Private equity investor HgCapital Trust (HGT) generated a record performance in 2021 as its total return NAV (net asset value) jumped 44% to £4.40 and net assets surpassed £2 billion.
During a stellar year, the trust’s share price return was 40%, outperforming the benchmark return of 18%, while overall portfolio valuations were up over 52% for the year.
PROVEN STRATEGY
Results for the year to December 2021 were outstanding as HgCapital’s tried-and-tested strategy of investing in unquoted software and services businesses with strong growth prospects and resilient business models helped maintain strong net asset growth momentum.
Over the year, the private equity investment trust saw a record level of investment, deploying £424 million alongside Hg, Europe’s largest investor in software & service businesses.
Chairman Jim Strang said HgCapital Trust and its portfolio ‘coped well with the challenges presented by the COVID-19 pandemic.
‘The defensive nature of the businesses within the portfolio and the operational skill of Hg have both contributed to the success of HGT in weathering this challenging period.
‘Despite the challenges in the external environment and the volatility they may induce, the Board is confident about the future prospects for HGT.’
THE NUMIS VIEW
HgCapital Trust remains one of Numis’ core long term investment trust recommendations, with the current 17% discount to NAV offering ‘considerable value’ according to the broker.
‘There are some potential headwinds for returns in the near term predominantly due to the threat of weaker or more volatile equity markets which could see multiples compress,’ warned Numis.
The broker believes HgCapital trust is ‘well positioned to maintain its record of double-digit NAV growth over the medium term, and it has a unique investment approach that is clearly differentiated from other listed private equity funds through its clear focus on technology and technology-enabled service businesses.’
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