HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2016 Earnings Presentation
21 slides from HGCapital Trust's earnings presentation, September 2016
Slide 1: Interim Results Presentation June 2016
Interim Results Presentation June 2016 This document accompanies the Interim Report & Accounts for the six months ended 30 June 2016 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’
Slide 2: Contents
HgCAPITAL CONTENTS TRUST PLC PAGE Overview of the Trust 3 Key financial highlights: - Performance 4 - Balance sheet 4 - Portfolio metrics 5 - Portfolio activity 6 Investment Strategy 7 Case Studies - An exit: Relay Software 10 - A new acquisition: Sovos Compliance 11 Portfolio review 12 Conclusion 1
Slide 3: The Trust gives investors access to a focused portfolio of HgCapital managed private equity investments
HgCAPITAL THE TRUST GIVES INVESTORS ACCESS TO A FOCUSED PORTFOLIO OF HgCAPITAL TRUST PLC MANAGED PRIVATE EQUITY INVESTMENTS 13% p.a. Established in 1989, HgCapital Trust has been managed by HgCapital for over 20 years Share price total return CAGR The Trust is HgCapital’s largest client with a f
Slide 4: Key financial highlights: performance and balance sheet
KEY FINANCIAL STRONG TRADING HAS CONTINUED TO DRIVE POSITIVE PERFORMANCE FROM HIGHLIGHTS THE UNREALISED PORTFOLIO OVER THE FIRST SIX MONTHS OF 2016 +13% As at 31 August 2016 NAV per share of £15.63, net assets of £584 million PERFORMANCE Increase from 30 June 2016, NAV per share of £15.48, net a
Slide 5: Key financial highlights: portfolio metrics
KEY FINANCIAL TOP 20 BUYOUTS (83%) HIGHLIGHTS Aggregate sales of £2.6 billion and profits of £623 million, average margins of 24% +12% Consistent double-digit performance in many of our larger companies including Visma, IRIS, P&I, JLA and Zenith (40% of the total portfolio by value) Average growth
Slide 6: Portfolio activity
KEY FINANCIAL SIGNIFICANT REALISATION AND INVESTMENT ACTIVITY IN 2016 YTD HIGHLIGHTS TeamSystem NetNames £656 million realised on behalf of HgCapital P&I clients £97m Casa Reha 6 realisations (5 to trade buyers) IRIS SFC Koenig Pro-forma returned to 2 refinancings PORTFOLIO ACTIVITY HgCapital
Slide 7: The HgCapital 'sweet spot'
THE HgCAPITAL ‘SWEET SPOT’ INVESTMENT Focus on investing in companies with specific business characteristics in sub-sectors we know well and STRATEGY believe have the ability to grow across market cycles… and are attractive to future buyers DEEP SECTOR EXPERTISE IN CORE SUB-SECTORS TARGETTING SPECIF
Slide 8: Adding the HgCapital angle to origination and execution
INVESTMENT ADDING THE HgCAPITAL ANGLE TO ORIGINATION AND EXECUTION STRATEGY SOURCING STRATEGY Synergies through material M&A deals – creating global players from a combination of regional leaders Well-defined target B2B business models Exclusivity / off-market deals, transacting with founders, who h
Slide 9: Once invested: how we add value to drive consistent and replicable returns
INVESTMENT ONCE INVESTED – HOW DO WE ADD VALUE TO DRIVE CONSISTENT AND STRATEGY REPLICABLE RETURNS? PILLARS OF VALUE CREATION VALUE CREATION - CURRENT SECTOR REALISED DEALS1 1 Buying an established book of customers BUILDING A 3.0x SUSTAINABLE Keeping customers happy = lower customer churn BOOK
Slide 10: Case study: exit Relay Software
CASE STUDY: RELAY SOFTWARE EXIT 2.2x original cost and c. 40% gross IRR over a two year period HgCapital partnered with Relay Software in 2014 representing the third investment for the Mercury Fund A leading provider of software to insurance brokers, underwriters and insurers in the Republic of
Slide 11: Case study: new investment Sovos Compliance
CASE STUDY: SOVOS COMPLIANCE NEW A continuation of HgCapital’s theme of working with tax and regulatory compliance software and services businesses INVESTMENT Sovos is a global provider of taxation compliance solutions, headquartered in the US A “sweet spot” HgCapital investment in terms of sub-
Slide 12: Trading performance overview of top 20 buyout investments
PORTFOLIO TRADING PERFORMANCE OVERVIEW OF TOP 20 BUYOUT INVESTMENTS (83%) REVIEW Aggregate sales of £2.6 billion and profits of £623 million, average margins of 24% Year of Investment Pre-2010 2010 - 2012 2013 - 2015 2016 STRONG PERFORMANCE 77% BY VALUE £388m LOWER GROWTH 10% BY VALUE, £49m INVESTIN
Slide 13: Conclusion: outlook and prospects
OUTLOOK & PROSPECTS CONCLUSION Confidence in a portfolio with strong earnings and cash generation driving further NAV value Over and above the general economic and political uncertainty we are all facing over the coming months, we do not expect there to be any specific negative consequences associ
Slide 14: Appendix contents
APPENDIX CONTENTS PAGE Top 20 buyout companies 15 Renewable energy investments 17 HgCapital funds snapshot 18 Contact 19 Sector expert investors supporting management to grow industry champions © Copyright 2016 HgCapital 14
Slide 15: Buyout portfolio (top 10)
BUYOUT PORTFOLIO APPENDIX The top 10 buy-out investments represent 61% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2016 1 Visma1 2014 TMT Nordic Region 53,659 86,245 14.2% 14.
Slide 16: Buyout portfolio (11-20)
BUYOUT PORTFOLIO APPENDIX The top 20 buy-out investments represent 83% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2016 11 Raet 2016 TMT The Netherlands 16,127 17,519 2.9% 64.
Slide 17: Renewable energy fund investments
RENEWABLE ENERGY FUND INVESTMENTS APPENDIX High quality European renewable energy projects currently representing 3% of NAV The Trust is invested via limited partnership interests in HgCapital’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) Exposure to renewable power assets anticipate
Slide 18: HgCapital funds snapshot
INVESTMENT HgCAPITAL FUNDS SNAPSHOT STRATEGY Targeting consistent 2x net performance across market cycles Realised Returns Overall Returns % Invested Returned in (gross) (gross) Cash Phase: Realisation HgCapital 5 £958 million 11 out of 12 investments realised 2.1x / 17% 2.2x / 17% 195% 2006 £
Slide 19: Contact
APPENDIX 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 For more information on Listed Private Equity, please visit the LPEQ website www.lpeq.com Sector expert in
Slide 20: Disclaimer
HgCAPITAL DISCLAIMER TRUST PLC 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 WITHI
Slide 21: Disclaimer
HgCAPITAL DISCLAIMER TRUST PLC 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-lookin