HgCapital Trust PLC COVID-19 Update (2864H)
March 24 2020 - 4:00AM
UK Regulatory
TIDMHGT
RNS Number : 2864H
HgCapital Trust PLC
24 March 2020
Update by the Board of HgCapital Trust plc (HGT) and the
Investment Manager (Hg) to Shareholders on the potential effects of
COVID-19 on HgCapital Trust
As the COVID-19 pandemic continues to unfold across the world,
the Board of HGT and the investment manager, Hg would like to
update you on what they believe may be the potential impacts for
HgCapital Trust plc and the mitigations that have been made.
Hg invests in companies that focus on critical activities such
as delivering legal, health and safety advice to many thousands of
businesses globally, helping these companies to pay taxes and
payroll, deliver healthcare services, audit and manage supply
chains and provide many other services. These types of company and
their business models are potentially less likely to be disrupted
by the pandemic than the broader economy. Nonetheless, with a
global recession now the backdrop for 2020, it is important to note
the potential challenges ahead, recognising the importance of
transparent communication to which the Board of HGT and Hg have
always been committed.
Given the critical nature of software and services that our
portfolio provides to the wider business world, Hg believes that
there will be fewer direct impacts from the pandemic than you might
see in a more generalist portfolio. Nevertheless, whilst Hg
anticipates that the portfolio in aggregate will continue to
deliver growth over the long-term, the Manager can see a scenario
where a handful of the Hg investments potentially deliver
year-on-year declines in performance and Hg are managing this
appropriately.
Public market valuations overall have fallen sharply in recent
weeks, with valuation multiples for the S&P500 returning to
2015 levels in EV:EBITDA terms. However, the S&P500 Software
and Services index, which is more closely related to our portfolio,
has returned only to 2017 valuation multiples. . Strong EBITDA
growth across the Software and Services sector has tempered that
valuation decline and thus asset values are similar to early 2019
levels. In such volatile markets, and with unpredictable trading
results for many businesses, market valuation multiples need to be
treated with caution. Hg will continue to stress test the
portfolio, in order to identify any issues as early as
possible.
In summary, Hg believes that there are likely to be short-term
declines in the overall valuation of our portfolio and thus in the
reported NAV of HGT. However, the long-term nature of listed
private equity investment, the types of business that Hg invests in
and the scale of the structural opportunities that these can
deliver, will continue to drive long-term growth.
As manager, Hg has robust business continuity procedures
allowing it to continue to provide active management of the
portfolio and full support for the management teams of our
portfolio companies, while working remotely. Hg's proprietary
HgHive(c) online community now has a COVID-19 channel through which
our portfolio companies can share best practice in dealing with the
effects of the pandemic.
Hg will maintain a focus on the best course of action for
society, for their employees and for the staff and businesses in
which they invest, and continue to review the risk profile as this
fast-moving situation develops.
Roger Mountford, Chairman, HgCapital Trust plc, said: "The Board
remains confident in Hg's management of the portfolio and the
ability of HGT as a long-term investment to continue to perform
across all cycles. We have always been committed to transparent
reporting to all our investors and will continue to monitor this
situation and provide further updates whenever required".
HGT reported its 2019 full year results on 9 March 2020 and will
provide a full revaluation of the portfolio up to 31 March on 11
May 2020.
Please do not hesitate to contact Laura Dixon
(laura.dixon@hgcapital.com) if you have any questions.
For further details:
Hg
Laura Dixon +44 (0)20 7089 7888
Brunswick
Alice Gibb and Sam Chiene +44 (0)207 404 5959
About HgCapital Trust plc
HgCapital Trust plc, whose shares are listed on the London Stock
Exchange (ticker: HGT.L), gives investors exposure through a liquid
vehicle to a portfolio of high-growth private companies in the
software and services sector. The selection of new investments and
creation of value in these businesses are managed by Hg, an
experienced and well-resourced private equity firm with a long-term
track record of delivering superior risk-adjusted returns for its
investors. For further details, please see www.hgcapitaltrust.com
.
The contents of the Hg and HgCapital Trust's websites are not
incorporated into, and do not form part of, this announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDBIGDXIGDDGGX
(END) Dow Jones Newswires
March 24, 2020 05:00 ET (09:00 GMT)
Hg Capital (LSE:HGT)
Historical Stock Chart
From Apr 2024 to May 2024
Hg Capital (LSE:HGT)
Historical Stock Chart
From May 2023 to May 2024