Valhalla Ventures, the holding company of Preqin founder Mark O’Hare, has lifted its stake in HgCapital (HGT) for a third time to 6.4%. The disclosure came yesterday as the private equity trust fell as Investec reversed the “buy” rating slapped on the shares two weeks ago when they stood at a two-year low.
Jersey-based Valhalla added to its position on Monday. The company manages the investments and philanthropic activities of O’Hare and wife Linda who made £2bn from the sale of alternative assets data provider Preqin to BlackRock in 2024.
At 453.5p yesterday, Valhalla’s holding of nearly 29.3m shares in the £2.1bn investment trust is worth £132.8m. This makes it HGT’s largest shareholder, ahead of Jupiter Fund Management which bought a 5.5% stake on 3 February when the shares were tumbling on fears that Anthropic and other AI startups would challenge its portfolio of business software companies.
A 24% rebound since the sell-off earlier this month prompted Investec to downgrade the “buy” rating it made to “hold” yesterday. Alan Brierley, head of investment company research at Investec, said the previous recommendation was appropriate after HGT plunged from 507p on 27 January to 380p on 4 February.
“Our rationale was that the vertically integrated, mission critical nature of its portfolio should offer greater resilience than a c.-25% share price fall implied,” Brierley said in a note to investors.
He added: “However, we cautioned against simply looking ‘across the valley’”, and comparing falls in listed software stocks with HGT given the “elevated valuations” in the portfolio whose enterprise value stood at 25.5 times earnings at 30 September with “significant leverage” of 7.3 times net debt to earnings.
With the shares having recovered sharply to 472p at Tuesday’s close, the analyst said he had applied a 20%-40% pass-through of this year’s contraction in the MSCI European Software and Services index to HGT’s portfolio. From this he derived an implied range in net asset value (NAV) per share of 498p to 530p compared to the 561.9p estimate for 31 December published by HGT in a trading update on 6 February.
Brierley acknowledged this was not a direct proxy and his calculation was based on 30 June fund borrowing figures from HGT. However, he said “prolonged volatility in the broader software sector could constrain private market deal activity further” and put pressure on the valuations of HGT’s software companies.
“On balance, we downgrade to “hold,” he said.
HGT shares fell 3.9%, or 18.5p, to 453.5p.
