IR Profile: Oakley Capital’s Steven Tredget
Oakley Capital Investments recently appointed a new Partner and Investor Relations head, Steve Tredget, whose background and experience lies in investment banking and public markets. He speaks to The Drawdown about the move to private equity; the cultural differences and why more of these moves are likely to sweep across the industry.
“From an IR perspective, there will be more and more people in my position as a result of MIFID II – because of the inevitable reduction of research coverage and corporate access provided by banks, many companies will choose to increase their in-house IR capabilities,” Tredget says .
Under the new rules, listed entities must either create clear audit trails of research costs, or fund research from their own balance sheets.
Tredget joined Oakley in May from investment bank Liberum, of which he was a founding partner. Over the past decade, Tredget has worked closely with Oakley’s founding partner Peter Dubens on several public listings, including the IPO of Oakley Capital Investments itself in 2007.
Dubens had been trying to persuade Tredget to join Oakley for several years, but Tredget didn’t feel as though Oakley required his particular capacity in-house at the time.
“The tipping point was Oakley’s coming of age,” he says. “In terms of AuM, scale, number of portfolio companies, number of investment professionals; there have been big changes in the last 12 months.”.
A second reason for Tedget’s decision was Oakley’s current perception gap, which he feels is particularly prevalent in the public market.
Thirdly, Tredget was ready for change: “I had been a corporate broker for 17 years and it was time for a new challenge. The increasing regulation and head winds faced by investment banks helped the decision; it’s becoming an increasingly difficult environment to work in,” he says.
Beyond these three drivers, it would seem deeper structural shifts taking place in both the public and private markets have created further reasons for Tredget to leave behind his investment banking life and venture into new private equity pastures.
Listed private equity is a peculiar beast. For the UK’s public PE houses, excluding 3i, discounts to NAV have oscillated between 10% and 30% over the last seven years. OCI’s discount to NAV has followed the rest of the pack: for 2016 its share price averaged 164p, while its NAV per share was 231p – a discount of 29%.
Despite the ongoing misalignment of listed PE NAV and share prices, Tredget believes change is coming. “When it comes to listed private equity, investors are realising that performance has been consistently positive, and that private equity firms are more conservatively managed with regards to over commitment and levels of debt – they are not making the mistakes seen pre-crisis.”
Tredget also points to private equity’s strong performance in recent years, with it now surpassing all other asset classes. “On top of all of this, recent M&A activity in the sector is creating more awareness of listed private equity and the available value.”
With Tredget aiming to lift Oakley’s share price to more than 200 pence by the end of the year, coupled with increasingly restrictive regulations gripping the investment banking industry, he seems to have timed his move well.
Though Tredget brings experience, skills and contacts he has used throughout his career with him to Oakley, there are major differences in his new role. “My focus is the main difference. Previously I was working with 20 to 30 different companies at one time. My knowledge of each was more shallow and I was an advisor with input, but less influence, over their comms and strategy,” he says.
His new role sees him help design Oakley’s comms strategy from the ground up: “Oakley remains an entrepreneur led unconventional PE house, but it has also come of age with greater strength in depth, more process and improved support functions. However, it’‘s had no comms strategy to help perception keep up with the reality of its quality and success.”
As Oakley pulls in the final commitments for its third institutional fund – expected to close in Q2, Tredget will start laying the foundations for the firm’s next fund, turning his attention to limited partnerships for the first time.
New audiences and demands are to be expected when moving from public markets to a private equity house, but perhaps more interestingly are the cultural differences Tredget has experienced.
Having met with old banking colleagues recently, Tredget was struck by the amount of conversation dedicated to hours spent at desks, politics, remuneration and stress. “The pressure in that industry is about doing as many transactions as possible, in a highly competitive environment, with little pipeline visibility.”
Tredget is relishing the relative positivity of the private equity market. “Private equity is much more progressive. Interests are more aligned between the investee companies and between colleagues; if a company flourishes then they and we are successful and that creates a much more supportive, inclusive environment,” he says.
Building on the collective nature of private equity, Tredget has observed how the team typically eat breakfast and lunch together. “At investment banks it’s harder to nurture a team spirit; people would disappear at meal times to escape or eat at their desk because of time pressures.”
Tredget’s comments speak to private equity’s unique alignment. “Success is celebrated across the board because we’re aligned,” he notes. “It’s more of a social attitude here. The Square Mile has its pros and cons but it’s very institutionalised; it’s very rigid.”
It’s not just at meal times that Tredget has felt the unified culture of private equity. For him, the regular opportunity to interact with various functions of the organisation is unfamiliar. “In the banking world I would rarely interact with the finance team for example. Here, I can see across to the team from where I sit.”
Asked how often he is interacting with other teams at Oakley, Tredget lists several instances over the preceding days. “We have a weekly PE meeting which is attended by the private equity professionals as well as representatives from the legal and finance teams. Yesterday we had the quarterly review, where partners examine portfolio company performance, and various teams including fund finance were engaged in this.”
Tredget also mentions the writing of a release concerning Oakley’s half year update: “That announcement was circulated to legal and finance teams, the board, as well as all of the partners – everyone had the opportunity to input.”
If the tendency towards investor relations executives moving in-house holds true, Tredget advises those making the move to ready themselves for the change. “Be prepared for the initial shock of only having one company to care about and the dislocation from the wider stock market. The intensity and buzz of broking is hard to leave and there is a sense of loss not being as engaged in the market.”
The flipside is being able to go much deeper into one company, learn much more and experience life on the inside, which would previously have been inaccessible. “For example, for me, the ability to work at Time Out, an Oakley portfolio company, is such a great opportunity. It’s such a creative place, where I get real insight about entertainment, travel, digital media, commerce and Time Out itself. Compare this to sitting in your glass tower in the City, casting judgement on how these companies are going to perform; you’re so out of touch compared to actually working within these businesses.”
Tredget’s experience of working in-house at a private equity firm brings to light the unique nature of this industry; one of community, collaboration, alignment and supportiveness.