RCS - HgCapital Trust PLC - Edison issues review on HG Capital Trust (HGT)

HgCapital TrustAnnouncement

04/08/2023 07:15

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RNS Number : 2073I  HgCapital Trust PLC  04 August 2023

London, UK, 4 August 2023

 

Edison issues review on HG Capital Trust (HGT)

HgCapital Trust (HGT) continues to operate against the backdrop of a tougher
macroeconomic environment, muted M&A markets and higher interest rates.
Nevertheless, it delivered a 12-month NAV TR to end-March 2023 of 10.3%, which
supports its longer-term outperformance of listed PE peers and major public
indices. While Hg (its investment manager) expects some pressure on sales to
new customers across HGT's portfolio, it sees several other organic growth
drivers, including cross- and up-sell. Last 12 month (LTM) revenue and EBITDA
growth to end-March 2023 remained high across its top 20 holdings at 30% and
27%, respectively.

 

Despite the tougher external environment, SaaS companies are expected to
continue generating healthy top-line growth and increasing profitability over
the next two years, with current Refinitiv consensus implying revenue and
EBITDA growth at c 10-15% pa. HGT is a quality play in the sector, underpinned
by the defensive growth profile of its holdings, Hg's sector expertise,
in-house value creation team and buy-and-build strategy. HGT has historically
delivered revenue and EBITDA growth of 20-30% pa at a margin above 25% (FY22:
29%) across its top 20 holdings. Therefore, it fulfils the 'Rule of 40', which
warrants a valuation premium versus the broader private IT sector. The shares
now trade at a c 17% discount to end-March 2023 NAV.

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(https://www.edisongroup.com/research/high-quality-high-growth-high-margin/32417/?utm_campaign=RNSreach%20Press%20Releases&utm_source=RNSreach&utm_medium=Press%20Release)
to view the full report.

 

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(mailto:investmenttrusts@edisongroup.com)

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