HgCapital Trust: Seizing ‘buy-and-build’ opportunities

Edison Investment Research Limited HgCapital Trust: Seizing ‘buy-and-build’ opportunities 26-Sep-2023 / 07:00 GMT/BST The issuer is solely responsible for the content of this announcement. London, UK, 26 September 2023 HgCapital Trust: Seizing ‘buy-and-build’ opportunities HgCapital Trust (HGT) delivered a 4.6% NAV TR in H123, with its performance continuing to be mostly driven by robust trading across its portfolio (with the associated increase in portfolio value in H123 of £203.8m, or 8.3% of end-2022 portfolio value) and a minor positive impact from multiples (£34.1m or 1.4%). Hg was cautious in terms of new platform investments in H123, but saw record high M&A activity across its portfolio, highlighting increasingly attractive pricing and a strong flow of opportunities for smaller bolt-on investments. HGT’s 60% coverage of outstanding investment commitments by its liquid resources makes the trust well positioned for a potential uptick in PE deal activity. Despite the tougher external environment, SaaS companies should continue generating healthy top-line growth of c 15% pa and increasing profitability over the next two years, based on current Refinitiv consensus. HGT is a quality play in the sector, underpinned by the defensive growth profile of its holdings and Hg’s sector expertise, in-house value creation team and buy-and-build strategy. HGT’s historical revenue and EBITDA growth across its top 20 holdings was 20–30% pa at a margin above 25% (H123: 30%). This includes c 10–15% pa organic revenue growth of HGT’s portfolio companies, which is less dependent on new client additions compared to some higher-growth tech businesses, according to Hg. Click here to view the full report. All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached – across institutions, family offices, wealth managers and retail investors – Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first company in-market 17 years ago, Edison has more than 100 employees and covers every economic sector. Headquartered in London, Edison also has offices in New York, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison’s reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Milosz Papst [phone] [e-mail] Learn more at www.edisongroup.com and connect with Edison on:  LinkedIn        www.linkedin.com/company/edison-group-/ Twitter           www.twitter.com/Edison_Inv_Res YouTube       www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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1733489  26-Sep-2023