Investment report March 2026 - View into the portfolio

5.500% PeopleCert Wisdom Issuer 2031
The ‘for-profit switch’

PeopleCert is the global leader in professional and vocational qualifications and certifications in over 200 countries. The company owns five iconic brands, including ITIL (IT service management certification), PRINCE2 (project management certification) and City & Guilds (qualifications and skills certificates for teaching professions). Over 82% of Fortune 500 companies use PeopleCert certifications. Founder and CEO Byron Nicolaides (79% of shares) and FTV Capital (21%) control the company.

A major strength is control over the intellectual property rights (IP) of ITIL and PRINCE2. Its deep roots in the processes of large global companies result in high switching costs for these companies and therefore low price sensitivity. With the acquisition of the City & Guilds of London Institute in October 2025, the company is expanding into the British market for professional qualifications, reducing its dependence on individual IP frameworks. City & Guilds focuses more on blue-collar workers, which acts as a natural AI hedge. But AI is also an opportunity for ITIL, as demonstrated by the planned ‘ITIL AI Governance’ product. With PRINCE2, PeopleCert benefits directly from the increasing use of AI tools, as it certifies project managers for the use of AI as a tool.

An important competitive advantage is the asset-light business model with moderate capital expenditure, which historically has led to a strong free cash flow conversion of approximately 87%. We consider the transformative acquisition of City & Guilds to be a key component of this investment. The strategic rationale goes far beyond simply buying market share. City & Guilds was previously run as a non-profit organisation with an EBITDA margin of only around 9%. The switch to a for-profit model under the umbrella of PeopleCert will now provide massive operational leverage, offering significant margin potential through the leveraging of synergies and leading to a better credit rating.

Our bonds are well ‘protected’ by a high LTV of 45% to 55%. We saw recent market concerns about artificial intelligence and the disruption of IP-based business models as a clear opportunity. As we consider the business model to be AI-resistant and, in part, a natural AI hedge, we took advantage of the temporary valuation discounts to significantly increase our holdings. Through this countercyclical approach, we expanded our position to a highly attractive average cost yield of just under 6%.

Yours sincerely

Johannes Hesche             Tobias Engl