Private equity investment trust Hgcapital has made several successful sales of its holdings, defying sector concerns about the challenging nature of exiting private equity investments.
The £2.3bn trust made full exits from software firms Transporeon and Commify, as well as secondary sales from Hg Genesis 8 and Hg Saturn 3, funds run by the same company that manages the trust.
The full and partial exits represented an average uplift of 25 per cent, the trust said in its preliminary results today, at a time when private equity dealmaking has slumped, and firms have struggled to realise full value from their holdings.
“This realisation activity sets Hg apart in a year when many other private equity firms struggled to generate liquidity from their portfolios,” the trust said in its results.
“Hg believes its realisation activity in 2023 was a clear differentiator for HgT, highlighting the fundamental strengths and attractiveness of the underlying portfolio to both trade and financial buyers.”
Just last month, the trust sold Argus, the fourth realisation announced over the prior four weeks, resulting in £295m for the trust once the transactions close later this year.
“This realisation represents Hg’s 13th liquidity event since the start of 2023 and the 29th liquidity event completed over the last two years, the equivalent of more than one per month and representing proceeds from nearly half of the Hg portfolio over this period,” the trust added.
In Hgcapital’s preliminary results for 2023, it reported a 10.7 per cent increase in net asset value per share, with share price increasing 26.2 per cent over the same period.
At the end of the period, the trust’s estimated net asset value per share stood at 498.6p.
This pushed the trust’s discount down over the year, from 23 per cent to 13 per cent, at a time when many trust’s discounts have widened.
The trust, managed by Europe’s largest investor in software & services companies, said the growth in its portfolio had been driven by “strong trading performance in the underlying portfolio.”
It made £71m of investments throughout the year, including in GTreasury, Nomadia, JTL, P&I and Howden.
The trust will report its full-year audited results for 2023 on 11 March.