Asset performance drives growth at HgCapital Trust

HgCapital Trust reported a 14.3% improvement in its net asset value per share for the year ended 31 December on Monday, to £21.57.

The FTSE 250 company noted that over the same 12-month period, its share prices rose 3.5% to 1785p, while the FTSE All-Share Index weakened by 9.5%.

Its total net asset value was £84m higher at year-end than it was 12 months earlier, at £805m.

The board proposed a final dividend of 30p per share, making for a full-year dividend of 46p per share.

It reported “strong” revenue and EBITDA growth of 25% and 27%, respectively, across its top 20 investments for the year, which made up 89% of HgCapital Trust’s portfolio.

The firm’s valuation multiple was 17.3x, and the net debt-to-EBITDA ratio was 5.6x, for its top 20 investments.

A net £217m of cash was returned to the company, and £187m was invested on behalf of the company during the period.

On the management front, HgCapital said its range of board skills and experience was “enhanced” by the appointment of Jim Strang, managing director and head of EMEA at Hamilton Lane Associates, and Guy Wakeley, chief executive officer of Equiniti Group.

New commitments to invest up to £225m in Hg Saturn and Transition Capital over next two to three years were made, broadening the investment reach of the firm in its chosen sectors.

The board said it had been “another strong year of performance” for the company, with a record number of realisations.

HgCapital had selectively invested in ‘sweet-spot’ businesses, the directors explained, in clusters where it had “many years [of] knowledge”.

It said a focus on operational improvement continued to drive performance and deliver significant network benefits, and looking ahead, it said it expected to see further liquidity events over the next 12 months through both exits and refinancings.

Robust double-digit trading performance underpinned the board’s confidence in the ongoing growth of its “strong” portfolio, it added.

“We have announced excellent results for 2018 - a total return in net asset value per share of 14.3%, mostly from growth in profits, and well ahead of the wider market,” said chairman Roger Mountford.

“Our top twenty investments - 89% of the portfolio - achieved 25% growth in revenues and 27% growth in earnings over the year.”