Hg to take advantage of the credit crunch

The investment trust of Hg Capital had strong interim results for the first half up till 30 June 2007 increasing its net asset value by 13.1 percent from £187.1 million in 2006 to £211.7 million.

Shareholders received a total return of 15.2 percent including dividends, while the company has returned 18.3 percent per annum to shareholders over a 10 year period.

The trust’s £54 million liquid resources corresponded to 25 percent of net assets.

HgCapital Trust’s chairman Roger Mountford said “We are ungeared at the trust level at a time when good companies will be available at unchallenging prices even if it may take time for vendors’ expectations to adjust.”

The trust had £38.3 million realizations during the half. Hg Capital participated in the consortium selling German mail-order pharmacy DocMorris to trade buyer Celesio for an undisclosed sum. Market sources said the price for the entire company was €200 million, and Hg Capital tripled its money from 2004 making a 50 percent IRR.

The buyout firm also sold business software companies Computer Software Group and IRIS Software to US buyout firm Hellman and Friedman for £500 million, although it retained a stake in the companies in June. The Computer Software Group had only been bought in April.

“The CS Group sale was opportunistic, but the marriage value was captured very quickly and while an exit in a few months is pretty unusual it was clearly too good to miss,” Moutford said.

The trust invested only £11 million in the half, which also included the management buyout of fashion company Americana.