9th Jul 2020 12:01
London, UK, 8 July 2020
Edison issues review on HgCapital Trust (HGT)
HgCapital Trust's (HGT) 12-month NAV TR to end-March 2020 was a solid 13.8% despite the COVID-19 market downturn in March 2020 (ytd NAV performance since end-December 2019 was a 6.2% decline). The coverage ratio reached a historically low level (13% vs three-year average of 53%) after HGT notably increased its investment activity and commitments in Q120. However, a significant part of these new commitments will not be drawn in the near term. The board continues to review its future funding arrangements and may also opt out of a new investment without penalty across all funds. HGT's portfolio focus is on the resilient software and technology sector and the manager expects a limited direct earnings impact on its portfolio from the COVID-19 pandemic.
HGT is trading broadly in line with its NAV, which is based on end-March valuations and thus captures the majority of the decline in market multiples. HGT highlights that it may need to reconsider its new dividend guidance released in April 2020 of at least 4.8p per share per year.
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