HGCapital Trust PLC · LSE:HGT
HGCapital Trust — Q1 2025 Earnings Presentation
31 slides from HGCapital Trust's earnings presentation, May 2025
Slide 1: Q1 2025 update: Get connected
Q1 2025 update Get connected to a universe of software and services businesses This document accompanies the report to 31 March 2025. The information in this document contains a summary of information set out in this report. References in this document to HgCapital Trust plc have been abbreviated to
Slide 2: HgCapital Trust (“HgT”)
HgCapital Trust (“HgT”) HgT is a FTSE 250 investment company listed on the main market of the London Stock Exchange and managed by Hg, Europe’s largest software investor1 £2.3bn market cap Investment strategy focused on profitable and growing Resilient business models with highly +19.0% p.a. compani
Slide 3: Hg track record, AUM and scale
30+ year #1 track record of investing Private equity tech investor globally1 c. $85bn >$160bn assets under management portfolio enterprise value 6 >400 Offices in London, Munich, employees including ~250 New York, San Francisco, Paris investment and other As at 31 March 2025; adjusted pro forma for
Slide 4: HgT is Hg’s largest client, committed to all Hg funds
HgT is Hg’s largest client, Pension Sovereign Wealth Endowments and insurance plans Funds companies committed to all Hg funds HgT provides listed access to “the free float” of >$160bn EV of Hg HgT’s underlying Hg’s largest Software “Inc” c. $85bn Hg’s portfolio shareholder base LP investor AUM compa
Slide 5: Targeting robust and resilient ‘Hg sweet-spot’ business models
Targeting robust and resilient ‘Hg sweet-spot’ business models Company maturity Business model Focus on end- Typical equity investment of attributes market clusters >€100m Tax & Accounting Business critical software ERP & Payroll or service Legal and Compliance Subscription / repeat Automation and E
Slide 6: Building scale and deep sub-sector knowledge over years of repeated investments
Building scale and accumulating deep sub-sector knowledge over years of repeated investments Tax & Accounting >20 years ERP & Payroll >20 years Legal & Regulatory >17 years Automation & Engineering >15 years Technology Services >14 years Fintech >11 years Healthcare IT >10 years Insurance >10 years
Slide 7: Operational expertise across a wide range of areas
We have operational expertise across a wide range of areas, reflecting where we see repeat value creation opportunities Growth Tech, Product, Cyber Data and AI Projects Support Talent • Sales • R&D and tech platform • BI, warehousing, snowballs • First 100-days, onboarding • C-Suite team effectivene
Slide 8: Examples of the projects we’ve helped deliver in the last year
Examples of the projects we’ve helped deliver in the last year Data monetisation R&D optimisation Account grading: CaPDB Business systems Built new data products to Removed ~$10m R&D Built account grading model to An accelerated assessment of enhance customer offering, synergies and secured top incr
Slide 9: Why invest in software?
Why invest in software?
Slide 10: Demographics is destiny…
Demographics is destiny… Long-term decline in working age population is expected to drive up cost of labour and increase software adoption OECD working age population (m) Relationship between labour cost and software spend 950 2022: 1,800 900 All time high R2=0.80 1,600 United States Software and Se
Slide 11: Earnings growth compounds to drive long-term performance of software
Earning growth compounds to drive long-term performance of software Software performance: earnings drive consistent Software earnings versus market1 returns. Multiples are much more volatile2 900 50% 1000% Software 40% 800% 800 30% 600% 700 20% 400% 600 EPS (rebased) Cumulative return 10% 200% Annua
Slide 12: Software companies are staying private for longer
Software companies are staying private for longer Median Market Value of Tech Initial Public Offerings by year, $m 5,000 4,500 1980-1990s 2000s 2010-2020s Median IPO valuation of c.$100-150m Median IPO valuation of $300-600m Median IPO valuation of $600m-$1bn+ 4,000 Opportunities for private tech Op
Slide 13: Europe’s fragmented market structure provides opportunities in private software
Europe’s fragmented market structure provides a broad range of opportunities in the private software space Europe: Tax & Accounting segment leaders US: Tax & Accounting segment leaders >50% of the top 40 European <20% of the top 40 US software software companies are private1 companies are private1 N
Slide 14: HgT provides listed access to the “free float” of >$160bn EV of Hg’s portfolio
HgT provides listed access to “the free float” of >$160bn EV of Hg’s portfolio of private software and services businesses 10% $285bn 20% >$160bn 4% 13% Revenue $44bn 6% 7% $33bn growth 4% $12bn $12bn EV $5bn Source: Factset, Europe tech firm EVs and Hg’s EV reported as at 31 March 2025. FY23 LTM re
Slide 15: HgT Q1 2025 update
HgT Q1 2025 update
Slide 16: Compounding growth: the power of a long-term investment strategy
Compounding growth: the power of a long-term investment strategy Both HgT’s share price and net asset value per share have consistently outperformed the FTSE All-Share Index over the long-term £2.4bn £2.3bn 19.0% p.a. Net assets Market capitalisation 18.2% 531.3p 506.0p p.a. NAV per share Share pric
Slide 17: Strong trading offset by multiple contraction in Q1 2025
Strong trading offset by multiple contraction in Q1 2025 At 31 March 2025. 17 Past performance is not a reliable indicator of future results.
Slide 18: Continued strong trading from “Rule of 40+” portfolio
Continued strong trading from “Rule of 40+” portfolio Rule of 40+: 12% organic revenue growth and 33% EBITDA margins for the full portfolio 20% LTM revenue growth1 A “sleep well” investment strategy • Highly recurring revenues and low customer churn due to mission critical software and services prov
Slide 19: Consistent realisation activity despite a challenging environment for exits
Consistent realisation activity despite a challenging environment for private equity exits HgT has continued to realise investments, while global £659m of realisations since the start of 2024 buyout distributions hit a low as a percentage of net assets1 40% £98m £92m 35% £51m £50m 30% Distributions
Slide 20: Hg has continued to invest selectively
Hg has continued to invest selectively Repeatable investments in companies with similar defensive business models building a store of future value for HgT £126m £114m £75m £45m £606m invested in 2024, including £109m of £38m co-investment. £32m £31m Portfolio companies also active in M&A, with £26m
Slide 21: Case study
A leading cloud-based platform platform that transforms the way enterprises automate, collaborate and report in real-time on critical risk, audit and compliance workflows. The company was founded in 2014, “by auditors, for auditors”, but has since leveraged its highly modern, modular platform to exp
Slide 22: Robust portfolio balance sheets with below market gearing
Robust portfolio balance sheets with below market gearing: ~70% equity in capital structures Europe LBO Proactive debt extension, with no meaningful maturities for ~2 average1 2 years3 £15.5bn 41% 70% 24.7x Maturity equity equity EV/EBITDA extended during 2024 £12.1bn Relates to PortCos in active sa
Slide 23: HgT’s robust balance sheet supports future investment activity
HgT’s robust balance sheet supports future investment activity During Q1 2025, HgT committed $1bn to Hg Saturn 4 to be invested over the next three to four years HgT’s “toolbox” to manage liquidity across market cycles Outstanding commitments at 31 March 2025 • Fund commitments: foundation of invest
Slide 24: Outlook
Outlook Resilient trading performance underpinned by mission-critical nature of products and services provided by portfolio companies. We do not expect any material first-order impact on the portfolio from US tariffs Selective investment in companies with similar defensive business models, building
Slide 25: Further resources
Further resources Hg portfolio Hg 2024: A Year in Review Orbit: an Hg podcast HgT website: https://www.hgcapitaltrust.com/ Hg website: https://hgcapital.com/ HgT LinkedIn: https://www.linkedin.com/company/hgcapital-trust-plc Orbit podcast: https://hgcapital.com/insights/orbit-podcast Hg insights: ht
Slide 26: Appendices
Appendices
Slide 27: Top 10 portfolio companies (57.1% of the total portfolio)
Top 10 portfolio companies (57.1% of the total portfolio) % Company Cluster Location Description Portfolio • Provides business-critical software to SMEs and the public sector in the Benelux and Nordic regions, providing c.2m Tax & Accounting/ Scandinavia enterprise customers with accounting; resourc
Slide 28: Portfolio diversified by cluster, vintage and geography
Portfolio diversified by cluster, vintage and geography Hg cluster by value Investment vintage by value Geographic spread by value Healthcare IT Automation & 2025 DACH Technology 4% Engineering 1% Services Pre-2021 11% 3% 5% 30% UK Other Europe 30% Fintech Tax & Accounting 2024 11% 7% 30% 28% Insura
Slide 29: Contact
Contact For further information on HgCapital Trust plc, please visit our website: www.hgcapitaltrust.com Or contact our Investor Relations Team at: investorrelations@hgcapital.com You can also follow us: Linkedin www.linkedin.com/company/hgcapital-trust-plc Doceo www.doceo.tv/funds/hg-capital-trust/
Slide 30: Disclaimer
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 AUSTRALIA, CANADA,
Slide 31: Disclaimer
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 terminology, incl