HgCapital Trust plc (LON:HGT) has announced a preliminary trading update for the 12 months ended 31 December 2023.
HgT provides investors with a listed vehicle to invest in unquoted businesses managed by Hg, Europe’s largest investor in software & services companies.
The objective of HgT is to provide shareholders with consistent long‑term returns in excess of the FTSE All‑Share Index by investing predominantly in unquoted businesses where value can be created through strategic and operational change.
Highlights for 2023 include:
· Estimated Net Asset Value (NAV) per share of 498.6 pence (unaudited)
· Total estimated NAV return per share, on a total return basis, of 10.7%1
· Total share price return of 26.2%1
· Discount narrowed from 23% to 13%
· Top 20 (77% of the portfolio) LTM revenue and EBITDA growth of 25% and 28% respectively for the year ended 31 December 2023
· Investments of £71 million and realisations of £343 million
· Year-end available liquid resources of £625 million (including a £350 million undrawn credit facility)
· Year-end outstanding commitments to Hg funds of £1.0 billion
NAV growth
HgT’s unaudited estimated NAV as at 31 December 2023 was £2.3 billion, which represents an estimated NAV per share of 498.6 pence, based on portfolio company valuations at 31 December and reviewed by the HgT AVRC. This growth was predominantly driven by strong trading performance in the underlying portfolio.
Investments and realisations
· HgT’s share of deployment from new and follow-on investments made during 2023 was £71 million, including GTreasury, Nomadia, JTL, P&I and Howden
· HgT’s share of proceeds from exits and refinancings during the period was £343 million, including secondary sales from Hg Genesis 8 and Hg Saturn 3, as well as the full exits of Transporeon and Commify. Full and partial exits represented an average uplift of 25% to their carrying values at 31 December 2022
Post- period balance sheet adjustments
Allowing for all transactions announced and not completed at the end of 2023:
· Available liquid resources of £735 million (including a £350 million undrawn credit facility)
· Outstanding commitments of £808 million
Hg REALISATION ACTIVITY CONTINUES TO HIGHLIGHT THE FUNDAMENTAL STRENGTH OF THE UNDERLYING PORTFOLIO
The sale of Argus announced in January 2024 represented the fourth material realisation event announced by Hg over the prior four weeks, resulting in c. $3.5 billion of proceeds that will be returned to Hg clients, including c. £295 million to HgT, once these transactions close in 2024.
This realisation represents Hg’s 13th liquidity event since the start of 2023 and the 29th liquidity event completed over the last two years, the equivalent of more than one per month and representing proceeds from nearly half of the Hg portfolio over this period.
This realisation activity sets Hg apart in a year when many other private equity firms struggled to generate liquidity from their portfolios. Hg believes its realisation activity in 2023 was a clear differentiator for HgT, highlighting the fundamental strengths and attractiveness of the underlying portfolio to both trade and financial buyers.
HgCapital Trust will report its full year audited results for 2023 on 11 March 2024.
