HgCapital Trust, the listed investment trust that invests in all HgCapital deals, has committed £200 million to HgCapital 7, a new buyout fund currently being raised by the UK-based firm with a £1.75 billion target.
The listed investment trust is likely to make a further commitment to the fund later in the year, HgCapital Trust said in its final results for 2012, which were released on Friday.
Stephen Bough, head of finance, fund administration, human resources and IT functions at HgCapital Trust, told Private Equity International that the allocation will be on similar commercial and contractual terms as the trust's commitment to HgCapital 6, a £1.9 billion 2010 vintage, which is approximately 70 percent deployed.
HgCapital Trust reported a 15.3 percent increase in net asset value (NAV) during 2012. In the 12 months to 31 December, the firm’s top 20 buyout investments had a sales increase of 9 percent and EBITDA growth of 6 percent. The total available liquid resources were £156 million, equivalent to 36 percent of NAV.
Bough said HgCapital Trust was “pretty happy with the revenue growth and profit growth” against an economic backdrop where GDP growth has been flat at best in many of the European economies. “We are not economists, but we are assuming it has been pretty grim and it will remain pretty grim,” he added. “Our investment strategy is all about growth. We are trying to find niches where we can make repeatable investments in businesses that can grow at a decent rate, because we cannot rely on a cyclical recovery in the economy to generate returns.”
In 2012, Hg was cautious on new investments, with the trust deploying just £38 million during the period. However, the firm said it continued to see active interest from both financial and trade buyers in a number of its portfolio companies, which may lead to a number of realisations in the next 12 months.
HgCapital Trust shares opened this morning up 1 percent at 1,174 pence, a 52-week high. That represents a 7 percent discount to net asset value, and gives the trust a market capitalisation of £417.5 million.