7th Mar 2016 10:28
LONDON (Alliance News) - Private equity firm HgCapital on Monday said its portfolio of investments has continued to trade strongly, generating double-digit revenue and Ebitda growth, boosting listed vehicle HgCapital Trust PLC in 2015, and expects to see opportunities to sell investments at attractive valuations in the medium term.
HgCapital Trust, which offers access to deals made by investment manager HgCapital, on Monday reported a total return, assuming reinvestment of all historic dividend, of 14.1% in 2015, citing "healthy trading" in its portfolio of investments. The trust's net asset value rose to 1,420 pence from 1,278p over the course of 2015, and sat at 1,455p on February 29.
Nevertheless, the discount at which the shares traded to NAV widened over the course of the year, with the stock delivering a total return of 8.6% in 2015. Shares in the trust were up 6.6% at 1,066.00p on Monday morning.
The trust will pay a dividend of 40p per share for 2015. That measures up against an ordinary dividend of 32p for 2014, which was supplemented by a 19p special dividend on the sale of its stake in Norwegian software company Visma to US private equity rival Kohlberg Kravis Roberts. HgCapital reinvested some of the proceeds in Visma.
"In last year's results we commented on our confidence in the portfolio, and this has been borne out with strong trading performance in the portfolio during the year and a number of realisations over the period for good value. We believe both trends are set to continue," Nic Humphries, managing partner of HgCapital, said.
Recent exits have included the sale of Casa Reha, a German provider of elderly care services, to Euronext-listed Korian, and business software company TeamSystem to Hellman & Friedman LLC, both of which completed in 2016.
In 2015, HgCapital completed four realisations and five recapitalisations across its portfolio, and sees further opportunities to return capital during 2016. About GBP65.0 million was invested on behalf of the trust in 2015, with GBP64.0 million of cash returned from realisations. The trust's outstanding commitments amounted to GBP117.0 million at the end of 2015, with the majority likely to be drawn down over the next two years.
"Given heightened ratings and a relatively buoyant market for realisations, we are continuing our focus on returning capital to our investors. To this end, a reasonable amount of thought and work is also going into our exit planning for the rest of 2016 and beyond," the manager said.
Given the volatile start to 2016 for financial markets, as well as fears about China's slowing economic growth, the investment manager said the "clarity of our investment strategy confers a number of clear advantages to a disciplined buyer".
"Specifically, we continue to focus on businesses that provide a business-critical product or service, to a fragmented customer base, benefiting from strong contracted or recurring revenues; this should enable us to identify opportunities with the appropriate business model to generate strong risk-adjusted returns for our clients. Companies with these characteristics will eventually provide attractive opportunities for sale to both trade and financial buyers," HgCapital said.
By Samuel Agini; [email protected]; @samuelagini
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