HGCapital Trust PLC · LSE:HGT
HGCapital Trust — Q3 2021 Earnings Presentation
25 slides from HGCapital Trust's earnings presentation, November 2021
Slide 1: Three months performance to 30 September 2021
Three months performance to 30 September 2021 Get connected To the 2nd largest software business in Europe November 2021 This document accompanies Q3 report for the three months ended 30 September 2021. The information in this document contains a summary of information set out in this report. Refere
Slide 2: HGT overview: Consistent long-term compounding growth
HGT overview: Consistent long-term compounding growth FTSE 250 investment company listed on the LSE Direct investor only committed to Hg funds A Board of 6 NEDs with a wide range of skill sets and strong focus on strategy and governance who make all decisions on commitments to Hg funds Managed by Hg
Slide 3: Key financials for Q3 2021
Key financials for Q3 2021 A long-term track record of outperformance Q3 2021 YTD 17% NAV per share and 18% share price CAGR over the past 10 years v. 8% CAGR from the FTSE All-Share NAV generated from consistently strong trading and realisations above book value per share +12% +36% Share price +11%
Slide 4: HGT's Portfolio – Top 20 LTM trading performance
HGT’s Portfolio – Top 20 LTM trading performance 40% 35% 35% 30% 29% 29% 25% 24% 25% 20% 23% 22% 19% 19% 15% 10% 11% 5% 0% Q3 2017 Q3 2018 Q3 2019 Q3 2020 Q3 2021 Revenue EBITDA 115% of the three month increase in unrealised valuation driven by trading Note: Top 20 - Based on LTM HGT reported figure
Slide 5: Managing liquidity – levers in place
Managing liquidity – levers in place ▪ Cash available to invest £314m ▪ Additional undrawn credit facility £45m ▪ Raised over Q3 2021 in new equity via tap issuance £25m ▪ Realised from the portfolio over Q3 through both exits and refinancings £87m ▪ Invested over Q3 into both new platform and bolt-
Slide 6: 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. $40bn Hg’s portfolio Hg’s largest companies LP investor HGT’s underlying HGT provides listed listed investor access to “the free base c. £2.3bn float” of the $92bn EV of Hg Software “Inc” HGT
Slide 7: 'Hg Inc' is the #2 largest software and #4 largest PE firm in Europe
‘Hg Inc’ is the #2 largest software and #4 largest PE firm in Europe $174bn Hg Snapshot ▪ Founded in 1990 with investment offices in London, Munich, New York -1% $92bn ▪ c.$40 billion of AuM and nearly 250 professionals $87bn ▪ Fourth largest PE firm in Europe +19% ▪ Specialised in software & servic
Slide 8: Single strategy across three funds - broad market coverage
Single strategy across three funds - broad market coverage Entry EV €1,500MM €500MM €100MM Company maturity COMMON FEATURES Shared Investment Benefit from c. 50 person Identical investment Dedicated execution teams Integrated origination and Committee and transaction support and strategy per fund co
Slide 9: Targeting robust and resilient 'Hg sweet-spot' business models
Targeting robust and resilient ‘Hg sweet-spot’ business models BUSINESS MODEL ATTRIBUTES DEEP SECTOR KNOWLEDGE… Tax & Accounting Business critical need delivered as software or service ERP & Payroll Legal and Compliance Subscription or repeat revenue model Automation and Engineering SWEET Insurance
Slide 10: A focused 'Hg Cluster' approach
A focused ‘Hg Cluster’ approach has driven deep sub-sector knowledge CLUSTER CURRENT PORTFOLIO TAX & ACCOUNTING 17+ years ERP & PAYROLL 17+ years LEGAL & REGULATORY COMPLIANCE 14+ years AUTOMATION AND ENGINEERING 13+ years TECH SERVICES 11+ years CAPITAL MARKETS & WEALTH MANAGEMENT IT 8+ years INSUR
Slide 11: A dedicated portfolio team focused on core repeatable value creation levers
A dedicated portfolio team focused on and organised around core repeatable value creation levers - like a software company The portfolio team has > 40 members and continues to grow © Copyright Hg 2021 11
Slide 12: Hg's online collaboration tool
Our portfolio executives connect with each other through Hg’s online collaboration tool Hg’s online collaboration platform, Hive, connects thousands of executives across the Hg portfolio through multiple live communities. By providing members with a safe and secure space to share specialist knowledg
Slide 13: Responsible Investment
Responsible Investment AA+ +UNPRI rating 100% carbon neutral since 2019 45%female 33% women in Hg’s 53% of investment executive hires 32 nationalities represented employees executive team were female in 2020/21 across Hg >$5m annually donated to charitable giving Our purpose: Trusted to improve the
Slide 14: During Q3, Hg continued to selectively invest in companies tracked for many years
During Q3, Hg continued to selectively invest in companies tracked for many years… £54.6m £18.5m £15.9m £10.3m £5.0m £4.6m During Q3 2021 Hg invested a total of £2.0m £1.6 billion on behalf of its clients, including £112m on behalf of HGT Other £0.6m £28.0m This pace of investment has continued with
Slide 15: Significant realisations at uplifts to book value
…and return cash to HGT with significant realisations at uplifts to book value 50% 3.5x 31% Average 47% 2.9x 34% Average uplift to multiple gross 2021 uplift to multiple gross 2020 book value of cost IRR YTD book value of cost IRR 2020 2021 YTD 5.5x Multiple 4.3x of cost 3.6x 3.0x 3.1x 2.8x 2.8x 2.6
Slide 16: Summary and outlook
Summary and outlook YTD 2021 has seen the continuation of the key trend - the digitalisation of business processes - which has accelerated across sectors and geographies, in part, as a result of the global responses to COVID-19. Overall, the value of the portfolio was up over 11% for the three month
Slide 17: Appendices
Listed access to the 4th largest software business in Europe December 2019 Appendices This document accompanies the Interim Report & Accounts for the third quarter ended 30 September 2019 and contains a summary of information set out in that document. Reference should be made to the full and Interim
Slide 18: Top 10 underlying companies (c. 58% of the total portfolio)
Top 10 underlying companies (c. 58% of the total portfolio) Company Cluster Location Description ▪ A leading ERP business, providing a range of software solutions to SME, mid-market and enterprise customers ERP & Payroll UK ▪ Helps >35k businesses, public-sector and not-for-profit organisations to w
Slide 19: A focus on Western Europe with experience building Transatlantic businesses
A focus on Western Europe with experience building Transatlantic businesses © Copyright Hg 2021 19
Slide 20: Global team of nearly 250 professionals across three offices
Global team of nearly 250 professionals across three offices © Copyright Hg 2021 20
Slide 21: Large and well-resourced investment machine
Large and well-resourced investment “machine” GOVERNANCE Hg LLP BOARD INVESTMENT COMMITTEE REALISATION COMMITTEE • Nic Humphries (Chair); • Matthew Brockman (Chair); • Andrew Land (Chair); • Matthew Brockman; • Nic Humphries; • Justin von Simson; • Justin von Simson; • Sebastien Briens; • Steven Bat
Slide 22: The HGT portfolio 30 September 2021
The HGT portfolio 30 September 2021 High growth companies with resilient and defensive characteristics continuing to perform in a challenging environment © Copyright Hg 2021 22
Slide 23: Contact
Contact For further information on HgCapital Trust plc, please visit our website: www.hgcapitaltrust.com Or contact our Investor Relations Team at: investorrelations@hgcapitaltrust.com Laura Dixon Hannah Brown +44 78 2459 2894 +44 20 8078 9144 You can also follow us: Linkedin at www.linkedin.com/com
Slide 24: Disclaimer
Appendix 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
Slide 25: Disclaimer
Appendix 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 terminol