HgCapital Trust lags behind benchmark against 'challenging' backdrop

HgCapital Trust PLC on Monday reported a mixed net asset value performance for 2025, and cut its full-year dividend, but said the portfolio performed well and it remains optimistic for the long-term future.

The investment trust known as HgT, which provides exposure to investments managed by Hg, reported an NAV per share of 561.5 pence as of December 31, up 2.9% from 545.5p one year prior.

HgCapital Trust reported a plus 4.0% NAV total return for 2025. This trailed behind its benchmark, the FTSE All-Share Index, which generated a plus 24.0% return.

Its NAV at February 28 was 560.9p per share, for a year-to-date return of minus 0.1%. The FTSE All-Share delivered a plus 9.7% return for the same period.

HGCapital Trust shares were down 0.1% at 399.58p in London on Monday morning.

The trust proposed a final dividend of 3.0p per share, down 14% on-year from 3.5p and bringing the full-year total down 9.1% to 5.0p from 5.5p. Its 2024 final and total dividends were down from 4.5p and 6.5p for 2023, respectively.

‘Against the challenging macro-environment backdrop and volatile environment for technology investments, companies within the HgT portfolio continued to report strong and consistent underlying trading performance, with LTM sales growing at 17% and Ebitda growing at 19% respectively, with Ebitda margins of 33%,’ commented Chair Jim Strang. ‘These figures are consistent with those reported last year and compare favourably with similar businesses.’

For 2024, HgT had reported LTM sales growth of 19% and LTM earnings before interest, tax, depreciation and amortisation growth of 23%. The Ebitda margin was 34%.

Strang continued: ‘The recent widespread sell-off seen in the software sector has seen little distinction made across the many different players in the space and their respective strengths and weaknesses.’

Looking ahead, Hg stated that the HgT portfolio continues to perform strongly, underpinned by its portfolio companies providing ‘mission-critical’ services and products.

‘Despite the recent volatility in public markets, fundamentals for enterprise software companies remain positive, suggesting that recent market moves are sentiment driven,’ Hg said.

‘We remain excited by the long-term opportunity, as businesses seek to automate more workflows to improve productivity and manage rising labour costs, underpinned by demographic and technology shifts,’ HgT’s manager added.

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