HgT – equity proposition
19/06/2025
HgT is a private equity investment company, which invests in leading, profitable, unquoted European mid-market businesses with an international footprint, offering mission-critical, low-spend software solutions to small and medium-sized enterprises (SMEs). It is managed by Hg, Europe’s leading private equity technology investor, and provides public market investors with exposure to Hg’s portfolio of over 50 such holdings representing more than $160bn in aggregate enterprise value. Below, we highlight five things investors need to know about HgT: Digitalisation trend underpinned by structural tailwinds. HgT’s portfolio companies deliver strong, highly profitable growth. Hg’s extensive sector expertise allowed HgT to deliver healthy returns. HgT has continued to deliver a high level of liquidity events. The trust has a strong track record of realising investments at an uplift to carrying value. If you would like to learn more about HgT, please see our latest research here.
HgT — A strong tech and IT services compounder
26/03/2025
HgT’s portfolio of IT software and services companies providing mission-critical, low-spend services to SMEs has maintained its strong sales and earnings momentum on the back of the secular digitalisation trend. Revenue and EBITDA growth in FY24 were 19% and 23% across HgT’s top 20 holdings (at an average 34% EBITDA margin) respectively. As valuation multiples remained broadly stable and portfolio debt increased amid high refinancing activity (which resulted in improved debt pricing), this led to a 10.4% NAV total return (TR) in FY24. HgT maintains a healthy long-term track record with five- and 10-year NAV TR of c 18% pa. HgT’s manager, Hg, remains committed to leveraging GenAI across its portfolio, noting some initial promising progress, and it hopes to see a more meaningful impact on the top and bottom line in the next one to two years. Therefore, it could prove a good play on the rise of AI-powered applications following the global investment in AI infrastructure (most notably chips and data centres). HgT’s shares now trade at a 9% discount to NAV versus a slight premium at end-2024.
HgT — Transaction activity picked up in 2024
03/02/2025
HgT reported a robust 10.1% preliminary NAV total return (TR) in FY24 (of which 4.4% in Q424), which the company highlighted was primarily driven by the strong trading performance of the underlying portfolio (in line with HgT’s long-term track record). The last-twelve-month revenue and EBITDA growth across its top 20 holdings (making up 76% of its portfolio) to end-November 2024 stood at 19% and 22%, respectively. We note that HgT’s NAV TR reflects some fx headwinds from the strengthening of sterling against the euro by close to 5% in 2024. The trust’s share price TR was even stronger than the NAV TR at 25.7%, resulting in the shares trading at a slight premium to NAV at end-2024. HgT’s portfolio valuations continue to be validated by uplifts to prior carrying values upon full and partial realisations, which in 2024 stood at an average of 15%. We also note that HgT’s manager delivered a considerable volume of liquidity events in 2024, which translated into £505m of gross proceeds from exits and refinancings to HgT (around 22% of the trust’s opening NAV), some of which were reinvested in the same companies.