. They have always had a usage-based pricing model. They don't have to dismantle the seat-based pricing and reconstruct commercial agreements with their customers. It's already outcome-based. They have a visionary founder who's a technologist, who operates on a single tech stack, so changes can be implemented and flow through the organization in real time. AI is clearly a positive for the ROI of their product.
More personalization of the emails, deeper content, deeper bespoke insights about what the recipient of the email is, it really wants, is going to improve the effectiveness of this. This is a bet on can the incumbency at this low cost, high efficacy, strongly embedded with the best tech that is available, and we've got to stay ahead of or in line with the best, how do we hang on to and grow this very lucrative market position. Clio, which is more of an offensive strategy. Clio, first of all, what is it? Clio is a practice management software company for small law firms, principally in the United States. There are about 350,000 small law firms in the United States.
Clio has about 150,000 of those customers. Their practice management is the ERP for small law. It's organizing their entire business, client meetings, case management, billing, et cetera. Last year, Clio acquired vLex, which is our company, which is a database, the third globally comprehensive database of case law, cited primary, secondary, and tertiary law available in the world after Thomson Reuters and RELX. Why is the combination so powerful? Because with vLex's data about what the law is and Clio's distribution into these small law firms and their practice management and document management tools, you have a truly integrated product in which AI forms a key part of everything that these small law firms do. Now, small law firms can't afford Thomson Reuters or RELX.
They can't afford Harvey, but there is a huge demand and a huge part of the market that needs an AI-first solution, and that is why we have combined with Clio, and that is why that will be the next most powerful wave of AI rollout in law. As we all know, the large law firms are already doing it in a large way anyway. Very exciting platform, very exciting company. AI will be the driver of the next leg of growth for Clio. To bring all this to conclusion, AI is the number one question for us for every new investment, for every portfolio company, and for every exit decision. It's a unique set of questions that we have to answer and challenges we have to rise to.
We have assembled this portfolio with AI front of mind. We are deploying our best resources on really realizing value from this opportunity, and we'll look forward to updating you on progress again in the future.
Thank you very much, Arthur. Now turning to the slightly less engaging topic of OCI's liquidity position and the company's outstanding commitments. As at the December 31st 2025, OCI has total outstanding commitments of GBP 992 million across the Oakley funds. A large majority of this, highlighted in the bright purple section of the bars, is the GBP 387 million remaining on Fund VI, which closed in March 2025. The GBP 380 million of outstanding Fund V commitments, a fund entering the last years of its deployment phase, and GBP 128 million in Origin II, which increased in its deployment pace over the last year with four investments in the period.
To give us a better indication of when we expect the nearly GBP 1 billion to be called, these bars break down if and when commitments will be called. Starting at the far left, there is over circa GBP 300 million that is not expected to be called, circa GBP 450 million that is set to be called after 12 months and over a four-year period, and GBP 250 million that is expected to be called over the next 12 months. This compares to GBP 191 million of liquidity from cash and available credit facilities. If we include a GBP 75 million accordion that OCI has the option to request, OCI's current liquidity for approximately a year, which is thinner than the typical target level of cover.
However, in combination, refinancings expected in the next six months and realizations targeted over the next 12 months are expected to generate inflows equivalent to another year of capital calls. Although not guaranteed, this is typical for OCI that outflows at least match or exceeded by inflows as a result of deal proceeds. As we can see on this slide. 2024 was more of an anomaly as a result of the very high levels of deployment, while 2025 saw the balance between capital calls and distributions begin to return. This ratio is expected to improve further this year as a result of planned realizations. Let's turn now to capital allocation. We've highlighted the four elements of OCI's capital allocation, some of which overlap on which the board provided further clarity in 2025. Fund commitments.
Over the longer term, the board remains committed to OCI's, to OCI shareholders benefiting from the returns generated by Oakley funds. To that end, EUR 500 million was committed to the latest flagship Fund VI. Direct investments. A resolution is in place to manage those direct investments, especially North Sails, providing both liquidity, maximizing upside, and moving the investment off the company's balance sheet. Capital return. Dividends have been discontinued in favor of distributing capital via share buybacks. The dividend had remained at an unchanged and nominal level since its introduction in 2016, and the board determined that shareholder returns would be better served by buybacks. The annual buyback program was initially launched at a minimum of GBP 20 million.
On the subject of buybacks, OCI has bought back and canceled 10.5 million shares since the launch of the buyback program in March 2025, returning GBP 52 million to shareholders. The program continues in 2026, with a minimum of 18 million remaining of the announced buyback authority. To bring the presentation section to a close, we look ahead to the rest of 2026. If the first three months of this year is anything to go by, this is gonna be a year without its challenges. However, a maturing portfolio of founder-led businesses who are targeting one of a number of persistent structural trends is expected to see rising organic earnings growth in 2026.
There are also the investments where fundamental improvements have been made, investment targets have been met, and now they move into the exit phase of ownership at possible premiums to book value. In combination, these two are expected to deliver increased OCI NAV growth. Secondly, as Arthur has detailed, AI is not a thematic overlay for Oakley, but a structural tailwind. A number of our existing portfolio companies are already significant beneficiaries of AI adoption. Oakley Touring gives OCI access to investments in AI-native businesses. Through our AI lab, we are actively driving adoption across the portfolio to enhance productivity and margin potential. Finally, the OCI board is focused on capital discipline and enhancing shareholder returns. They have prioritized buybacks that take advantage of mispricing. They are working towards the resolution of the direct investments, which will in turn deliver further liquidity for OCI.
With a new chair taking the helm tomorrow, we can expect more initiatives targeting the improvement of the rating of the shares. While I'm here, some dates for the diary. April 29th, the Q1 NAV update, and the May 13th is the Capital Markets Day. Please contact the OCI investor relations team via the website should you wish to dial into the event. That brings the presentation element of the webinar to a close. Thank you for remaining with us. At this point, I'll hand over to Rosanna to take us into the Q&A section.
Thank you, Steven. Thank you everyone who has submitted questions so far. For those of you who would still like to do so, it's not too late. Please submit any remaining questions using the Q&A function on the webinar home screen. I have one eye on the time, so we're gonna try and close off as many of the key questions and topics that you've raised. But if we don't get round to answering your questions today, we can reach out to you directly after the webinar. With that said, we are going to kick off with a question we've had in on portfolio performance. So Steven, the 11% EBITDA growth number is slowing versus historic earnings growth. Why do you think this is, and do you expect this to continue?
I think the first thing to say is that, EBITDA, that our EBITDA growth number is a relatively blunt number, and it conceals a number of factors for why it might, you know, kind of move up or down. There are three drivers to the softening. There's kind of market headwinds and the kind of, I guess, a miss in expectations, as there has been over the last couple of years. I suspect that's probably responsible for 50% of the impact of the slowing of that average growth rate. Then there's planned investment for growth, which is probably 30% of the impact. To explain that, I mean, that is capital invested, expenses invested, anticipated in a company's growth, particularly in the early years of our ownership.
If I take one example, you know, kind of one of our companies acquired in the last 18 months grew its EBITDA at over 50% the year before last. Last year, while the top line has continued to grow and almost double, there was a planned doubling of full-time employees at the business to position the company for its further growth, and that saw the company drop to an EBITDA loss for the year. Then finally, there's a change in mix. I mentioned it on the slide relating to those KPIs, and this is really the remaining 20% of the impact. That's underlined the fact that for some companies, particularly business services, the value driver isn't necessarily organic. It's accretive M&A unless earnings growth. Earnings growth, which is therefore less, you know, kind of more modest than maybe tech education and business services.
Thank you, Steven. We've had a few questions on the theme of deployment and future investment themes. What is the deal pipeline looking like for 2026, and what is the investment focus? In particular, could you touch on your approach to doing more software deals and how are you evaluating any software businesses through the AI lens?
Sounds like a question for you, Arthur.
Okay. I'm happy to take that one. Look, on the pipeline, the pipeline is always very strong. At Oakley, we never have a shortage of high-quality investment ideas. It's really about filtering through for the best ones on the best relative value. We have, as we've probably told you before, we're running a database of more than 7,000 founder-owned businesses in the sectors that we cover in Western Europe, and we're at the various stages of development. We are managing relationships with as many of those founders as possible. There's always a lot of things that we can do. However, to be specific about it, we deployed relatively rapidly last year in the larger fund. I think you can expect a deceleration in deployment in the larger fund.
However, the smaller fund, the Origin fund, is on its investment deployment trajectory. You can expect more deals to come there, but they will be smaller and therefore with smaller commitments from OCI. In terms of software, look, we continue to be active in software. Those software businesses that have the kind of characteristics that I was talking about briefly earlier are still very attractive. The fascinating thing is that we haven't done a software investment since February 3rd and this big re-rating in the market. All of us are waiting to see what impact that has on private market valuations.
As I said, public market valuations have always been somewhat removed from private market software valuations, but we're gonna really find out in the next few weeks what impact that has flowed through to for us. That may create some very interesting buying opportunities in software, and we certainly don't exclude software from our opportunity set as a result of AI. In fact, far from it. We're just looking, again, as I would say, for the best relative value.
Thank you very much, Arthur. In the interest of time, I'm gonna make this the final question. As I said, at the start, we will follow up directly to any additional questions that have been submitted. It is a question on the topic of realizations. Steven, what is the outlook for realizations in the next 12-18 months?
I'll start and I'll let Arthur finish. I mean, in terms of, I'll let Arthur talk to the market, and what he sees as the kind of backdrop to deals. I think the first thing to say is that I think we've always maintained if you have kind of A-class strategic, you know, high-quality assets, then there's always a market for them. Uncertainty in the market obviously creates pricing challenges. There have been, as I mentioned earlier in the presentation, there is at least four companies which have been identified as being in the realization phase now. We're planning for their ultimate exit over the next 12 months, and we have a, you know, kind of relative degree of confidence in those processes.
There's also the possibility of a partial sell-down in one of our other holdings. The opportunity for both kind of liquidity and proceeds and also the possibility for kind of positive NAV upside as a result of those. I don't know, Arthur, if you want to talk about what you see kind of in terms of the confidence of the broader realization market.
Yeah. I mean, look, you know, as you know, we've got several realizations that are in the sort of prep phase right now. You never know until the last minute, do you? We have high levels of confidence that there is a good market, good investor reception for these kind of companies, which, as I said, at the beginning, a lot of them are either not related to AI at all or benefit from AI. I think we're feeling good about that, but of course, you can never be complacent, and you never know until you get to the finish line. I think we've got good line of sight to, I'm saying between three and five position realizations in the next 12 months.
Thank you, Arthur. Thank you, Steven. I will hand back to Steven now to do the wrap-up.
Thank you, Rosanna, and thank you, Arthur, for joining us on today's call. I think as we summarized in the outlook, you know, we anticipate OCI, despite whatever the backdrop brings, its ability to outperform in 2026. It's a market in which, you know, PE, you know, returns to its foundations, whereby, well, exercising the control to make changes, making fundamental improvements to a business and looking to return, you know, kind of capital, you know, when we can and at regular intervals. I think sticking to those disciplines and backing founders is what Oakley continues to do well and will be demonstrated in the performance of OCI this year, and further beyond. Thank you so much for joining us today.