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HgCapital TrustAnnouncement

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RNS Number : 9664R  HgCapital Trust PLC  06 February 2026

HgCAPITAL TRUST PLC

TRADING UPDATE FOR THE YEAR ENDED 31 DECEMBER 2025

 

ESTIMATED NAV PERFORMANCE DRIVEN BY RESILIENT TRADING IN THE UNDERLYING
PORTFOLIO IN CHALLENGING CONDITIONS

London, 6 February 2026: HgCapital Trust plc ('HgT') today announces a
trading update for the year ended 31 December 2025.

 

HgT provides investors with a listed vehicle to invest in one of the largest
and fastest growing portfolios of unquoted technology companies in Europe(1),
managed by Hg.

The objective of HgT is to provide shareholders with consistent long‑term
returns in excess of the FTSE All‑Share Index by investing predominantly in
unquoted businesses where value can be created through strategic and
operational change.

 

Key highlights for 2025 include:

●     Estimated NAV total return per share was 4.0%(2) over the year,
and as a result, at 31 December 2025, the estimated NAV per share stood at
£5.62 with net assets of £2.6 billion (unaudited)

●     The share price total return showed a decrease of 4.9%(2), over
the year at £5.07; market capitalisation at the year-end was £2.3 billion

●     Strong underlying performance from the portfolio with LTM revenue
and EBITDA(3) growth of 17% and 20% and margins of 34% for the overall
portfolio to 30 November 2025; in line with prior year figures

●     Investments of £357 million made over the year and realisation
proceeds of £215 million generated

●     Realisations in 2025 included GTreasury at an uplift of 97% to
book value, overall, exits over the year added 4.6 pence to the NAV

●     In November, HgT announced the exit of Intelerad (due to complete
in March 2026). The transaction price reflected an uplift of 62% to its last
reported carrying value

●    At year-end, HgT had available liquid resources of £368 million
(including a £375 million credit facility, of which £36 million was drawn as
at 31 December 2025)

●     Outstanding commitments to Hg funds totalling £1.8 billion (68%
of NAV) which are expected to be called over the next 4-5 years

NAV performance

HgT's unaudited estimated net assets of £2.6 billion at 31 December 2025,
represent an estimated NAV per share of 561.9 pence, based on portfolio
company valuations at 31 December and reviewed by the HgT Audit, Valuation and
Risk Committee ('AVRC').

Estimated NAV total return for the year was +4.0%, as positive performance and
exits above book value in H2 largely offset the decline in H1 2025 (-0.4%).

Strong trading from the underlying portfolio companies was a key driver of
performance over the year, contributing +17% to portfolio value.

While trading remains the key driver of performance over the long-term,
movements in comparable valuation multiples can impact performance over
shorter-term periods, and this was the case during 2025. Elevated public
market volatility saw multiples used to value HgT's portfolio companies
contract, detracting from portfolio valuations by -7% over the reporting
period. In addition, increases in net leverage, deployed to support future
growth, further reduced valuations by -6%.

 

Recent volatility in public market software companies

Public market volatility has increased sharply through January and into
February 2026, especially in the software sector, sparked by investor concerns
about the potential impact of AI on the software industry, coupled with a
pronounced rotation of capital out of software and into hardware (chips,
memory and data-centre build-out).

The broad-based decline in listed software shares and associated volatility
has also had a pronounced negative impact on HgT's share price, which is down
20% this year to date. The recent widespread sell-off seen in the sector has
been with little distinction made across the many different players in the
space and their respective strengths and weaknesses. Given the strength of the
HgT portfolio, the market positions that portfolio companies enjoy and Hg's
skill and experience as a manager, the Board believes that the current share
price represents significant value. Given the scale of the recent dislocation
between the share price and the value placed on the assets within the HgT
portfolio, the Board is actively considering a number potential actions to
address the current discount to net asset value using the full set of tools at
its disposal, including share buy-backs, and following the well-established
processes HgT has developed to manage such situations. The Board is in
constant dialogue with the Manager and its advisers around what proactive
steps may be taken to mitigate the current situation; one example of which
being the accelerated release of this trading update.

While public market multiples (both software and tech-enabled services; US and
Europe) are one input to Hg's valuation methodology, relevant private M&A
comparables ('comps') form a material input for valuations, reflecting Hg's
model of acquiring full or effective control of the companies within the
portfolio. The weightings of these comps for each individual business means
the valuation multiples are linked to, but do not fully track, movements in
the public markets. Very broadly and depending on the mix of comparables and
their relative movements, we see typically 20-40% of the movement in public
comparables flow through to the multiples used to value our portfolio
companies.

The multiples derived from these relevant public and private comps are then
applied to the earnings of the portfolio companies, which remain the key
driver of valuations and long-term performance. The HgT portfolio businesses
have typically grown their EBITDA by 10-15% organically each year, i.e. c. 3%
each quarter. In addition, the impact of M&A activity may increase levels
of growth in a given period.

Despite the recent volatility and seemingly indiscriminate negative sentiment
in public markets, HgT's portfolio companies continue to demonstrate strong
organic growth, and strong margins, while balance sheets remain robust across
the portfolio. Notably, Hg's significant investment in its own AI initiatives
is rapidly building momentum and is now driving increased value creation
across the portfolio. Furthermore, Hg has a strong track record of generating
realisations at premia to carrying value, including during periods of
heightened market volatility, with the significant majority of exits taking
place in the private markets.

Hg's view remains that AI presents significant opportunities for innovative,
product-led, incumbent software companies. Hg has been investing in software
for more than two decades and today we are investors and board members in
nearly 60 privately-owned software and services businesses, providing us with
granular insight into the interactions between SaaS businesses and their
customers, informing our view on how AI will diffuse into the real economy.

In his recent essay, Matthew Brockman, Hg's Chief Investment Officer, shares
his perspectives on how AI is reshaping software, the opportunity this
presents for incumbents and how Hg is working closely with its portfolio
companies as they transition to be AI-first businesses:

https://hgcapital.com/insights/everything-everywhere-but-not-all-at-once
(https://hgcapital.com/insights/everything-everywhere-but-not-all-at-once)

Investment activity

●     HgT invested £357 million in 2025 with new and follow-on
investments primarily in IFS, P&I, A-LIGN, Citation, Payworks, Diamant
Software and Scopevisio, including £34 million of co-investment (on which HgT
does not pay management fees or carried interest). Co-investments now
represent c. 10% of NAV, increasing from 9% at the start of 2025, in line with
HgT's long-term goal of 10-15%.

 

●     Post-period investment of £93 million including a new investment
in the take-private of OneStream. The transaction is expected to complete in
April 2026.

 

 

Realisation activity

●     Gross proceeds from realisations during the year of £215
million. This includes proceeds from P&I, Citation, Trackunit, smartTrade
and GTreasury.

●     Realisations over 2025 saw an average uplift to book value of 25%,
this highlights the attractiveness of the mission-critical companies in which
the Manager continues to invest.

●     Post-period saw the full realisation of Intelerad, announced in
November at an uplift of c. 62% to its carrying value. The transaction is
expected to be completed in March 2026.

 

Pro-forma balance sheet

Allowing for all transactions announced as at the date of this trading update:

●     Pro-forma available liquid resources of £410 million (including a
£375 million credit facility of which £32 million was drawn at the time of
this announcement).

 

●     Pro-forma outstanding commitments to Hg funds of £1.8 billion
which are expected to be called over the next 4-5 years.

 

 

Hg REPORTS STRONG TRADING AND TRANSACTION ACTIVITY OVER 2025 WHICH CONTINUES
TO HIGHLIGHT THE STRENGTH OF DISCIPLINED FUND MANAGEMENT EXPERTISE IN
CHALLENGING CONDITIONS

Despite a challenging market environment, Hg continued to see robust
investment and realisation activity over 2025, with a total of fifteen
transactions announced or completed. This was accompanied by strong underlying
trading performance across the portfolio.

Investment activity has continued across all Hg funds, at levels consistent
with the long-run average, with $6.1 billion deployed over the year. This
activity continues to focus on businesses within the end-market,
mission-critical software and services 'clusters' which Hg has tracked for
many years.

During 2025, Hg realised over $3.4 billion of proceeds from liquidity events
(including all announced exits) as part of a continued focus on returning cash
back to investors

This record of realisations achieved compares favourably with peers, as the
industry continues to find generating liquidity challenging. The performance
achieved by Hg continues to show the fundamental strengths and attractiveness
of the underlying portfolio companies to both trade and financial buyers.

Hg continues to screen an attractive pipeline of investment opportunities and
further liquidity events are expected over the next six to twelve months.

HgT will publish the full Annual Report & Accounts for 2025 on 9 March
2026

The Company is satisfied that all inside information which the Directors and
the Company may have in the period leading up to the announcement of its
results for the year ended 31 December 2025 has been, with the release of this
announcement, and will continue to be notified to the London Stock Exchange
via a regulatory information service.  Accordingly, the Company is not
prohibited from dealing in its own shares.

 

The mandatory closed period under MAR will commence on 7 February 2026 and
will last until the annual financial results in respect of the year ended 31
December 2025 are published.

 

 

(1) By Enterprise Value, Source: Hg, Factset.

(2) Total return assumes that all historical dividends have been re-invested.

(3) Excluding investments valued on a basis other than earnings

 

 

- ends -

 

For further information please contact:

 

HgCapital Trust

George Crowe

george.crowe@hgcapital.com

+44 7774 617 150

 

Laura Dixon

laura.dixon@hgcapital.com

+44 7824 59 2894

 

 

Hg

Tom Eckersley

tom.eckersley@hgcapital.com

 

Sam Ferris

sam.ferris@hgcapital.com

 

Cadarn

Lucy Clark

lucy@cadarncapital.com

+44 (0)7984 184 461

 

David Harris

david@cadarncapital.com

+44 (0)7368 883 211

 

Notes:

1.     Please be advised that this announcement contains inside
information as stipulated under the Market Abuse Regulation (EU) No. 596/2014
as amended by The Market Abuse (Amendment) (EU Exit) Regulations 2019.

 

2.     This announcement may include "forward-looking statements". These
forward-looking statements are statements regarding the Company's objectives,
intentions, beliefs or current expectations with respect to, amongst other
things, the Company's financial position, business strategy, results of
operations, liquidity, prospects and growth. Forward-looking statements are
subject to risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.  Accordingly, the
Company's actual future financial results, operational performance and
achievements may differ materially from those expressed in, or implied by, the
statements. Given these uncertainties, prospective investors are cautioned not
to place any undue reliance on such forward-looking statements, which speak
only as at the date of this announcement. The Company expressly disclaims any
obligation or undertaking to update or revise any forward-looking statements
contained herein to reflect actual results or any change in the Company's
expectations with regard to them or any change in events, conditions or
circumstances on which any such statements are based unless required to do so
by the Financial Services and Markets Act 2000, the Listing Rules or
Prospectus Regulation Rules of the Financial Conduct Authority or other
applicable laws, regulations or rules.

 

3.     Past performance is not a reliable indicator of future results. The
value of shares and the income from them can go down as well as up as a result
of market and currency fluctuations. You may not get back the amount you
invest.

 

 

( )About HgCapital Trust plc

HgCapital Trust plc is an investment company whose shares are listed on the
London Stock Exchange (HGT.L). HgT gives investors exposure, through a liquid
vehicle, to a portfolio of high-growth unquoted companies, managed by Hg, an
experienced and well-resourced private equity firm with a long-term track
record of delivering superior risk-adjusted returns for its investors.

Further information on HgT including a short introduction video is available
here: https://www.hgcapitaltrust.com/ (https://www.hgcapitaltrust.com/)

 

LEI: 213800J7QUJJBEFSIN38

 

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