HGCapital Trust PLC · LSE:HGT

HGCapital Trust — Investor Presentation (April 2023)

103 slides from HGCapital Trust's investor presentation, Apr 25, 2023

1. Slide 1: HgCapital Trust plc Investor Event

   HgCapital Trust plc Investor Event Get connected 25th April 2023 to a combined enterprise value of >€120bn of software and tech-enabled services businesses 1

2. Slide 2: Introduction to HgCapital Trust

   Introduction to HgCapital Trust Jim Strang © Copyright Hg 2023

3. Slide 3: HGT is a FTSE 250 investment company managed by Hg

   • HGT is a FTSE 250 investment company listed on the main market of the London Stock Exchange and managed by Hg, the 3rd largest PE investor in EMEA • HGT is Hg’s largest and longest standing investor • HGT objective to provide consistent, long-term returns to shareholders (through investment in pri

4. Slide 4: Compelling record driven by long term compounding of returns

   Compelling record driven by long term compounding of returns An investment of £1,000 in HGT shares made 10 years ago would now be worth £4,516, a total return of 352%. An equivalent investment in the FTSE All-Share Index would be worth £1,882. £2.1bn HGT NAV per share +16.8% p.a. HGT share price +16

5. Slide 5: 2022 was a resilient year for HGT in challenging markets

   2022 was a resilient year for HGT in challenging markets £2.1bn +5.4% £527m 7.0p net assets NAV per share cash invested Full year dividend £1.6bn -15.1% £404m 1.7% market cap share price cash returned ongoing charges The HGT portfolio is made up of 48 individual companies, spread across eight end-ma

6. Slide 6: Strong trading was the key driver of NAV performance in 2022

   Strong trading was the key driver of NAV performance in 2022 HGT top 20 portfolio companies (77% of portfolio) +30% +25% 29% revenue growth EBITDA growth EBITDA margin Growth drivers  Organic: price optimisation, upsell, share of wallet  M&A: accretive deal pricing, cross-sell/up-sell, share of wa

7. Slide 7: HGT Board has an expanded range of tools to manage volatility

   HGT Board has an expanded range of tools to manage through market volatility  Commitments to all Hg funds: foundation of HGT investment strategy; visibility over future capital deployment  Secondary fund transactions: increasing depth of secondary market provides an additional tool to manage liqui

8. Slide 8: Growth of the secondary market provides an additional tool

   The growth of the secondary market provides an additional tool for HGT to manage exposure The secondary market provides a route for investors to exit positions in private funds, generating early liquidity and supporting portfolio rebalancing. Buyers assume all rights and obligations, including any o

9. Slide 9: Update on recent HGT portfolio rebalancing

   Update on recent HGT portfolio rebalancing Fund Transaction Rationale Partial sale of c. 25% of Hg Genesis 8 Rebalance portfolio exposure Pricing at 100% of December NAV generating  Reduce exposure to G8, HGT’s largest fund exposure, c. £90m of proceeds locking in 3.2x MOIC  Reduce exposure to Acc

10. Slide 10: Hg introduction

    Hg introduction Luke Finch © Copyright Hg 2023

11. Slide 11: Hg Inc is the #2 largest software firm in Europe

    ‘Hg Inc’ is the #2 largest software firm in Europe, and one of the fastest growing >25 years of investing Aggregate EV ($m) $129bn >175 investments $120bn 5 investment offices across Europe and the US >350 Staff including c. 220 professionals $48bn >$55bn funds under management $27bn >55k portfolio

12. Slide 12: European base, transatlantic reach

    European base, transatlantic reach © Copyright Hg 2023 12

13. Slide 13: Targeting robust and resilient Hg sweet-spot business models

    Targeting robust and resilient ‘Hg sweet-spot’ business models with unique scale in European tech Tax & Accounting Business critical software or service ERP & Payroll Legal and Compliance Subscription / repeat revenue model Sweet-spot BUSINESS DEEP Automation and Engineering MODEL SECTOR Years of ac

14. Slide 14: Long-term approach has driven deep sub-sector knowledge

    A long-term focused approach has driven deep sub-sector knowledge and networks TAX & ACCOUNTING ERP & PAYROLL LEGAL & REGULATORY AUTOMATION & ENGINEERING >18 years >18 years >15 years >14 years SME TECHNOLOGY SERVICES CAPITAL MKTS & WEALTH MGT IT INSURANCE HEALTHCARE IT >12 years >9 years >8 years >

15. Slide 15: HGT is Hg's largest client, committed to all Hg funds

    HGT is Hg’s largest client, committed to all Hg funds Pension Plans, SWFs, Endowments, Insurance Cos etc c. $55bn Hg’s portfolio Hg’s largest companies LP investor HGT’s underlying HGT provides listed access listed investor to “the free float” of $120bn base c. £3bn EV of Hg Software “Inc” HGT provi

16. Slide 16: Hg investment strategy & update

    Hg investment strategy & update Nic Humphries © Copyright Hg 2023

17. Slide 17: If you can keep your head when all about you are losing theirs

    “If you can keep your head when all about you are losing theirs” If – Rudyard Kipling © Copyright Hg 2023

18. Slide 18: Business critical software

    Access market intelligence Gather supplier information Pay Duty / VAT Provide Pensions Produce Accounts Produce legal documents Find insurance Policy administration Disclose to Regulator Bill suppliers Handle litigation Job Scheduling Catalogue parts Run my website Employment Taxes Trade securities

19. Slide 19: Consistent superior returns through all cycles

    Consistent superior returns through all cycles over the very long term © Copyright Hg 2023

20. Slide 20: >$17 billion returned over last 20 years at 3.3x MOIC

    >$17 billion returned over last 20 years at 3.3x MOIC / 33% IRR 75% 8.1x c.80% of realised investments have returned >2.5x MOIC / 25% IRR >90% of realised investments have returned > 2.0x / 20% IRR c.1% 57% 6.4x 112% 43% Loss ratio 5.6x 5.5x 33% 77% 5.2x 5.1x 25% 4.9x 39% 4.7x 29% 4.4x 25% 40% 4.2x

21. Slide 21: Hg: consistent superior returns over the very long term

    Hg: consistent superior returns, through all cycles, over the very long term 3,500 3,000 2,500 2,000 4x 1,500 1,000 S&P 500 (S&S) S&P 500 500 - Past performance is not indicative of future performance. Past performance is not a reliable indicator of future results. The value of shares and the income

22. Slide 22: Top 5% of all PE funds for DPI

    Top 5% of all PE funds for DPI for every fund over last 11 years 2012 vintage 2013 vintage 2017 vintage 2018 vintage 2020 vintage 3.0x 1 2.5x 2.1x 2.1x 2.0x 1.8x 0.6x 0.6x 1.3x 1.4x 1.0x 1.2x 0.9x 0.3x 0.3x 0.0x 0.3x 0.1x 0.0x 0 Industry Median1 Top 5% of Funds1 funds2 Note: Net DPI figures for Hg a

23. Slide 23: ~2.5x more returned in cash than invested in 2022

    ~2.5x more returned in cash than invested in 2022 2020-22 2022 Proceeds ~$11bn ~$5bn Proceeds vs Invested Cost ~1.5x ~2.5x Aggregate Gross MOIC / IRR 1 >4x / 30% >5x / 50% Past performance is not indicative of future performance. Note: Figures above exclude Saturn © Copyright Hg 2023 23 1. Includes

24. Slide 24: What about your current portfolio?

    “You gave me cash returns… …but what about your current portfolio? Private equity valuations are (vastly) inflated.” © Copyright Hg 2023

25. Slide 25: Q4 2022 realisations: 26% average uplift to prior valuation

    Q4 2022 realisations: 26% average uplift to prior reported valuation 48% 26% 12% 18% Oct-22 Oct-22 Nov-22 Dec-22 Past performance is not indicative of future performance. © Copyright Hg 2023 25

26. Slide 26: Consistent with long-term realisation premium of >35%

    Consistent with our long-term realisation premium of >35% 115% 55% 40% 38% 28% 28% 26% 2017 2018 2019 2020 2021 2022 Average Past performance is not indicative of future performance. Note: Valuation uplift at exit for presented platform investments, from Mercury 1 (100% Software & Services funds) ©

27. Slide 27: How is the portfolio trading now?

    So you grew businesses in a strong market… …but now we have the Ukraine war, inflation, higher interest rates. How is the portfolio trading now? © Copyright Hg 2023

28. Slide 28: 2022 snapshot

    2022 snapshot 28% 25% 20% LTM revenue LTM EBITDA employment growth growth growth $120bn total Enterprise Value Past performance is not indicative of future performance. © Copyright Hg 2023 28 Figures are as at LTM 31 December 2022, adjusted pro-forma for events post-period end. FTE growth is like-fo

29. Slide 29: Consistent revenue and EBITDA growth through Covid and 2022 turmoil

    0% 5% 10% 15% 20% 25% 30% 0% 5% 10% 15% 20% Jan-20 Jan-20 Feb-20 Feb-20 Mar-20 Mar-20 Organic EBITDA Apr-20 Apr-20 Organic Revenue May-20 May-20 Jun-20 Jun-20 Jul-20 Jul-20 Aug-20 Aug-20 Sep-20 Sep-20 Oct-20 Oct-20 Nov-20 Nov-20 Dec-20 Dec-20 Jan-21 Jan-21 Feb-21 Feb-21 COVID – First, second and thi

30. Slide 30: Consistent EBITDA growth over 15+ years across all market cycles

    Consistent EBITDA growth over 15+ years across all market cycles 100% software and services 15% 26% 25% 26% 24% 24% 9% 19% 19% 20% 7% 12% 13% 11% 8% 9% 9% 9% 2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023B LTM EBITDA Growth Indicative S&S EBITDA Growth Past perfor

31. Slide 31: Didn't you just get lucky picking the software sector?

    Didn’t you just get lucky picking the software sector 20 years ago? Anyone doing the same could produce your returns? © Copyright Hg 2023

32. Slide 32: The Hg 33% IRR Formula

    The Hg 33% IRR Formula 6% 5% 7% 33% 3% 2% 2% 8% Software Hg cluster / Hg market EBITDA Financing Hg operating Hg driven M&A Hg IRR sector growth thesis growth leader operating leverage skill leverage Past performance is not indicative of future performance. © Copyright Hg 2023 32

33. Slide 33: Hg's largest, long-term investments

    Hg’s largest, long-term investments $47.6bn +16x Average Hg investment of 11 $3.1bn years Total EV at entry Total current value Past performance is not indicative of future performance. © Copyright Hg 2023 33

34. Slide 34: >$12bn current equity value compounding at >35% IRR

    >$12bn current equity value compounding at >35% IRR $12bn c.30% Total Dec-22 Equity CY 2023F Value EBITDA Growth Past performance is not indicative of future performance. © Copyright Hg 2023 34

35. Slide 35: Long-term investment example 2006 vs 2023

    2006 2023 7 years public company 17 years Hg ownership Enterprise Value $400m 50x $20bn Organic Revenue growth 6% 2.5x 15% % EBITDA margin % 15% 1.8x 28% 60% software 80% true SaaS Business quality 50% recurring 90% recurring Past performance is not indicative of future performance.

36. Slide 36: Past, Present and Future. Tense. What now?

    Past, Present and Future. Tense. What now? David Toms © Copyright Hg 2023

37. Slide 37: Downturns: multiple decline then earnings decline – GFC

    Downturns have distinct phases of “multiple decline” then “earnings decline” – Software & Services in the GFC Earnings multiples for the software & services sector through the GFC 120 110 100 90 80 Multiple 70 60 50 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Source: Factset, analysis of US listed software a

38. Slide 38: Downturns: multiple decline then earnings decline – GFC

    Downturns have distinct phases of “multiple decline” then “earnings decline” – Software & Services in the GFC Earnings multiples for the software & services sector through the GFC 120 110 Earnings 100 90 80 Multiple down Multiple 70 c.35% before 60 earnings decline 50 Dec-07 Jun-08 Dec-08 Jun-09 Dec

39. Slide 39: Multiple decline then earnings decline – last 2 years

    Downturns have distinct phases of “multiple decline” then “earnings decline” – Software & Services in the last 2 years Earnings multiples for the software & services sector since May 2021 120 110 100 90 80 70 60 50 May-21 Jan-22 May-22 Jan-23 Jul-21 Sep-21 Nov-21 Mar-22 Jul-22 Sep-22 Nov-22 Source:

40. Slide 40: Multiple decline then earnings decline – last 2 years

    Downturns have distinct phases of “multiple decline” then “earnings decline” – Software & Services in the last 2 years Earnings multiples for the software & services sector since May 2021 120 110 100 90 80 Multiple down 70 c.30% before earnings decline 60 50 May-21 Jun-21 Aug-21 Sep-21 Oct-21 Jan-22

41. Slide 41: Earnings, not multiples, drive consistent value creation

    Earnings, not multiples, drive consistent value creation Software & services returns, by multiples & earnings 40% 800% 30% 600% 20% 400% Cumulative return 10% 200% Annual return 0% 0% (10%) (200%) Returns from multiple (20%) (400%) Returns from earnings (30%) (600%) Cumulative returns (40%) (800%) P

42. Slide 42: Time makes software more valuable

    Time makes software more valuable Recent software price increases .com domains 7% Average: 14% Most products 5% QBO Advanced 20% QBO Plus 14% QBO Essentials 25% MS 365 E3 13% O365 E5 9% O365 E3 15% O365 E1 25% 365 Premium 10% 365 Basic 20% Premium 10% Standard 8% Starter 20% 0% 5% 10% 15% 20% 25% 30

43. Slide 43: We would expect growth to slow as markets get saturated

    We would expect growth to slow as markets get saturated… Tech spend - annual growth vs spend as a % of GDP 14% 12% Growth rate of tech spend 10% 8% 6% 4% 2% 0% 2% 3% 4% 5% 6% 7% 8% Tech spend as % of GDP © Copyright Hg 2023 43

44. Slide 44: But at current levels we see no sign of this

    But at current levels we see no sign of this Tech spend - annual growth vs spend as a % of GDP 14% 12% Brazil Netherlands Singapore Growth rate of tech spend 10% United States Denmark Finland 8% China 6% Norway Germany Sweden Australia United Kingdom Italy 4% 2% 0% 2% 3% 4% 5% 6% 7% 8% Tech spend as

45. Slide 45: More tech spend is going towards software and services

    But more tech spend IS going towards software and services Tech spend – as a % of GDP versus proportion of tech spend on software/services 80% Software and services spend as % of Singapore 70% United Kingdom DenmarkAustralia United States 60% Germany Finland Norway Japan 50% Spain tech spend Canada

46. Slide 46: Ease of use has fuelled technology uptake for 60 years

    Ease of use has fuelled technology uptake for 60 years Software vs Hardware Capex, as a % GDP 5.0% 4.5% 4.0% 3.5% 3.0% Software spend (as % GDP) 2.5% 2.0% 1.5% Hardware spend 1.0% (as % GDP) 0.5% 0.0% 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 Source: Federal Res

47. Slide 47: Cloud is still changing the game

    Cloud is still changing the game Revenue of major software companies 300 250 200 Revenue, $bn 150 100 (New) Cloud 50 Migration to Cloud Maintenance Perpetual Licence 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Source: Hg analysis of

48. Slide 48: Hg staff intranet

    Hg staff intranet Source: Hg © Copyright Hg 2023 48

49. Slide 49: © Copyright Hg 2023

    Earnings, not multiples, drive consistent value creation But more tech spend IS going towards software and services Software & services returns, by multiples & earnings Tech spend — as a % of GDP versus proportion of tech spend on softwarelservices 80% 40% 800% 5 Singapore 2 70% : 30% 4 + 600% . . U

50. Slide 50: Portfolio Value Creation Team

    Portfolio Value Creation Team Shiv Pabari © Copyright Hg 2023

51. Slide 51: A systematic engine for value delivery in the portfolio

    A systematic engine for value delivery in the portfolio Scale portfolio of 50+ B2B tech services and software companies © Copyright Hg 2023 51

52. Slide 52: Operational experts across a wide range of areas

    Operational experts across a wide range of areas where we see repeat value creation opportunities Growth Tech, Product, Cyber Data Sales R&D BI & reporting Marketing Product AI & machine learning Pricing Cyber Data infrastructure Customer Success Projects Support HR & Talent Finance & FP&A Value cre

53. Slide 53: How we pivot portfolio outcomes

    How we pivot portfolio outcomes Co-ownership of specific value Scale portfolio of 50+ creation prioritiesB2B tech services and software companies © Copyright Hg 2023 53

54. Slide 54: Pivoting to a materially different, better outcome

    Pivoting to a materially different, better outcome Growth Tech, Product, Cyber Data Sales R&D BI & reporting Marketing Product AI & machine learning Pricing Customer Success Cyber Data infrastructure Kevin Smith Projects Support HR & Talent Finance & FP&A Value creation planning Org design & optimis

55. Slide 55: How we pivot portfolio outcomes

    How we pivot portfolio outcomes Co-ownership of Truly focused specific value Scale portfolio of 50+ creation prioritiesB2B tech services expertise and software companies © Copyright Hg 2023 55

56. Slide 56: Truly focused expertise

    Truly focused expertise Growth Tech, Product, Cyber Data Marketing experts Sales R&D BI & reporting Marketing Product AI & machine learning Pricing Cyber Data infrastructure Customer Success Projects Support HR & Talent Finance & FP&A Value creation planning Org design & optimisation Finance analyti

57. Slide 57: Operational experts across a wide range of areas

    Operational experts across a wide range of areas where we see repeat value creation opportunities Growth Tech, Product, Cyber Data Sales R&D BI & reporting Marketing Product AI & machine learning Pricing Cyber Data infrastructure Customer Success Projects Support HR & Talent Finance & FP&A Value cre

58. Slide 58: Recent investment priorities

    Recent investment priorities Investing in Transatlantic R&D expertise capabilities expansion +5 >50 10 In-house Data Finance, Org Product R&D team Operations Recent hires in the Optimisation, experts today United States Systems © Copyright Hg 2023 58

59. Slide 59: Key impact projects across the portfolio

    Key impact projects across the portfolio Data monetisation Tech Cost Marketing Built new data products, Revised R&D roadmap, improved Signed up and delivered $6M of Centralized BU marketing silos to €3M ‘year 1’ ARR, tech debt; increased R&D savings from AWS, adding to our form single ‘Group’, €9M b

60. Slide 60: Macro – Setting the Scene

    Macro – Setting the Scene Inflation in the last 10 years 12% Eurozone UK 10% USA 8% 6% 4% 2% 0% (2%) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Inflation data per FactSet; Eurozone - Harmonized CPI, All-items HICP (YoY%); UK - CPI All Items (YoY%); USA - CPI Total (YoY%) © Copyri

61. Slide 61: Driving value pricing from the Hg centre

    Driving Value pricing from the ‘Hg centre’ Briefing sessions with boards 22 10+ and PortCos months Board + CEO/CFO ago briefing sessions IP & tools provided to facilitate 8 3 response at scale pieces of relevant IP portfolio webinars On-the-ground project support 30 PortCos engaged 12 PortCo project

62. Slide 62: What impact have we crystalised?

    What impact have we crystalised? …representing +£100m £52m +£2bn EBITDA from Hg of value projects… in total © Copyright Hg 2023 62

63. Slide 63: Using our collective scale to manage costs

    Using our collective scale to manage costs Organisation R&D Hg group efficiency, rightshoring systems process projects discounts automation +$3 million per $40 million p.a. >$1 million per project function © Copyright Hg 2023 63

64. Slide 64: Rapid Business Insights: Hg's BI-as-a-Service software

    Rapid Business Insights: Hg’s ‘BI-as-a-Service’ software Portfolio business systems Hg-hosted cloud platform BI-as-a-service Future-proof production tech-stack with fully automated, live data Hg cloud data Automated warehouse data quality Hg Data Enrichment APIs  4 companies live, 8 in progress  4

65. Slide 65: A systematic engine for value delivery in the portfolio

    A systematic engine for value delivery in the portfolio Scale portfolio of 50+ B2B tech services and software companies © Copyright Hg 2023 65

66. Slide 66: Software Company Financing in the Current Macro Environment

    Software Company Financing in the Current Macro Environment Chelsea Lau © Copyright Hg 2023

67. Slide 67: Hg Capital Markets Team

    Hg Capital Markets Team Juan Campos Chelsea Lau Olena Ostasheva Philipp Speeck Hazem Ben Larbi Head of Capital Principal Senior Associate Senior Associate Treasury & Hedging Markets (20 years) (8 years) (7 years) (6 years) (12 years) Responsible for structuring, negotiating and managing capital stru

68. Slide 68: Market themes

    Market themes © Copyright Hg 2023 68

69. Slide 69: Market themes

    Market themes March 2009 © Copyright Hg 2023 69

70. Slide 70: Macro – setting the scene

    Macro – setting the scene Consumer Expenditures QoQ Growth % 5% 4% 3% 2% 1% 0% (1%) (2%) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: FRED Economic Data St. Louis Fed, U.S. consumer spend quarter-o

71. Slide 71: Macro impacts LBO debt markets

    Macro impacts LBO debt markets Buyout activity vs deal leverage 1,200 LBO Invested Capital LBO Deal Leverage 6.5x 1,000 6.0x 5.5x 800 5.0x $bn 600 4.5x 400 4.0x 200 3.5x - 3.0x 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source:

72. Slide 72: Macro impacts LBO debt markets

    Macro impacts LBO debt markets PE Funds Raised vs Credit Spread (inverted) 250 Funds Raised for Buyouts (right) LBO Credit Spread (inverted) 700 600 450 500 650 400 $bn bps 850 300 200 1,050 100 1,250 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20

73. Slide 73: Wealth & return transfer: equity headwind, debt tailwind

    Wealth & return transfer: equity headwind ~ debt tailwind Key LBO ingredients 20 Year average1 Current Market EV Purchase Price Multiples 9.2x 11.5x Debt / Equity Capitalization 41% 45% Ratio Long-Term Average Cost 5.7% 8.6% of LBO Debt Long-Term Average Recession / 6 – 8% Topline Organic Growth wea

74. Slide 74: Cost of LBO leverage vs PE's expected returns

    Wealth & return transfer: equity headwind ~ debt tailwind Cost of LBO Leverage vs PE’s expected returns Net IRR Historical 20 Yr Average Blended 20 Yr Avg Cost Actual cost 17% Average for PE1 debt + equity cost of funding2 of LBO Debt of LBO debt 14% 11% 8% 5% 2% 2002 2003 2004 2005 2006 2007 2008 2

75. Slide 75: Average LBO profile vs typical Hg business

    Average LBO profile vs Typical Hg business LBO n = 85 18% 16% Est. Long-term organic topline growth % 14% 12% n = ~600 10% 8% 6% 4% 2% 0% 35% 40% Equity cushion % 60% 75% Average LBO LBO Source: Hg Analysis based on LSTA Index constituent-level data, S&P LCD, Hg portfolio data over the last 3 years

76. Slide 76: Hg has raised $12 billion of financing in 2022

    Hg has raised $12 billion of financing raised in 2022 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Project DS $1bn $2bn $3bn $7bn $8bn $10bn $12bn © Copyright Hg 2023 76

77. Slide 77: Hg lender survey findings

    Hg lender survey findings Hold sizes have come Most lenders have >$1bn down in L6M vs 2021 of dry powder L6M margins have increased by 100-200bps >24 months remaining Leverage is down ~1-2x investment period # of deals declined at credit committee has spiked Higher probability of default & Expect ne

78. Slide 78: Portfolio company example – €900 million PIK raise

    Portfolio company example – recent €900 million PIK raise Delivered annual proceeds to investors through consistent cost of financing over a 3 year period ☑ Optimised capital structure Returned capital to investors for 3 consecutive ☑ years, totalling ~€2.6 billion proceeds to date ☑ Maintained the

79. Slide 79: Portfolio company example – £730 million refinancing

    Portfolio company example – £730 million refinancing Created a robust and fully flexible structure for multiple strategic options during Sep-2022 market storm ☑ Extended debt maturity from 13 months to 7 years Secured a sizeable acquisition/capex facility ☑ (£120 million / 1.3x EBITDA) ☑ Doubled the

80. Slide 80: Long-term stock market real return

    “A : . = LONG-TERM STOCK MARKET REAL RETURN 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 Source: Global Financial Data & New Star estimates

81. Slide 81: ESG

    ESG Caroline Löfgren, Chief Sustainability Officer © Copyright Hg 2023

82. Slide 82: UNPRI rating and Carbon Neutral firm since 2019

    UNPRI rating Private Equity (100/100) 100% Carbon Neutral firm Investment & Stewardship Policy (82/100) since 2019 $12m $260k Committed via the Hg Foundation Donated to charity through since its inception employee initiatives in 2022 38% 42% Women in the investment team Women across firm 48 40eNPS N

83. Slide 83: Hg's ESG efforts focused on most material topics

    Hg’s ESG efforts are focused on the most material topics based on what is important to the business and its key stakeholders Very high Climate & Energy Diversity, Equity & inclusion Increasing importance to stakeholders Cybersecurity Data privacy Business Culture & Ethics Anti-trust Human rights Job

84. Slide 84: Hg's ESG team supports firm and portfolio companies

    Hg’s ESG team supports the firm and its portfolio companies on strategic ESG initiatives across a range of areas ESG strategies Double materiality Reporting Annual ESG Diagnostics assessments Carbon footprinting & Science Based Targets Compliance Community & education Climate change risk Caroline Lö

85. Slide 85: Longstanding commitment to ESG & Sustainability

    The firm has a longstanding commitment to ESG & Sustainability Environmental Social Hg launches Hg becomes a Hg becomes a the Hg member of member of SEO Governance Hg becomes a foundation LGBT Great London member of the RI affiliate network of Invest Europe Hg becomes Hg commits to a member of Hg be

86. Slide 86: Longstanding commitment to ESG & Sustainability

    The firm has a longstanding commitment to ESG & Sustainability Environmental Social Hg launches Hg becomes a Hg becomes a the Hg member of member of SEO Governance Hg becomes a foundation LGBT Great London member of the RI affiliate network of Invest Europe Hg becomes Hg commits to a member of Hg be

87. Slide 87: ESG is embedded into the investment process

    ESG is embedded into the investment process from deal screening to exit ESG & Cybersecurity Ongoing Engagement & Realisation ESG Exclusion List: Onboarding: Vendor DD DD: Support: Committee • Forced labour 5 Assessments: • Performance reviews • Mining • Illegal activity • • ESG DD red-flag • Annual

88. Slide 88: Our Sustainable Business framework

    Our Sustainable Business framework is the foundation of our portfolio ESG review © Copyright Hg 2023 88

89. Slide 89: Each company is assessed against our framework

    Each company is assessed against our framework, scored from 0 -10 and benchmarked against their peers to ensure actions are taken to improve Leading Established Emerging 10.00 9.00 8.00 Average 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2022 2021 – 2019 © Copyright Hg 2023 89

90. Slide 90: ESG has direct and indirect positive impact on our businesses

    ESG has direct and indirect positive impact on our businesses Correlation between ESG scores and EBITDA margin for software and service Business benefits of ESG, external companies in Genesis based on Hg’s 2022 ESG assessment: 50% 38% better employee loyalty and 55% higher morale, at companies with

91. Slide 91: Deep dive: Climate change

    Deep dive: Climate change Understand Calculate Set climate change related risks portfolio carbon footprint Science Based Targets Hg is co-leading iCI’s 26% of Hg’s AUM to be covered by Scope 3 Tech guidance SBTs by 2026 and 100% by 2040 © Copyright Hg 2023 91

92. Slide 92: Deep dive: Diversity, Equity & Inclusion

    Deep dive: Diversity, Equity & Inclusion Hg has developed a DEI toolkit to support portfolio companies © Copyright Hg 2023 92

93. Slide 93: Find out more

    Find out more  Hg’s Responsible Investment (RI): https://hgcapital.com/life-at-hg/responsible-investing  RI Report 2021/2022  RI Policy  Carbon footprint report 2022  Hg’s D&I website  Hg’s UNPRI report  Contact: ESG@hgcapital.com © Copyright Hg 2023 93

94. Slide 94: James Turner, CEO

    James Turner, CEO © Copyright Hg 2023

95. Slide 95: The challenge

    The challenge There are substantial skills shortages in the technology sector and an urgent need to prepare the current and future workforce for modern jobs. 29% of vacancies due to lack of digital 3m new jobs in the UK will require 65% of primary school children will skills – rising to 60% in the t

96. Slide 96: Our aim

    Our aim Our vision is that the tech workforce of the future harnesses the talents of all, regardless of background. We help under-represented groups to access high quality jobs in tech by supporting education- and employment- based programmes in the UK, US and Europe. Our work is funded solely by Hg

97. Slide 97: Impact so far

    Impact so far $12.5m 8,000+ invested students reached Two-year academic support and mentoring for disadvantaged Tailored support for talented undergraduates from lower income 16-18 year olds taking maths / further maths qualifications homes to gain graduate roles in tech • 250 participants • 500 par

98. Slide 98: The next 3 years

    The next 3 years $50m 30 25,000 25% Committed since Strategic partnerships Young people and Of Portfolio Companies inception with expert non- adults supported on tech and Hg team engaged profits pipeline thehgfoundation.com © Copyright Hg 2023 98

99. Slide 99: Closing comments

    Closing comments Jim Strang © Copyright Hg 2023

100. Slide 100: Closing comments

     Closing comments Investment outlook • Investment environment remains challenging but Hg well placed to continue to underwrite attractive deals and deploy funds (as witnessed in GFC, Covid-19 etc) • Intention to increase allocation to co-investments to enhance returns for HGT over time Portfolio • Ta

101. Slide 101: Thank you

     2¢ Capital o Hgts pic Thank you

102. Slide 102: 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,

103. Slide 103: 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, inclu

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