HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2017 Earnings Presentation
29 slides from HGCapital Trust's earnings presentation, March 2018
Slide 1: 2017 Annual Results
2017 Annual Results March 2018 This document accompanies the Annual Report & Accounts for the twelve months ended 31 December 2017 and contains a summary of information set out in that document. Reference should be made to the full Report & Accounts rather than relying on this summary. The reader’s
Slide 2: Contents
Contents 2 HgCapital Trust plc 03 Hg: 2017 review 05 Key financial highlights 06 Investment activity 09 Hg investment strategy 13 Outlook 18 Appendix 19 Building businesses that change how we all do business © Copyright Hg 2018
Slide 3: Listed access
HgCapital Trust plc 3 Listed access A growth portfolio of more than 30 unquoted businesses 15% p.a. 13% p.a. Share price total return CAGR NAV per share total return CAGR over the past twenty years over the past twenty years ▪ The Company offers exposure to a network of more than 30 unquoted ▪ Hg ha
Slide 4: HgCapital Trust plc
HgCapital Trust plc 4 HgCapital Trust plc The Company is a ‘direct investor’ and only invests alongside Hg institutional investors across multiple funds and vintages © Copyright Hg 2018
Slide 5: 2017 Review
HgCapital Trust plc 5 2017 Review Building businesses that change how we all do business 2017 was a busy year for Hg: we forged new partnerships with some exciting companies; saw some of our investments move on stronger than when we met; and our programme of collaborative forums brought management t
Slide 6: 2017 Performance
Key financial highlights 6 2017 Performance Strong trading and exits above book value continued to drive positive performance from the portfolio over 2017 +22% NAV per share +19% Share price 46p Full-year total return growth total return growth dividend • As at 31 December 2017 NAV per share of • As
Slide 7: The balance sheet
Key financial highlights 7 The balance sheet Multiple levers in place to manage liquid resources and outstanding commitments AS AT 31 DECEMBER 2017 PRO-FORMA AS AT 28 FEBRUARY 2018 £160m £449m £181m £667m Outstanding commitments Liquid resources Outstanding commitments Liquid resources (62% of NAV)
Slide 8: The top 20
Key financial highlights 8 The top 20 Top 20 currently represents 83% of the portfolio by value, aggregate sales of £2.8bn, EBITDA of £738m and margins of 27% +14% LTM sales growth +16% LTM EBITDA growth • Top 20 has grown revenues consistently by • Top 20 has grown EBITDA by 16% p.a. on 12% p.a. on
Slide 9: Investments and realisations
Portfolio activity 9 Investments and realisations Hg has invested £764 million and realised £1.5 billion over 2017 Note: Sovos Compliance, Visma and Esendex were further investments into companies Hg knows well. © Copyright Hg 2018
Slide 10: Significant realisations in 2017
Portfolio activity 10 Significant realisations in 2017 £224m returned to the Company with a gross investment multiple of 3.0x / 35% gross IRR 5.1x 29% 161% 23% 3.5x 105% 3.3x 27% 2.9x 33% 2.8x 3.0x 2.5x 2.7x 46% 2.0x 2.0x 2.2x 2.1x 1.8x 1.4x £59m proceeds £37m proceeds £21m proceeds £36m proceeds £9
Slide 11: Historic investment activity
Portfolio activity 11 Historic investment activity 2017 was a record year for realisations 2006 – 2008 2009 – 2015 2016 – 2017 NET SELLERS NET BUYERS NET SELLERS 55% £224m £135m £111m £106m £104m £92m £87m £87m £83m £82m £80m £80m £73m £66m £65m £64m £62m £62m £51m £45m £38m £30m £26m £8m 2006 2007
Slide 12: Continuing to selectively invest
Portfolio activity 12 Continuing to selectively invest Investing with a cautious and disciplined strategy £104m £80m £87m £65m £73m £33m £40m 2013 2014 2015 2016 2017 © Copyright Hg 2018
Slide 13: A reminder …
Hg Investment Strategy 13 A reminder … Focused on businesses with specific characteristics across technology and technology-enabled services © Copyright Hg 2018
Slide 14: Same 'sweet-spot' focus
Hg Investment Strategy 14 Same ‘sweet-spot’ focus Four funds across the size range currently investing in technology and tech-enabled businesses LARGE-CAP SATURN 1 EV focus: >£1bn HgT commitment: £75m-150m CONTROL BUYOUTS MID-MARKET Hg8 EV focus: £250m-750m HgT commitment: £350m MID-MARKET MERCURY 2
Slide 15: 'Hg Software Inc'
Hg Investment Strategy 15 ‘Hg Software Inc’ TECHNOLOGY SPECIALIST LARGEST EUROPEAN SOFTWARE COMPANIES BY EV (£M)1 £100,627m >25 years of European Technology investing If ‘Hg Software Inc’ were listed 38 investments as a single group, it would be in European Technology businesses one of the largest i
Slide 16: Harnessing the network effect
Hg Investment Strategy 16 Harnessing the network effect In 2017 the Operations Innovation team organised ten events enabling hundreds of people from within the portfolio to share ideas © Copyright Hg 2018
Slide 17: Trading performance
Portfolio review 17 Trading performance Top 20 (currently representing 83% by value of our investments), had aggregate sales of £2.8bn, EBITDA of £738m and margins of 27% over the year Pre-2010 2010 2011 2012 2013 2014 2015 2016 2017 01 03 02 13 £417m 16 17 Strong performance 06 78% by value 19 10 0
Slide 18: Outlook
HgCapital Trust plc 18 Outlook Strong trading of the underlying businesses, combined with capital returns from exits above book value, will continue to drive value for our investors ▪ Following a strong year for realisations, Hg expects to see several further exits over the next six months ▪ While t
Slide 19: Appendix
Appendix 19 The buyout portfolio 20 ‘Hg Services Inc’ 22 Case studies 23 Renewables 25 Hg funds snapshot 26 Contact 27 Disclaimers 28 © Copyright Hg 2018
Slide 20: Buyout portfolio
Appendix 20 Buyout portfolio The top 10 buy-out investments represent 64% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2017 1 Visma1 2014 Technology Scandinavia 45,365 97,009 15.0%
Slide 21: Buyout portfolio (cont.)
Appendix 21 Buyout portfolio (cont.) The top 20 buy-out investments represent 83% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2017 11 Mitratech5 2017 Technology North America 22,2
Slide 22: 'Hg Services Inc'
Appendix 22 ‘Hg Services Inc’ TECHNOLOGY SPECIALIST COMPARABLE EUROPEAN SERVICES COMPANIES BY GROWTH RATES (CAGR)1 >10 years 20% of investing in European Service businesses ‘Hg Services Inc.’ has exhibited unbroken like-for-like growth since 11 investments 16% 15% 2009; driving industry-leading in E
Slide 23: Case study: QUNDIS
Case study 23 3.5x Investment 29% +29% Gross IRR Uplift to book Multiple value Headquartered in Germany, QUNDIS supplies a full data management solution for the housing and utilities industries to collect, measure, and transmit consumption-dependent data for heating and water usage on an apartment u
Slide 24: Case study: Sequel Business Solutions
Case study 24 5.1x Investment 77% +161% Gross IRR Uplift to book Multiple value Sequel Business Solutions is a leading provider of software and services to the Lloyd’s of London and the broader insurance markets, headquartered in London with operations in UK and Spain. The company was founded in 199
Slide 25: Asper renewable energy
Appendix 25 Asper renewable energy High quality European renewable energy projects currently representing 2.7% of the portfolio value (£17.5 million) ▪ The Company invested via LP interests in Asper’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) >30% Uplift to book ▪ Exposure to renewable
Slide 26: Hg funds snapshot
Appendix 26 Hg funds snapshot Targeting consistent performance across market cycles REALISED RETURNS % INVESTED RETURNED OVERALL RETURNS (GROSS) IN CASH (GROSS) Hg5 ▪ Phase: Realisation £958 million ▪ 11 out of 12 investments realised 2.1x / 17% 195% 2.1x / 16% 2006 ▪ £1.4 billion in proceeds Hg6 ▪
Slide 27: Contact
Appendix 27 Contact For further information on HgCapital Trust plc, please visit our website: www.hgcapitaltrust.com Or contact Laura Dixon +44 (0)20 7089 7888 investorrelations@hgcapitaltrust.com For more information on Listed Private Equity, please visit the LPEQ website www.lpeq.com © Copyright H
Slide 28: Disclaimer
Appendix 28 Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN THE UNITED STATES OR TO “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR INTO OR WITHIN AUSTRA
Slide 29: Disclaimer
Appendix 29 Disclaimer These materials include statements that are, or may be deemed to be, "forward-looking statements" which are based on current expectations and projections about future events. In some cases, these forward- looking statements may be identified by the use of forward-looking termi