Private equity fund manager Hg has sold a €500m (£439m) stake in French legal software firm Septeo to a group of institutional investors but with HgCapital Trust (HGT) maintaining its holding, last valued at £129.6m in September.

Hg has not previously disclosed the value of its majority ownership of Septeo, which provides legal software for notaries, law firms, corporate legal and HR departments, bailiffs, real estate professionals and accountants in France, Belgium, Canada and the US.

In December 2024, Hg said the business, in which it first invested in 2020, was valued at over €3bn.

The transaction comes a month after Anthropic sparked a rout in software-as-a-service stocks with the launch of legal add-ins to its Claude chatbot that the market saw as challenging an array of IT and data firms.

Hg has $185bn (£136bn) invested in privately owned software providers. Shares in HgCapital, which invests in Hg funds, crashed early last month and after a partial recovery, stand on a wide 29% discount. That has attracted investors such as Jupiter Fund Management and Preqin data provider founder Mark O’Hare, whose Valhalla holding company now has an 8% stake, although Investec analysts reversed their initial “buy” recommendation due to concerns on the potential impact of the sell-off on the trust’s net asset value.

As part of the transaction, HGT has converted about €45m (£39m), or a third, of its existing holding in Septeo through the Hg Genesis 9 fund into a fee-free co-investment alongside the new investors, saving shareholders money. This lifts fee-free co-investments 10% to 12% of the portfolio as of 31 December.

The £1.8bn investment trust also announced it was increasing by $9m (£7m) its investment in the $6.4bn take-private transaction of US financial software maker OneStream announced in early January. Through the Hg Saturn 4 fund, HGT has upped its investment to £100m from £93m in what it said was the over-subscribed syndication of $1.5bn of equity in OneStream.

HGT said the two transactions totalling £46m “were agreed during a period of heightened volatility in public markets” and “reflect continued demand in the private markets for Hg’s portfolio investments”.

On a day when the UK stock market fell 0.9% on the impact of the war in Iran, HGT shares rose over 1%, or 4.5p, to 402.5p.

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