Caledonia Investments (CLDN) investor relations material

Investment strategy and performance

• Focuses on long-term, diversified investments across private and public markets, emphasizing capital preservation and absolute returns of inflation +3%-6% per annum, with a 10-year annualized return of 9.8% and a history of consistent dividend growth.

• Self-managed structure with £3.0bn in net assets, delivering consistent dividend growth for 58 years and NAV growth outpacing inflation by 6.5% p.a. over the last decade.

• Portfolio diversified across public companies, private capital, and funds, targeting annual returns of 10–14% and achieving 10–13% p.a. over the past decade.

• Three main strategies: public companies, private capital (mainly UK mid-market), and funds, with the funds pool representing 30% of NAV and providing exposure to North America and Asia.

• Investment approach centers on high-quality businesses, concentrated portfolios, and alignment of incentives with shareholders, measured by NAV per share and rewarded in shares.

North America focus

• Targets the U.S. lower mid-market, investing in founder-owned businesses with strong operational potential and low leverage, benefiting from less competition and lower entry multiples.

• Portfolio includes 45 managers and 30 funds, valued at £567.3m, with 200 companies and a weighted average age of 4.3 years.

• Achieved strong long-term returns: 19.8% (3 years), 18.9% (5 years), and 16.4% (10 years) annualised in GBP.

• Entry multiples in the lower mid-market remain lower and more stable compared to broader US buyouts.

• Typical fund commitments are $25-30 million, making the investor a significant LP and often securing advisory board seats.

Asia focus

• Invests in funds targeting the region's expanding middle class and innovation, with a portfolio of 35 managers across 15 funds and 385 companies, heavily weighted to healthcare, consumer discretionary, and IT.

• Asia's share of the global middle class and spending is rising rapidly, projected to account for two-thirds of global middle-class spending by 2030.

• Exposed to innovation in sectors like EVs, biotech, and robotics, with realised and unrealised investments in leading companies.

• Long-term returns: 6.9% (10 years) annualised in GBP, though recent performance has been challenged by constrained IPO exits.

• Recent years have seen macroeconomic uncertainty and FX movements weigh on valuations and exit activity, but operational performance remains strong and IPO activity is picking up.