HgCapital Trust plc Regulatory News (HGT)

30 January 2017

HgCapital, the Manager of HgCapital Trust plc ("The Trust"), has announced that it has agreed the sale of Zenith, the largest independent vehicle leasing business in the UK, to Bridgepoint in a transaction totalling £750 million. The sale of Zenith delivers a 2.9x investment multiple and a 46% gross IRR over the investment period.

The Trust, the listed investment trust which participates in all HgCapital's investments alongside its institutional clients, will realise cash proceeds of approximately £59.0 million on completion of the transaction. This represents an uplift of £15.4 million (35%) or 41 pence per share over the carrying value of £43.6 million in the Net Asset Value ("NAV") of the Trust at 30 November 2016 which was based on the Directors' valuation as at 30 June 2016.

Based on the 30 November 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 £601.5 million (or 1,611 pence per share). The Trust's liquid resources available for future deployment are estimated to be £105 million (17% of the pro-forma 30 November 2016 NAV). In addition, the Trust has access to a £80 million standby facility, which is currently undrawn.

The investments within the Trust portfolio were last valued at 30 June 2016. The Trust's 2016 annual results, including the re-valuation of the portfolio as at 31 December 2016 will be announced on 6 March 2017.

HgCapital announces sale of Zenith to Bridgepoint

30 January 2017: HgCapital is pleased to announce that it has agreed the sale of Zenith, the largest independent vehicle leasing business in the UK, to Bridgepoint in a transaction totalling £750 million.

Headquartered in Leeds, with full-service operations in both Solihull and Wokingham, Zenith has over 500 employees and provides end-to-end automotive solutions focused on contract hire, salary sacrifice, fleet management and short-term hire services to customers across the UK. The company operates a fleet of c.85,000 vehicles and focuses on serving blue-chip customers, principally as sole supplier. Zenith was recently ranked 7th in the FN50's list of the UK's top 50 contract hire companies.

HgCapital initially invested in Leasedrive in December 2013 (with LDC retaining a minority stake in the business), subsequently completing the merger with Zenith in February 2014, and the business has operated as a single entity since March 2014. The merger of Zenith and Leasedrive was driven by the highly complementary nature of the two businesses and the potential to create economies of scale.

A substantial part of the value created during HgCapital's investment period has been driven by the close collaboration of Zenith's management and the HgCapital team. Zenith has continued to deliver strong double-digit revenue and EBITDA growth over the past year (19% p.a. CAGR since March 2014) and the contracted nature of its business model means that a significant proportion of future growth is already underpinned by existing customer contracts.

Andrew Land, Partner, HgCapital, said: "We have had a very successful partnership with the Zenith management team and are proud to have been part of the Company's success. The business model has been a great fit with Hg's investment strategy, providing mission-critical services to customers through long-term relationships and the use of proprietary technology. We have no doubt that Tim, Mark and the rest of the team will have continued success working with Bridgepoint."

Tim Buchan, CEO at Zenith commented "We thank HgCapital for their contribution and are pleased to welcome Bridgepoint as our new partner. We look forward to working together on our long-term strategy of continued investment in product and system developments."

Emma Watford, partner at Bridgepoint and head of its business services sector team, commented: "Zenith is already best-in-class with a proven business model that has had an unbroken track record of growth over a long period. It benefits from an exceptional management team and, with them, we believe that the business can continue its impressive growth trajectory through its continued focus on customer service, technology and targeted acquisition activity."

HgCapital were supported by Evercore, Deloitte, OC&C, KPMG, Weil Gotshal & Manges and Sidley Austin on the sale.

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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.

Neither the contents of HgCapital Trust's, HgCapital's, Zenith's, nor Bridgepoint'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.