HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2018 Earnings Presentation
31 slides from HGCapital Trust's earnings presentation, September 2018
Slide 1: 2018 Interim Results
2018 Interim Results September 2018 This document accompanies the Interim Report & Accounts for the six months ended 30 June 2018 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. The reader’s a
Slide 2: Contents
Contents 2 HgCapital Trust plc 03 2018 YTD review 06 Key financial highlights 07 Portfolio activity 10 Hg investment strategy 13 Portfolio review 21 Outlook 22 Appendix 23 Note: References in this presentation to HgCapital Trust plc have been abbreviated to ‘HgCapital Trust’ or ‘the Company’. Hg ref
Slide 3: Listed access to unquoted tech and tech-enabled businesses
HgCapital Trust plc 3 Listed access to unquoted tech and tech-enabled businesses A long-term investment vehicle that is delivering consistent, compounding growth and continues to outperform the FTSE All-Share Index 18% 24% p.a. 14% p.a. Share price total return Share price total return CAGR Share pr
Slide 4: HgCapital Trust plc
HgCapital Trust plc 4 HgCapital Trust plc The Company is a ‘direct investor’ and only invests alongside Hg institutional investors across multiple funds and vintages © Copyright Hg 2018
Slide 5: About the Company
HgCapital Trust plc 5 About the Company ▪ Exposure to a network of more than 30 unquoted tech and tech-enabled businesses with consistent strong growth in sales and EBITDA and high cash generation ▪ Businesses are sourced by Hg using a deep sector focus to identify companies with specific business m
Slide 6: Portfolio activity YTD
HgCapital Trust plc 6 Portfolio activity YTD An active period with realisations made at an average 2.4x investment multiple / 22% gross IRR and 38% uplift to book value 7 new Investments c. £123 million 4 further Investments c. £60 million 10 realisations c. £190 million 5 refinancings c. £21 millio
Slide 7: The balance sheet
Key financial highlights 7 The balance sheet Multiple levers in place to manage liquid resources and outstanding commitments AS AT 30 JUNE 2018 PRO-FORMA AS AT 31 AUGUST 2018 £154m £575m £154m £475m Outstanding commitments Liquid resources Outstanding commitments Liquid resources (75% of NAV) (20% o
Slide 8: Six months to June 2018 Performance
Key financial highlights 8 Six months to 30 June 2018 Performance Strong trading and exits above book value continued to drive positive performance from the portfolio +11% Share price +8% NAV per share 16p Interim total return growth total return growth dividend • As at 30 June 2018, the share price
Slide 9: The top 20
Key financial highlights 9 The top 20 Top 20 currently represents 90% of the portfolio by value, aggregate sales of £3.0bn, EBITDA of £829m and margins of 28% +23% LTM sales growth +19% LTM EBITDA growth Note: Sales and EBITDA growth have been calculated on a weighted basis based on the respective v
Slide 10: Historic realisation and investment activity
Portfolio activity 10 Historic realisation and investment activity Continued strong realisation and investment activity 2006 – 2008 2009 – 2015 2016 – 2018 NET SELLERS NET BUYERS NET SELLERS £224m £210m 55% £180m £135m £111m £106m £104m £92m £87m £87m £83m £82m £80m £80m £73m £66m £65m £64m 20% £62m
Slide 11: Significant realisations YTD
Portfolio activity 11 Significant realisations YTD £210m returned to the Company with a gross investment multiple of 2.4x / 22% gross IRR 29% 4.9x 22% 66% 4.7x 47% 4.3x 4.2x 27% 3.6x 3.6x 3.0x 3.0x 2.6x 31% 2.1x 18% 56% 1.7x 43% 1.4x 1.3x 0.9x 1.0x 0.9x 0.9x 0.6x Last valuation date Exit © Copyright
Slide 12: Continuing to selectively invest
Portfolio activity 12 Continuing to selectively invest Investing with a cautious and disciplined strategy Investing in companies we have known and owned for many years Making repeatable investments in the types of companies and ‘clusters’ that we have invested in before Saturn £65m 8% of NAV 17% of
Slide 13: Building businesses that change how we all do business
Hg 13 Building businesses that change how we all do business ▪ Sector specialist investor in B2B technology and tech-enabled companies ▪ Harnessing a “network effect” through true specialisation and a large, homogenous portfolio ▪ c. 140 employees with c. 85 investment professionals and 15 Operating
Slide 14: HgCapital Trust plc is Hg's largest single investor
Hg 14 HgCapital Trust plc is Hg’s largest single investor Assets Under Management 46% NAV 8% Leading Global Institutional LPs c. £10bn £1.3bn Portfolio value, cash & Invested capital and commitments to Hg undrawn commitments Undrawn commitments to Hg funds 6% Commitments to Hg funds 40% Note: Figure
Slide 15: One strategy over four funds
Hg Investment Strategy 15 One strategy over four funds Currently investing across the size range in technology and tech-enabled businesses LARGE-CAP SATURN 1 ▪ Fund size: £1.5 billion EV focus: >£1bn ▪ Target # of investments per fund: c. 4 HgT commitment: £150m ▪ HGT typical equity hold: £35-50 mil
Slide 16: A reminder of our investment strategy
Hg Investment Strategy 16 A reminder of our investment strategy… Focused on businesses with specific characteristics across technology and technology-enabled services BUSINESS MODEL HG “SWEET SPOT” DEEP SECTOR FOCUSED ON END ATTRIBUTES KNOWLEDGE MARKET CLUSTERS Business critical need delivered as so
Slide 17: Focused on eight distinct end-market clusters
Hg Investment Strategy 17 …focused on eight distinct end-market clusters End-market specialisation helps us to build deep know-how Tax & Accounting Legal & Compliance Human Capital Management Automotive Insurance SME Tech Services Financial Data and FinTech Healthcare 2018 Current investment © Copyr
Slide 18: 'Hg Software Inc'
Hg Investment Strategy 18 ‘Hg Software Inc’ If ‘Hg Software Inc’ were listed as a single group, it would be one of the largest in Europe In aggregate, Hg’s current tech investments have over LARGEST EUROPEAN SOFTWARE COMPANIES BY EV (£M)1 £2.6 billion revenues £100,627m £751 million EBITDA £13.1 bil
Slide 19: Creating value through growth
Hg Investment Strategy 19 Creating value through growth Businesses we support create value primarily through growing revenue VALUE CREATION: ALL REALISED DEALS WITHIN OUR CORE SECTORS MoC 3.0x -0.1x 0.6x Additional 2.5x investments e.g. to fund M&A 0.3x 2.0x 1.0x 1.5x 2.8x Inorganic 1.0x Customer wi
Slide 20: OI playbook driving short and medium-term value
Hg Investment Strategy 20 OI playbook driving short and medium-term value In 2018 the OI team has organised 14 events enabling hundreds of people from our portfolio companies to ‘harness the power of the Hg community’ and share ideas across a range of business areas led by a team of 18 professionals
Slide 21: Trading performance
Portfolio review 21 Trading performance Top 20 (currently representing 83% by value of our investments), had aggregate sales of £3.0bn, EBITDA of £829m and margins of 28% over the year, these companies have grown LTM revenues at 23% and LTM EBITDA at 19% Pre-2013 2013 2014 2015 2016 2017 2018 01 07
Slide 22: Outlook
HgCapital Trust plc 22 Outlook Strong trading of the underlying businesses, combined with capital returns from exits above book value, will continue to drive value for our investors ▪ It has been another strong six months for realisations, Hg expects to see further liquidity events over the next six
Slide 23: Appendix
Appendix 23 The top 20 portfolio 24 Case study - Intelliflo 26 Renewables 27 Hg funds snapshot 28 Contact 29 Disclaimers 30 © Copyright Hg 2018
Slide 24: The top 20 portfolio at June 2018
Appendix 24 The top 20 portfolio at 30 June 2018 The top 10 buy-out investments represent 72% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2018 1 Visma1 2014 Technology Scandinavia
Slide 25: The top 20 portfolio at June 2018 (cont.)
Appendix 25 The top 20 portfolio at 30 June 2018 (cont.) The top 20 buy-out investments represent 90% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2018 11 Commify5 2016 Technology
Slide 26: Case study - Intelliflo
Case study 26 4.7x Investment 39% +66% Gross IRR Uplift to book Multiple value Headquartered in the UK, Intelliflo is a provider of front and back office software solutions to financial intermediaries, including IFAs, wealth managers, adviser networks, insurance/life companies and brokers. In June 2
Slide 27: Asper renewable energy
Appendix 27 Asper renewable energy High quality European renewable energy projects currently representing 2.8% of the portfolio value (£19.7 million) ▪ The Company invested via LP interests in Asper’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) ▪ Exposure to renewable power assets antici
Slide 28: Hg funds snapshot
Appendix 28 Hg funds snapshot Targeting consistent performance across market cycles REALISED RETURNS % INVESTED RETURNED OVERALL RETURNS (GROSS) IN CASH (GROSS) Hg5 ▪ Phase: Realisation £958 million ▪ 11 out of 12 investments realised 2.1x / 17% 195% 2.1x / 16% 2006 ▪ £1.4 billion in proceeds Hg6 ▪
Slide 29: Contact
Appendix 29 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 © Copyright Hg 2018
Slide 30: Disclaimer
Appendix 30 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 AUSTRA
Slide 31: Disclaimer
Appendix 31 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 termi