HgCapital Trust plc Regulatory News (HGT)

19 September 2016

HgCapital, the Manager of HgCapital Trust plc ("The Trust"), has announced that it has agreed the sale of Personal & Informatik AG ("P&I"), a leading provider of payroll and strategic HR software headquartered in Germany, to a company backed by funds of Permira, an international investment firm. The terms of this transaction have not been disclosed.

The sale of P&I represents the first exit from the HgCapital 7 Fund (December 2013 vintage), and delivers a 36% IRR and 2.3x investment multiple. HgCapital has retained a minority position of €70 million in P&I; the Trust's share of this is valued at £6.0 million.

The Trust, the listed investment trust which participates in all HgCapital's investments alongside its institutional clients, will realise cash proceeds of approximately £31.9 million on completion of the transaction. When combined with the value of the retained minority position, this represents an uplift of £2.9 million (8%) or 8 pence per share over the carrying value of £35.0 million in the Net Asset Value ("NAV") of the Trust at 31 August 2016 which was based on the Directors' valuation as at 30 June 2016.

Based on the 31 August 2016 reported NAV (including the impact of the revaluation of the carried interest provision) the pro-forma NAV of the Trust is expected to increase to £586.0 million or 1,570.1 pence per share). The Trust's liquid resources available for future deployment are estimated to be £72.0 million (12% of the pro-forma 31 August 2016 NAV). In addition, the Trust has access to a £40 million standby facility, which is currently undrawn.

HgCapital returns 36% IRR from the sale of Personal & Informatik to Permira funds

§ First realisation from HgCapital 7 Fund

§ Delivers 36% IRR and 2.3x investment multiple

§ HgCapital has returned c.£1 billion in 2016 year to date

§ HgCapital 7 Fund has now returned approximately 25% of invested cost

19 September 2016: HgCapital is pleased to announce that it has agreed the sale of Personal & Informatik AG ("P&I"), a leading provider of payroll and strategic HR software headquartered in Germany, to a company backed by funds of Permira, an international investment firm. The terms of this transaction have not been disclosed.

HgCapital initially invested in P&I in December 2013 and this and was the first investment from the HgCapital 7 (December 2013 vintage) Fund. This sale is the first exit from HgCapital 7 and delivers a 36% IRR and 2.3x investment multiple. HgCapital has retained a minority position of €70 million. The HgCapital 7 Fund has returned approximately 25% of invested cost from this exit alone, with further liquidity expected to be generated over the coming months through a number of planned refinancings.

Founded in 1968 and headquartered in Wiesbaden, P&I is a leading supplier of integrated HR software solutions for payroll, strategic HR and analytics. The company serves more than 15,000 customers, ranging from small and medium-sized private businesses (SMB) to public sector organisations of all size mainly across Germany, Switzerland and Austria (DACH region), but also in 10 other European countries.

The investment in P&I followed a decade of tracking the business prior to investing, which enabled HgCapital to build a strong relationship with the business' management over time and conduct thorough due diligence through the cycle. The investment in P&I is typical of HgCapital's approach to sourcing, origination and the business model characteristics which HgCapital looks for and which remain its focus.

Through its resilient business model with a high share of recurring revenue, P&I performed ahead of investment case throughout HgCapital's ownership period, delivering double-digit EBITDA growth. The strong performance is a result of constant investment of P&I into innovation and expansion of its product and cloud offering, driving cross-sell of new HR technology including human capital management, recruiting and analytics solutions to its existing customer base, as well as strong wins of new customers. P&I's high growth and cash flow performance ahead of investment case enabled HgCapital to refinance the business in January 2016, returning c. 0.6x original cost to the HgCapital 7 Fund. The company's performance and attractive business model which we identified at acquisition, as well as its high quality management generated favourable competitive dynamics from a number of potential buyers over recent months.

Kai Romberg, Partner at HgCapital, said: "This realisation is a result of the hard work and dedication from our investment team over the last decade, from the extensive due diligence prior to investment to the strong relationship built with management throughout ownership. P&I has an impressive business model and performed ahead of expectations, delivering significant double digit growth during this time. We are particularly pleased to be able to announce our first exit from HgCapital 7 with an attractive return, demonstrating our strength and capabilities in the regulatory driven and payroll software space. We thank the management of P&I for their trust and co-operation throughout our investment that formed the basis of this result, and we are happy to remain invested, providing us with the opportunity to benefit from the future success of the company."

Justin von Simson, Partner at HgCapital commented: "We have had a very successful partnership with P&I and are proud of what the Company has achieved since we first entered into that relationship. At the same time, we believe that there are numerous further growth opportunities ahead and would be excited to contribute to the next leg of that journey."

"With the acquisition of P&I, the Permira funds strengthen their position as one of the largest software investors in Europe and particularly in the DACH region", said Jörg Rockenhäuser, Head of the DACH region at Permira. "We are delighted to bring our deep expertise in the technology sector and our extensive knowledge of the German market to support the future growth plans of P&I."

HgCapital were supported by Arma Partners and GCA Altium as joint financial advisers on the sale.

- Ends -

For further details:

HgCapital

Maitland

About HgCapital Trust plc

HgCapital Trust plc is an investment trust whose shares are listed on the London Stock Exchange (ticker: HGT.L). The Trust is a client of HgCapital, giving investors exposure to a portfolio of high-growth private companies, through a liquid vehicle. New investments and existing portfolio companies are managed by HgCapital, an experienced and well-resourced private equity firm with a long-term track record of delivering superior risk-adjusted returns for its investors. For further details, please see www.hgcapitaltrust.com.

About HgCapital

HgCapital is a sector expert private equity investor, supporting management teams to grow industry champions. Deeply resourced sector teams focus on specific sub-sectors and investment themes to identify companies occupying an established position within a niche, and which have the potential to grow faster than their market, create employment and become the leader in their industry. HgCapital's dedicated portfolio management team provides practical support to management teams to help them realise their growth ambitions. HgCapital invests in expanding segments of the TMT, Services, Industrials and Renewable Energy sectors across Western Europe. Based in London and Munich, HgCapital manages more than £5 billion for some of the world's leading institutional and private investors. For further details, please see www.hgcapital.com

About Permira

Permira is a global investment firm that finds and backs successful businesses with ambition. Founded in 1985, the firm advises funds with a total committed capital of approximately €31 billion. The Permira funds make long-term investments in companies with the objective of transforming their performance and driving sustainable growth. In the past 30 years, the Permira funds have made over 200 private equity investments in five key sectors: Consumer, Financial Services, Healthcare, Industrials and Technology. Permira employs over 200 people including 130 investment professionals in 14 offices across North America, Europe and Asia. The Permira funds have a long track record of successfully investing in technology companies around the world including NDS, Genesys, Ancestry.com, TeamViewer, Renaissance Learning, Metalogix, LegalZoom.com, Magento and Teraco. Since 1997, over 30% of the Permira funds' investments have been in the core sector of Technology.

For more information visit: www.permira.com 

Neither the contents of HgCapital Trust's, HgCapital's, P&I's, nor Permira's websites nor the contents of any website accessible from hyperlinks on the websites (or any other website) is incorporated into, or forms part of, this announcement.