HgT — Public market volatility weighing on H125 return

HgT (LSE: HGT)

Last close As at 05/08/2025

GBP5.12

2.00 (0.39%)

Market capitalisation

GBP2,344m

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Research: Investment Companies

HgT — Public market volatility weighing on H125 return

HgT’s muted -0.3% NAV total return (TR) in H125 (according to its preliminary trading update) was negatively affected by public market volatility that reduced HgT’s private portfolio valuations by 4pp. That said, it represents a NAV rebound in Q225 following the -2.0% TR in Q125. Last 12-month (LTM) revenue and EBITDA growth to end-May 2025 across HgT’s entire portfolio were both a robust 19%, translating to a 7pp positive effect on portfolio value. Minor headwinds came from fx changes and higher portfolio net debt (1pp NAV impact each). Gross realisation proceeds reached £165m (7% of opening NAV), which according to Hg compares favourably with peers in a challenging environment. Investments (including reinvestments) stood at £306m, or 12% of opening NAV.

Milosz Papst

Written by

Milosz Papst

Director of Content, Investment Trusts

Investment companies

Listed private equity

6 August 2025

Price 512.00p
Market cap £2,389m
NAV 540.2p
Discount to NAV 5.2%
Current yield 1.0%
Shares in issue 457.7m
Code/ISIN HGT/GB00BJ0LT190
Primary exchange LSE
AIC sector Private equity
Financial year end 31 December
52-week high/low 545.1p 420.0p
NAV high/low 524.0p 500.5p
Net gearing 0.0%

Fund objective

HgT’s investment objective is to provide shareholders with consistent long-term returns in excess of the UK All-Share Index by investing predominantly in unquoted companies where value can be created through strategic and operational change.

Analysts

Milosz Papst
+44 (0)20 3077 5700
Katherine Thompson
+44 (0)20 3077 5700

HgT is a research client of Edison Investment Research Limited

The reported LTM EBITDA growth in HgT’s portfolio shows a softening versus the 26% reported in H124. The numbers are not fully comparable given that in previous years they were reported for HgT’s top 20 holdings only (a different set of companies in each of these years). That said, Hg highlighted in HgT’s Q125 report that organic growth across its portfolio was c 2pp below what it might consider more normal historical levels. Margins seem to be holding up at a strong level, given the same increase in revenue and EBITDA in H125. HgT reported a 33% EBITDA margin for the 12 months to Q125, broadly in line with previous years.

HgT made a $1bn commitment to the Saturn 4 fund, the latest vintage of Hg’s large-cap fund, and after H125 committed €350m to Hg Genesis 11, Hg’s latest mid-cap fund, and €150m to Hg’s latest small-cap fund (Hg Mercury 5). This resulted in HgT pro forma outstanding commitments of £1.7bn. Its pro forma available liquid resources reached £383m (including its £375m credit facility, of which £28m was drawn at the time of HgT’s announcement), or c 23% of outstanding commitments, which at first glance may seem low. However, we note that commitments will be drawn gradually over four to five years, and the latest Hg Genesis and Hg Mercury funds are expected to start investing in 2026. Therefore, HgT intends to partly fund its commitments with portfolio exits (in line with its past approach). Here, we note Visma reportedly picked London as its listing venue and could list as early as 2026.

HgT fully exited smartTrade, a provider of multi-asset electronic trading and payments platforms (sold to TA Associates), resulting in £30.3m in proceeds (vs end-2024 carrying value of £32.3m). Citation Group (a provider of tech-enabled compliance and certification solutions to SMEs) completed a recapitalisation, with HarbourVest Partners becoming a new shareholder. The transaction values HgT’s holding at 8% above its end-September 2024 carrying value and resulted in c £13m of net proceeds. Finally, HgT partially exited Trackunit, a SaaS and operating data platform provider for the construction ecosystem, at a 6% uplift to end-2024 carrying value, with expected net realisation proceeds of £21.1m. The buyer was the private equity business of Goldman Sachs Alternatives.

HgT made a new investment in Scopevisio (active in cloud-based business automation, £4.8m) and follow-on investments in IFS (£124m) and P&I (£53m). It also reinvested part of the realisation proceeds into Citation Group (£30m) and Trackunit. After H125, HgT made a new £49m investment into A-LIGN, a provider of cyber compliance services. H125 investments included £34m of co-investments, which make up 10% of the portfolio, within its target range of 10–15%.

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Metro Bank — H125 results see underlying PBT treble

Metro Bank reported underlying PBT of £45.1m in H125 (+246% half-on-half) due to a strong exit net interest margin (NIM) of 2.95% and costs down by 8% year-on-year. The repositioning of the business model towards higher-return commercial and specialist mortgage lending, coupled with the lowest exit cost of deposits on the UK high street (1.02%), has proved effective. Management expects revenue growth to continue apace in H225, with an £800m corporate and commercial credit pipeline already in place (vs £700m of gross new lending in H224). Management guidance remains the same for FY25 given the macro uncertainty prevalent in the UK. However, by delivering a ‘mid- to upper-single-digit’ return on tangible equity (RoTE) and a double-digit RoTE in FY26, with mid- to upper teens thereafter, Metro’s strong growth trajectory remains on track. Metro shares traded at 0.57x book value per share (BVPS) of 217p at the end of June. Given there has been no change in guidance, our FY25–27 estimates are unchanged.

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