HgCapital Trust (HGT) released its annual results for the 12 months ending 31 December 2023.
- HGT reported NAV returns of 11.1% over the year, ending with a NAV per share of 500.4p, and total net assets of £2.3m. HGT also reported a share price total return of 26.2%, with its market cap hitting the £2.0bn mark.
- HGT’s discount narrowed from 23% to 13% over the year.
- HGT has proposed a final dividend of 4.5p per share, bringing its total 2023 dividend to 6.5p.
- HGT’s portfolio reported revenue and EBITDA growth of 25% and 30% respectively across its top 20 investments. It also reported a valuation multiple (EV/EBITDA) of 26.1x for the same group of companies. HGT finished the year with 49 investments, with the top 20 accounting for 76% of the portfolio.
- With respect to HGT’s performance versus public markets, HGT’s managers commented: “although our trading (earnings) performance is well ahead of publicly listed peers, our portfolio value has lagged its public peers during 2023. This reflects much less aggressive multiple expansion in our valuation models, versus that experienced in the public markets.”
- Over 2023 HGT reported £324m in realisations, with an average uplift to their carrying value of 25%.
- HGT’s realisations more than covered the £74m invested into companies familiar to the investment manager, as well as further commitments of c. £183m to Hg funds, with total outstanding commitments of £1.2bn as of 31 December 2023. These are expected to be drawn down on over the next three to four years.
- HGT has increased its revolving credit facility by £25m, bringing the total facility to £375m, with a three year term. Including the RCF, HGT has £700m in liquid capital available.
Jim Strang, HGT’s chairman, commented:
“HgT has delivered a resilient performance over 2023, with the underlying portfolio continuing to deliver strong growth. Investment activity was slower in the first half of the year as the prevailing high degree of uncertainty and tight capital markets conditions combined to make transactions challenging. However, this activity accelerated in the second half of the year and into 2024, as conditions improved and as the market looked favourably on the kinds of high-quality assets that make up the HgT portfolio.
“The significant liquidity generated in the period, not only validates the market value of the assets in the portfolio, but further strengthens the balance sheet to be able to capitalise on future opportunities as they present themselves. With our defensive portfolio of companies and prudent management of the balance sheet, HgT is well positioned to take advantage of investment opportunities as they arise, and the Board remains positive for both transaction activity and portfolio performance in the year ahead.”