HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2017 Earnings Presentation
26 slides from HGCapital Trust's earnings presentation, September 2017
Slide 1: 2017 Interim Results Presentation
2017 Interim Results Presentation September 2017 This document accompanies the Interim Report & Accounts for the six months ended 30 June 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. T
Slide 2: Contents
HgCAPITAL CONTENTS TRUST PLC PAGE Overview of the Company 3 Key financial highlights: - Performance 4 - Balance sheet 5 - Portfolio metrics 6 - Portfolio activity 8 Investment Strategy 11 Case Studies - Zenith 14 - Zitcom 15 Portfolio review 16 Conclusion and Outlook 17 Appendix 18 Sector expert inv
Slide 3: Listed access to a fast-growing portfolio of unquoted businesses
HgCAPITAL LISTED ACCESS TO A FAST-GROWING PORTFOLIO OF UNQUOTED BUSINESSES TRUST PLC The Company offers exposure to a portfolio of more than 30 unquoted businesses with consistent strong growth in sales and EBITDA and high cash generation 14% p.a. HgCapital has been managing the Company for over
Slide 4: Performance: strong trading continued to drive positive performance
KEY FINANCIAL STRONG TRADING HAS CONTINUED TO DRIVE POSITIVE PERFORMANCE FROM HIGHLIGHTS THE UNREALISED PORTFOLIO OVER THE FIRST SIX MONTHS OF 2017 +12% As at 30 June 2017 NAV per share of £17.97, net assets of £671 million Driven by strong trading across the unrealised portfolio and exits above
Slide 5: Balance sheet: liquid resources and outstanding commitments
KEY FINANCIAL LIQUID RESOURCES AND OUTSTANDING COMMITMENTS HIGHLIGHTS Multiple levers in place to manage the balance sheet Representing 26% of NAV £182m Up from £119 million at the half year to include post-period realisations Liquid resources £80 million undrawn bank facility BALANCE SHEET
Slide 6: Portfolio metrics: top buyouts (82%)
KEY FINANCIAL TOP 20 BUYOUTS (82%) HIGHLIGHTS Aggregate sales of £2.5 billion and profits of £626 million, average margins of 25% Consistent double-digit performance in many of our larger companies including Visma, IRIS, Sovos Compliance and +11% Ullink (>40% of the total portfolio by value) A s
Slide 7: Portfolio metrics: ratings up, high cash generation
KEY FINANCIAL TOP 20 BUYOUTS (82%) HIGHLIGHTS Ratings up from 2016 year-end, high cash generation across the portfolio Ratings up from 2016 year end, reflecting the impact of the investments in two of our higher growth businesses, 16.0x Mitratech and Visma There remains a continued shift in the
Slide 8: Portfolio activity: realisation and investment activity in 2017 YTD
KEY FINANCIAL REALISATION AND INVESTMENT ACTIVITY IN 2017 YTD HIGHLIGHTS Net divestors over the period, taking advantage of a buoyant environment for realising value at good prices £0.9 billion realised on behalf of HgCapital clients £134m 3 realisations and 3 refinancings completed over the per
Slide 9: Significant realisations 2017 YTD
KEY FINANCIAL SIGNIFICANT REALISATIONS 2017 YTD HIGHLIGHTS £212m returned to the Company with a gross investment multiple of 3.0x / 36% gross IRR 5.1x 29% 161% 23% 3.5x 105% 3.3x 33% 2.9x 2.7x 2.7x 2.5x 46% 2.2x 2.0x 2.0x 1.8x 1.4x £59m proceeds £37m proceeds £21m proceeds £33m proceeds £9m proceeds
Slide 10: Investments
KEY FINANCIAL INVESTMENTS HIGHLIGHTS Continuing to make good investments with a cautious and disciplined strategy £104m £87m £80m £65m £53m 2013 2014 2015 2016 2017 YTD Sector expert investors supporting management to grow industry champions © Copyright 2017 HgCapital 10
Slide 11: The HgCapital 'sweet spot'
THE HgCAPITAL ‘SWEET SPOT’ INVESTMENT Focus on investing in companies with specific business characteristics in tech and tech-enabled services that STRATEGY we believe have the ability to grow across market cycles… and are attractive to future buyers Sector expert investors supporting management to
Slide 12: Adding the HgCapital angle to origination and execution
INVESTMENT ADDING THE HgCAPITAL ANGLE TO ORIGINATION AND EXECUTION STRATEGY Sector expert investors supporting management to grow industry champions © Copyright 2017 HgCapital 12
Slide 13: Once invested – how do we add value to drive consistent returns?
INVESTMENT ONCE INVESTED – HOW DO WE ADD VALUE TO DRIVE CONSISTENT AND STRATEGY REPLICABLE RETURNS? VALUE CREATION - CURRENT SECTOR REALISED DEALS1 3.0x Consistent growth has supported multiple expansion at 0.4x (0.3x) exit 2.5x Highly cash generative businesses, 0.4x but cash often reinvested f
Slide 14: Case study: Zenith
CASE STUDY: ZENITH EXIT 2.9x investment multiple and 46% gross IRR over a 3 year investment period In March, HgCapital completed the sale of Zenith to Bridgepoint in a transaction totalling £750 million. 13% BUSINESS DESCRIPTION BUSINESS MODEL CHARACTERISTICS Largest UK independent vehicle leasing b
Slide 15: Case study: Zitcom
CASE STUDY: ZITCOM EXIT 3.3x investment multiple and c. 141% gross IRR over an 18 month investment period In June, HgCapital completed the sale of Zitcom to Intelligent, a Belgian headquartered strategic acquiror. 56% BUSINESS DESCRIPTION A leading Danish hosting and cloud solutions provider, BUSINE
Slide 16: Portfolio review: trading performance of top buyout investments
PORTFOLIO TRADING PERFORMANCE OVERVIEW OF TOP 20 BUYOUT INVESTMENTS (82%) REVIEW Aggregate sales of £2.5 billion and profits of £626 million, average margins of 25% Year of Investment Pre-2010 2010 - 2013 2014 - 2016 2017 STRONG PERFORMANCE 75% BY VALUE £385m LOWER GROWTH 9% BY VALUE, £46m INVESTING
Slide 17: Conclusion: outlook & prospects
OUTLOOK & PROSPECTS CONCLUSION Confidence in a strong portfolio with strong earnings continuing to drive further NAV value A busy 2017 year-to-date with eight realisations, three refinancings, three new investments and two significant further investments As stated over the past 12 months we beli
Slide 18: Appendix contents
APPENDIX CONTENTS PAGE Top 20 buyout companies 19 Renewable energy investments 21 HgCapital funds snapshot 22 Contact 23 Sector expert investors supporting management to grow industry champions © Copyright 2017 HgCapital 18
Slide 19: Buyout portfolio (top 10)
BUYOUT PORTFOLIO APPENDIX The top 10 buy-out investments represent 61% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2017 YTD 1 Visma1 2014 TMT Scandinavia 41,396 112,140 17.9%
Slide 20: Buyout portfolio (11-20)
BUYOUT PORTFOLIO APPENDIX The top 20 buy-out investments represent 82% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2017 YTD 11 Raet 2016 TMT Netherlands 16,127 18,457 2.9% 64.
Slide 21: Renewable energy fund investments
RENEWABLE ENERGY FUND INVESTMENTS APPENDIX High quality European renewable energy projects currently representing 3.5% of the portfolio value The Company is invested via LP interests in HgCapital’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) In July 2017, it was Exposure to renewable
Slide 22: HgCapital Trust plc - historic investment and realisation activity
APPENDIX HgCAPITAL TRUST PLC - HISTORIC INVESTMENT AND REALISATION ACTIVITY 2006 – 2008 2009 – 2015 2016 – 2017 NET SELLERS NET BUYERS NET SELLERS £212m £135m £111m £106m £104m £92m £87m £87m £83m £82m £80m £80m £66m £65m £64m £62m £62m £53m £51m £45m £38m £30m £26m £8m 2006 2007 2008 2009 2010 2011
Slide 23: HgCapital funds snapshot
HgCAPITAL FUNDS SNAPSHOT APPENDIX Targeting consistent 2x net performance across market cycles Realised Returns Overall Returns % Invested Returned in (gross) (gross) Cash Phase: Realisation HgCapital 5 £958 million 11 out of 12 investments realised 2.1x / 16% 2.1x / 16% 195% 2006 £1.4 billion
Slide 24: Contact
APPENDIX 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 Sector expert in
Slide 25: Disclaimer
HgCAPITAL DISCLAIMER TRUST PLC 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 WITHI
Slide 26: Disclaimer
HgCAPITAL DISCLAIMER TRUST PLC 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-lookin