HgCapital Trust has announced its annual results for the year ended 31 December 2016. During the period, the Trust provided an NAV total return of 19% and a share price total return of 43%, which it says compares to return on the benchmark of 16.8%. The Trust says that the increase in VA is primarily due to the uplift to book value on the exit of Zenith announced in January 2017.
The trust says that it experienced strong revenue and EBITDA growth (11% and 21% respectively) across the top 20 buyout investments (83% of the portfolio) over the last twelve months. It has a valuation multiple (EV/EBITDA) of 14.2x and debt to EBITDA ratio of 4.1x for the top 20 buyout investments. During the period, £135m of cash was returned to the Company and £104m invested on behalf of the Company (including £13m of co-investment).
As at the end of February, the Trust had liquid resources of £99m (16% of NAV) with outstanding commitments (including its commitment to the Mercury 2) for £499m (80% of NAV). The Trust says it expects these to be drawn down over the next four to five years.
In terms of outlook, The Trust says that it has had a good start to 2017 with the sale of Zenith at a 2.9x investment multiple and 46% gross IRR. The Trust estimates that this will provide cash proceeds to the Company of £59 million, some 22% over the book value as at 31 December 2016. The company says that it will concentrate its efforts on returning further value from the portfolio over the next 12 months through both exits and refinancings.9 new investments were made in 2016, and a key focus over this year is on delivering on the operational and financial plans made at the time of investment. The Trust expects to make some new investments over the remainder of 2017 but not at the level of activity seen over the last year, given the current market environment. The Trust says that the portfolio is continuing to trade well and it is optimistic about the prospects for these companies over 2017, despite the wider macro-economic and political climate.
HgCapital Trust sees NAV uplift of 19% driven primarily by Zenith sale : HGT