HgCapital Trust delivers 4% NAV return in 2025 despite tech turmoil
HgCapital Trust (HgT) has posted an estimated NAV total return of 4.0% for 2025, landing at an estimated NAV per share of £5.62 and unaudited net assets of £2.6 billion. That is a steady showing in a difficult year for software valuations. The share price total return for the year was -4.9% at £5.07, and early 2026 has been rough too, with the shares down 20% year to date on sector-wide selling.
The Board is now openly weighing actions to tackle the discount to NAV – including share buy-backs – and has even accelerated this trading update to get information into the market sooner. Under the bonnet, the portfolio continues to trade well: last twelve months revenue rose 17% and EBITDA grew 20% with 34% margins to 30 November 2025, broadly in line with last year.
What moved the NAV: strong trading vs weaker multiples and higher leverage
HgT’s estimated net assets of £2.6 billion equate to 561.9 pence per share, based on valuations at 31 December and reviewed by the Audit, Valuation and Risk Committee. The year was a tale of two halves: H1 saw a small decline (-0.4%), while H2 benefited from exits above book value.
The building blocks are clear:
- Trading added +17% to portfolio value, reflecting robust revenue and EBITDA growth across the companies.
- Comparable valuation multiples contracted amid market volatility, detracting -7%.
- Increases in net leverage – used to support future growth – reduced valuations by a further -6%.
Exits helped too. Realisations over the year were achieved at an average uplift of 25% to book value and added 4.6 pence to the NAV.
Share price slide and the Board’s stance on buy-backs
Public software markets have been choppy into 2026, with investors fretting about AI’s impact on the sector and rotating capital into hardware plays. HgT’s share price is down 20% so far this year, and the Board notes “indiscriminate” selling across the space.
In response, the Board is actively considering actions to address the discount to NAV using all tools at its disposal, including buy-backs. Dialogue with the Manager and advisers is ongoing. Importantly, Hg highlights that while public comps feed into valuations, private M&A comparables carry meaningful weight, and only a portion of public multiple moves typically flow through to portfolio valuations.
Portfolio fundamentals: growth, margins and AI execution
Operationally, the portfolio looks resilient. LTM revenue and EBITDA growth were 17% and 20% respectively, with 34% EBITDA margins to 30 November 2025. Hg notes portfolio companies typically grow EBITDA organically by 10-15% per year.
Balance sheets remain robust and Hg’s AI initiatives are “rapidly building momentum” in value creation across the portfolio. The firm’s view is that AI presents significant opportunities for innovative, product-led incumbent software companies, and it is working with nearly 60 privately owned software and services businesses on the transition to AI-first models. For more context, see the CIO’s essay on AI’s impact on software:
Hg insights.
Deal flow and exits: uplifts underscore private market demand
HgT invested £357 million in 2025, backing new and follow-on deals in IFS, P&I, A-LIGN, Citation, Payworks, Diamant Software and Scopevisio. Co-investment totalled £34 million – on which HgT pays no management fees or carried interest – taking co-investments to around 10% of NAV, in line with the 10-15% long-term target. Post period, HgT invested a further £93 million, including a new investment in the take-private of OneStream, expected to complete in April 2026.
On the way out, gross realisations were £215 million, including proceeds from P&I, Citation, Trackunit, smartTrade and GTreasury. GTreasury was a standout with a 97% uplift to book value. Intelerad was announced in November at an uplift of about 62% to carrying value and is expected to complete in March 2026.
Zooming out to the Manager level, Hg deployed $6.1 billion across its funds in 2025 and realised over $3.4 billion, with further liquidity events expected over the next 6-12 months. That context matters for HgT’s commitments and potential distributions over time.
Liquidity, credit and commitments: room to manoeuvre, but keep an eye on calls
At year end, HgT had available liquid resources of £368 million, including a £375 million credit facility of which £36 million was drawn. Outstanding commitments to Hg funds were £1.8 billion, or 68% of NAV, expected to be called over the next 4-5 years.
On a pro-forma basis – including post-period transactions – available liquid resources rise to £410 million, with £32 million drawn on the facility. The scale and pacing of capital calls will be a key watch item, but the facility and the Manager’s ongoing realisations provide flexibility.
Key numbers at a glance
| Metric | Figure |
|---|---|
| Estimated NAV per share | £5.62 (561.9 pence) |
| Estimated NAV total return (2025) | +4.0% |
| Share price (year-end) | £5.07 |
| Share price total return (2025) | -4.9% |
| Market capitalisation (year-end) | £2.3 billion |
| Net assets (unaudited) | £2.6 billion |
| LTM revenue growth (to 30 Nov 2025) | 17% |
| LTM EBITDA growth (to 30 Nov 2025) | 20% |
| Portfolio EBITDA margin | 34% |
| Investments (2025) | £357 million |
| Realisations (2025) | £215 million |
| GTreasury exit uplift to book | 97% |
| Intelerad uplift to carrying value | c. 62% (completion expected March 2026) |
| Available liquid resources (year-end) | £368 million |
| Credit facility | £375 million (drawn £36 million at 31 Dec 2025) |
| Outstanding commitments | £1.8 billion (68% of NAV) |
| Pro-forma liquid resources | £410 million (drawn £32 million) |
| Share price YTD (to early Feb 2026) | -20% |
My take: resilience under the bonnet, but sentiment sets the sticker price
Positives:
- Operational momentum is intact: 17% revenue growth, 20% EBITDA growth and 34% margins are solid in any market.
- Exits at premia – notably GTreasury at +97% and Intelerad at c. +62% – support carrying values and demonstrate private buyer demand.
- The Board is being proactive on the discount, including potential buy-backs.
Watch-outs:
- Multiple compression and higher leverage shaved -13% from valuations in 2025. If public comps remain volatile, some of that may continue to filter through.
- Commitments of £1.8 billion are sizeable at 68% of NAV. Liquidity looks adequate, but call pacing matters.
- Sentiment towards software is fragile. The shares fell 20% in early 2026 despite stable fundamentals.
Overall, the gap between trading performance and share price sentiment looks unusually wide. If Hg continues to realise assets above carrying value and the Board leans into buy-backs, that could be a catalyst. The full Annual Report is due on 9 March 2026, which should provide more detail on valuations and portfolio trading.
Jargon buster
- NAV: Net asset value – the total value of the company’s investments and assets minus liabilities, per share.
- Total return: Percentage return including dividends reinvested.
- LTM: Last twelve months – a trailing performance window.
- EBITDA: Earnings before interest, tax, depreciation and amortisation – a cash proxy for operating profit.
- Comparable multiples: Valuation benchmarks from public markets and private M&A deals used to value portfolio companies.
- Credit facility: A revolving debt line that can be drawn to fund investments or working capital.
- Co-investment: Direct stakes taken alongside the manager, typically with lower fees.
Further information
Company site: hgcapitaltrust.com
Hg CIO essay on AI and software: Everything, everywhere, but not all at once
