Hg, the London-listed private equity firm, has confirmed it will increase its ownership in the HgCapital Trust to more than 15%, according to a regulatory filing. The trust, which invests in software and services companies, has long been a key vehicle for Hg's investment strategy. The decision to raise its stake comes as the trust’s shares have traded at a persistent discount to net asset value, a common challenge for investment trusts in the current market environment.
The move is likely to be seen as a vote of confidence in the underlying portfolio, which includes businesses in sectors such as fintech, legal tech and insurance software. Hg already acts as the investment manager for the trust, and a larger ownership position could give it greater influence over strategic decisions. Analysts have noted that increased insider ownership often signals that management sees value in the assets that the broader market may be overlooking.
For UK investors, particularly those holding shares in HgCapital Trust, the development could have mixed implications. A higher stake from Hg may help narrow the discount to net asset value, potentially boosting share prices. However, it also raises questions about corporate governance, as a large shareholder can sway votes on key matters such as board composition or future capital raises. The trust’s board has said it will continue to act in the interests of all shareholders.
The wider investment trust sector has faced headwinds in recent months, with rising interest rates and economic uncertainty pushing many trusts to trade at wider discounts. HgCapital Trust’s net asset value stood at approximately £2.8 billion as of its last quarterly update, with shares trading around 480p compared to a net asset value per share of roughly 520p, representing a discount of about 7.7%. The trust’s portfolio has delivered steady returns, but the discount has persisted.
Looking ahead, market watchers expect Hg to complete the stake increase through open market purchases or a tender offer. The exact timeline and method have not been disclosed. For UK pension holders and retail investors, the key takeaway is that such moves can signal management’s belief in long-term value, but they do not guarantee short-term share price gains. No investment advice is offered here; investors should consult their own financial advisers.
Source: HgCapital Trust regulatory filing