Private equity fund manager Hg has committed to increasing its stake in HgCapital Trust (HGT) from 6% to 15% in the “medium term” after the £1.8bn investment trust, which invests in its funds, tumbled to a 25% discount after this year’s AI scare for software stocks.

In a statement before a capital markets event in London for investors, the company said that the current share price “materially undervalues” the portfolio focused on unquoted enterprise software providers and business support companies.

The company said partners, employees and Hg would all make on-market purchases of HGT shares. The shares gained 21.6p, or 5.6%, to 407.5p. They have rallied 26%, or 84.5p, from a 323p low on 21 May but remain 19% below their starting point at the start of the year.

Steven Batchelor, Hg’s co-chief executive, said partners and staff at the firm had always believed in having “skin in the game” and had already agreed to invest another £800m in Hg’s new funds on top of their currrent £600m of holdings. “My partners and I are excited to have an opportunity to further increase our exposure via on-market purchases of HgT shares at this deep discount, and continue to strengthen our alignment with HgT shareholders and all Hg’s clients,” he said.

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