9th Mar 2015 08:17
LONDON (Alliance News) - The manager of HgCapital Trust PLC Monday said it is confident of finding opportunities to invest in businesses that will grow at a faster rate than that of the broader economy, although the private equity investor cautioned that market conditions remain challenging.
HgCapital Trust, a listed vehicle that feeds investors' capital into all private equity deals managed by manager HgCapital, reported a total return of 12.8% for 2014, assuming reinvestment of dividends.
The trust's net asset value, the difference between its assets and liabilities, increased to GBP476.9 million from GBP440.6 million during 2014. NAV per share increased to 1,278 pence from 1,180p. The trust paid a dividend of 51p for the year as a whole.
At the end of February, the trust's NAV was GBP465.9 million, while NAV per share amounted to 1,248p.
"Investing in the current market environment remains challenging and we have maintained a cautious and disciplined approach in selecting and investing in companies within sub-sectors that we know well. We strongly believe that we can continue to find opportunities to invest in businesses growing materially faster than the broader economy," the private equity trust's manager said in a statement.
The manager also expects a continuation of the trend of allocating the trust's capital to fund bolt-on acquisitions of companies in its portfolio.
"2014 was a year when nearly a third of the capital deployed on behalf of the trust was to fund bolt-on acquisitions, an increasing feature of how we work to grow value in our portfolio companies," the manager said.
The manager also thinks that its efforts to improve the operating performance of its portfolio companies are yet to emerge in its valuations. In addition, it thinks that the "strong performance" across the portfolio will continue to drive NAV growth, as long as there is no "material reduction" in market ratings.
The prospects of exiting investments, a process known as realisation in the industry, are also healthy, according to the manager.
"We believe that there will be further opportunities during the course of 2015 to continue to realise investments from within the portfolio, just as we have done consistently across market cycles," the manager said.
The portfolio managed by the manager consists of 27 companies.
HgCapital Trust shares were up 2.1% at 1,128.05 pence on Monday shortly after the market opened for trading.
By Samuel Agini; [email protected]; @samuelagini
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