HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2021 Earnings Presentation
24 slides from HGCapital Trust's earnings presentation, September 2021
Slide 1: Six months performance to 30 June 2021
Six months performance to 30 June 2021 Get connected To the 2nd largest software business in Europe September 2021 This document accompanies the Interim Report & Accounts for the six months ended 30 June 2020. The information in this document contains a summary of information set out in this reports
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 H1 2021
Key financials for H1 2021 A long-term track record of outperformance 15% CAGR over the past 10 years NAV per share +21% generated from consistently strong trading and realisations above book value Share price +17% Net assets £1.6bn Market capitalisation £1.6bn Based on HGT’s share price at 30 June
Slide 4: HGT's Portfolio – Top 20 LTM trading performance
HGT’s Portfolio – Top 20 LTM trading performance 40% 35% 35% 30% 25% 27% 27% 26% 20% 23% 23% 19% 19% 20% 15% 10% 11% 5% 0% H1 2017 H1 2018 H1 2019 H1 2020 H1 2021 Revenue EBITDA Consistently strong trading accounted for 22% in portfolio growth over H1 2021 Note: Top 20 - Based on LTM HGT reported fi
Slide 5: Managing liquidity – levers in place
Managing liquidity – levers in place ▪ Cash available to invest £239m ▪ Additional undrawn credit facility £165m ▪ Raised over H1 2021 in new equity via tap issuance £75m ▪ Realised from the portfolio over H1 through both exits and refinancings £82m ▪ Invested over H1 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 >$35bn Hg’s portfolio Hg’s largest companies LP investor HGT is akin to the HGT’s underlying “10% free float” of listed investor the $75bn EV of Hg base >£2bn Software “Inc” HGT provides sharehol
Slide 7: The 2nd largest - and fastest growing - software company in Europe
The 2nd largest - and fastest growing - software company in Europe Hg Snapshot $174bn -1% ▪ Founded in 1990, investment offices in London, Munich and New York $75bn ▪ 100% privately owned by Hg Partners $71bn ▪ >$35 billion of AUM and >240 employees +17% ▪ Specialised in software & services investme
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 to accelerate portfolio growth
A dedicated portfolio team to accelerate portfolio growth potential – organised like a software company Promoting a culture of working together sharing Sharing best practice and resources with tailored ideas and experiences across the portfolio. In 2020: teams of technical experts, Hg works closely
Slide 12: 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 13: Hg has continued to selectively invest in companies tracked for many years
Hg has continued to selectively invest in companies tracked for many years… £42.0m £31.6m £26.6m £15.6m £15.2m £14.3m £11.4m Over H1 2021, Hg invested a total of £2.3 billion on behalf of its clients, including £165m on behalf £7.3m of HGT Other £0.9m £40.0m £19.9m £9.0m This pace of investment has
Slide 14: Return cash to HGT with 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 26% 2.7x 30% 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 2.5
Slide 15: Summary and outlook
Summary and outlook The first half of 2021 has seen the continuation of the key trend - the digitalisation of business processes - which has accelerated across sectors and geographies as a result of the global responses to COVID-19. Overall, the value of the portfolio was up over 28% for six months
Slide 16: 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 17: Top 10 underlying companies (c. 57% of the total portfolio)
Top 10 underlying companies (c. 57% of the total portfolio) Company Cluster Location Description ▪ Provides business-critical software to SMEs and the public sector in the Benelux and Nordic regions, providing >1m Tax & Accounting/ Scandinavia enterprise customers with accounting; resource-planning
Slide 18: A focus on Western Europe with experience building Transatlantic businesses
A focus on Western Europe with experience building Transatlantic businesses © Copyright Hg 2021 18
Slide 19: Global team of nearly 250 professionals across three offices
Global team of nearly 250 professionals across three offices © Copyright Hg 2021 19 *
Slide 20: 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 21: The HGT portfolio in 2021
The HGT portfolio in 2021 High growth companies with resilient and defensive characteristics continuing to perform in a challenging environment “Sometimes, it’s the small things that make the biggest difference. For example, automating those dull tasks that nobody likes to do”. David Toms, Hg © Copy
Slide 22: Contact
Appendix 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.linkedi
Slide 23: 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 24: 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