HgCapital Trust (HGT) Q1 2025 earnings summary

Executive summary

• The portfolio focuses on profitable, growing B2B software and services businesses managed by Hg, Europe's largest software investor.

• Emphasis on resilient, mission-critical software with highly recurring revenues and low customer churn, delivering a 19.0% p.a. 10-year share price CAGR and 12.8% p.a. outperformance vs. public markets.

• Portfolio companies delivered over 20% LTM trading growth, reflecting resilience and strong operational performance.

• The investment strategy targets robust business models in sectors like Tax & Accounting, ERP & Payroll, Legal & Compliance, and Fintech, with typical equity investments ranging from €100m to over €1bn.

• HgT provides listed access to a $160bn+ enterprise value portfolio, diversified across software sub-sectors and geographies.

Financial highlights

• Market capitalization at £2.3bn as of 31 March 2025; NAV per share at 531.3p (down 2.0%) and share price at 506.0p.

• Portfolio valuation at £2,909m at 31 March 2025, with £36m unrealized loss in Q1 2025 due to multiple contraction, offset by strong trading.

• LTM revenue growth of 20%, LTM EBITDA growth of 21%, and EBITDA margin of 33% for the full portfolio.

• Realisations of £49m in Q1 2025, with £151m YTD 2025 and £102m in exits post-period, despite a challenging exit environment.

• Investments of £46m completed in Q1; £606m invested in 2024 and £278m YTD 2025, with co-investment rising to 10% of the portfolio.

Outlook and guidance

• Resilient trading expected to continue, underpinned by the mission-critical nature of portfolio companies' products and services.

• Attractive pipeline of investment opportunities being screened; further liquidity events anticipated in the next 6–12 months.

• No material first-order impact anticipated from US tariffs; portfolio remains focused on defensive business models.

• Exit market remains challenging, but cash returns to clients remain a priority.

• Long-term opportunity remains strong as businesses seek automation to address rising labor costs.