HgCapital Trust NAV Drops 5.4% in Q1 on Rating Decline

HGT Reports Q1 NAV Decline Amidst Rating Pressure

HgCapital Trust Plc (LON:HGT) announced a net asset value (NAV) per share of 528 pence for the first quarter ending March 31, marking a total return of -5.4%. The decrease was primarily attributed to a significant drop in valuation ratings.

Detailed Financial Performance

The company's trading update revealed that a -11.2% impact from lower ratings drove the NAV down. However, this was partially offset by a 6% positive contribution from trading performance and a 0.9% gain from foreign exchange movements. The underlying portfolio demonstrated robust health, with 12-month revenue and EBITDA growth of 16% and 19%, respectively.

Portfolio Valuation and Liquidity

The portfolio's valuation multiple contracted, with the average EV/EBITDA multiple decreasing to 24 times from 25.2 times at the end of the previous year. On a pro-forma basis, HgCapital Trust holds total liquidity of £297 million, consisting of cash and available credit facilities, positioning it for future investment activities.

Summary

While the headline NAV reflects valuation headwinds, HgCapital Trust's portfolio companies continue to deliver strong operational growth. The trust remains active in capital allocation, balancing new investments with share buybacks.

FAQ

Q: What was the main reason for HgCapital Trust's NAV decline in Q1?
A: The primary driver was a drop in valuation ratings, which negatively impacted the opening NAV by 11.2%.

Q: How did the underlying business portfolio perform?
A: The portfolio showed strong performance, with 16% revenue growth and 19% EBITDA growth on a 12-month basis.

Source: Investing.com