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HgCapital achieves record performance over 2021

HgCapital Trust exercises option over Allocate Software HGT

HgCapital achieves record performance over 2021 – HgCapital Trust (HGT) has published its annual results for the year ended 31 December 2021. During the period, the trust achieved strong portfolio performance with a total return NAV increase of 44% to a record high of £4.40 and net assets of more than £2bn. Its share price return was 40%, outperforming its benchmark return of 18%.

A final dividend of 5p per share has been proposed (full year dividend of 7p per share) while the company saw a record level of investment over the year, deploying £424m alongside Hg, Europe’s largest investor in software & service businesses.

Jim Strang, chairman of HGT, said: “As I noted in my last review, HGT and its portfolio have coped well with the challenges presented by the COVID-19 pandemic. The defensive nature of the businesses within the portfolio and the operational skill of Hg have both contributed to the success of HGT in weathering this challenging period. I am happy to report that our full-year results continue to see the portfolio delivering strong growth and excellent returns.

“While 2021 has been very encouraging for HGT, we have all witnessed the recent events unfolding in Eastern Europe. Your Board remains extremely focused on ensuring that the risks inherent in managing a successful and fast-growing investment company, during such uncertain times, are fully addressed. Despite the challenges in the external environment and the volatility they may induce, the Board is confident about the future prospects for HGT.”

Manager’s summary:

  • The combination of the long-term nature of listed private equity investment with the types of business that Hg invests in, and robust double-digit growth in trading is expected to continue to drive long-term performance 
  • Against the backdrop of COVID-19, Hg’s portfolio has performed well.
  • The overall portfolio valuations were up over 52% for the year to 31 December 2021, returning over £4 billion of liquidity to Hg investors, including £271 million to HGT.
  • As highlighted previously, COVID-19 has had a limited direct impact on the portfolio, given its defensive growth characteristics and we believe our investments will continue to benefit from ongoing trends in the digitalisation of business processes, across sectors and geographies.
  • The portfolio companies remain focused on selling business-critical and non-discretionary software and services to their underlying business customers, delivering highly predictable levels of recurring revenue.
  • Across our funds, we expect further investment activity in the next 12 months to continue – cautiously and with discipline – into businesses that we have often tracked for several years.
  • Further liquidity events are expected over the next twelve months.
  • Bolt-ons and strategic M&A within the portfolio remain a key focus and across the current portfolio.

HGT : HgCapital achieves record performance over 2021

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