HgCapital Trust PLC Edison issues update on HgCapital Trust (HGT)
June 10 2021 - 2:00AM
RNS Non-Regulatory
TIDMHGT
HgCapital Trust PLC
10 June 2021
London, UK, 10 June 2021
Edison issues update on HgCapital Trust (HGT)
HgCapital Trust (HGT) posted a strong NAV TR of 8.4% in Q121,
driven primarily by double-digit earnings growth across the
portfolio (LTM EBITDA for top 20 holdings up 30% y-o-y). After
record-high transaction volumes in FY20 (investments at GBP403m and
realisations at GBP364m), HGT has maintained a high transaction
activity to date in 2021 (GBP147m and GBP112m, respectively). Its
coverage ratio was a healthy 69% at 12 May 2021, supported by tap
equity issues, which totalled c GBP50m to 8 June 2021 (versus
GBP25m in FY20), and a GBP200m credit facility agreed in Q420,
which remains undrawn.
HGT focuses on the software and services sector, which has been
one of the most sought-after industries (S&P 500 Software and
Services index up 52% over the 12 months to end-March 2021). This
has resulted in overall demanding public valuations. At the same
time, HGT's shares are trading broadly in line with NAV (vs a c 20%
average discount for PE peers, although in line with HGT's
historical trading). However, we note that HGT's recent NAV TR has
been mostly driven by earnings momentum across portfolio companies
rather than public market multiples. Moreover, the company
continues to report healthy uplifts to last carrying value on
exits, suggesting a relatively conservative portfolio valuation
policy. The broader software and services market remains supportive
for HGT's portfolio, with the S&P 500 Software and Services
Index (which historically has been a good valuation proxy for Hg's
portfolio) up 7% since end-March 2021 to 8 June 2021.
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