HGCapital Trust PLC · LSE:HGT

HGCapital Trust — Investor Presentation (December 2011)

15 slides from HGCapital Trust's investor presentation, December 2011

1. Slide 1: HgCapital Investment Strategy

   HgCapital Investment Strategy Generating outperformance in a low growth environment Nic Humphries December 2011

2. Slide 2: Contents

   HgCapital Contents Trust plc Contents HgCapital at a Glance 3 Our Strategy 4 Thematic Investing 10 Sector expert investors supporting management to grow industry champions © Copyright 2011 HgCapital 2

3. Slide 3: HgCapital at a glance

   HgCapital HgCapital at a glance Sector expert private equity investor in European mid‐market OVERVIEW ƒ Established 1990, independent since HgCapital spun out of Merrill Lynch in 2000 (formerly Mercury Private Equity) ƒ £3.6 billion client assets managed ƒ 5 dedicated sector teams across 3 funds: −

4. Slide 4: Three elements - all in place for more than a decade

   Our Strategy Three elements ‐ all in place for more than a decade ƒ Focused only on five sectors ƒ Deep sector teams operating across Europe SECTOR EXPERT INVESTORS ƒ Accumulated expertise from repeated activity in certain sub- sectors (Thematic Investing) ƒ Large portfolio support team to bring sig

5. Slide 5: Sector expert investors

   Our Strategy Sector expert investors We invest exclusively in five sectors WHY? HEALTHCARE ƒ Much more relevant as partners to management teams ƒ Differentiates us INDUSTRIALS ƒ Accumulated experience increases the chance of success ƒ Makes us better judges of how to invest our clients’ money RENEWA

6. Slide 6: Supporting Management

   Our Strategy Supporting Management Large Portfolio Support team ƒ A supportive and knowledgeable investor is more than IN-HOUSE PORTFOLIO SUPPORT TEAM cultural fit, we bring significant support in two areas: (8 professionals including 4 partners) − Board support − Project support ƒ Board Members - t

7. Slide 7: Growing Industry Champions

   Our Strategy Growing Industry Champions INDUSTRY CHAMPIONS FINDING POTENTIAL CHAMPIONS Those small and medium sized companies that have Identifying European companies worth between €20m- established a strong position within an industry niche, but 500m (‘mid-market’) within Investment Theme subsector

8. Slide 8: Four Sources of Value-Creation

   Our Strategy Four Sources of Value‐Creation HgCapital within the wider scope of Private Equity activity FINANCIAL LEVERAGE Financing skills: 1990’s (debt) Niche firms e.g. small buyouts, local experts, distressed debt etc. MULTIPLE EXPANSION M&A skills: 2000’s (exit vs. entry) OPERATIONAL IMPROVEMEN

9. Slide 9: Historical value creation driven by growth and operational improvement

   Our Strategy Growing Industry Champions Consistent with this strategy, historical value creation has been driven by growth and operational improvement SOURCE OF RETURN – ALL buyout realisations to date from 2002 and 2006 funds 3.0x 2.5x 0.1x 0.5x Multiple of original cost 2.0x 1.5x 1.0x 2.6x 1.0x 0.

10. Slide 10: Thematic Investing emerges from deep sector expertise plus established toolkits

    Thematic Thematic Investing emerges from deep sector expertise plus Investing established toolkits targeted on a high volume market segment ƒ Sector focused strategy since 1997 TOP DOWN ƒ Large sector teams operating across Europe SECTOR FOCUS ƒ Firm-wide annual Business Planning process to identify

11. Slide 11: Necessary Skills and Resources

    Thematic Investing Necessary Skills and Resources THEMATIC INVESTING SUSTAINABLE ƒ Pick sustainable growth sub-sectors based on GROWTH years of bottom up research and expertise SUBSECTORS ƒ Established processes to constantly challenge and refine which sub sectors BEHAVE MORE BRING BENEFIT OF WELL ƒ

12. Slide 12: How to identify attractive 'themes' over time

    Thematic How to identify attractive ‘themes’ over time Investing IDEA GENERATION (typically 10 – 15 ideas p.a.) TESTING (typically 4-6 per team p.a.) REFINING (typically 1-2 per team p.a.) INVESTING (typically 1 new theme/sub-sector every 2-3 years) REJECTING (potentially on the radar for selective

13. Slide 13: Technology sector example

    Thematic Investing Technology sector example COMPANY DESCRIPTION GEOGRAPHY YEAR ƒ In 2002, HgCapital identified regulatory-driven SME software market as an attractive Investment Theme, based on: Accounting, legal and UK 2004 − Sector growth ahead of GDP, driven by: business software − SME numbers gr

14. Slide 14: Disclaimer

    HgCapital Disclaimer Trust plc This document accompanies the Interim Report and Accounts for the six months ended 30 June 2011 and contains a summary of the information set out in that document. Reference should be made to the full Report and Accounts rather than relying on this summary. It does not

15. Slide 15: Disclaimer

    HgCapital Disclaimer Trust plc Forward-looking statements are not guarantees of future performance. A number of important factors could cause actual results or outcomes to differ materially from those expressed, projected or implied in any forward- looking statements. No one undertakes publicly to u

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