Hg Capital Trust makes £60m pledge to new TMT fund

HgCapital Trust has made a £60 million commitment to building out a new smaller companies technology fund.

The investment trust, which will next month see its long-term steward and Citywire Selection manager Ian Armitage (pictured) step down, will use the vehicle to target TMT investments with an enterprise value of between £20 million and £80 million.

HgCapital is already a highly regarded name within the private equity space, which as a sector suffered when the financial crisis hit in 2008 because of broad over-commitments. 

HgCapital escaped this wider trend and over the five years to the end of June grew its net asset value (NAV) per ordinary share by 53.26% versus the LPX United Kingdom's 47.58% fall.

HgCapital was unable to comment on the new fund because of regulatory constraints.

However, according to analysts familiar with the company, small cap technology investments is an area in which the manager has historically made a number of profitable allocations and has now decided to set up a team dedicated to the sector.  The new vehicle has so far raised £300 million and Matt Brockman, formerly of Apax, has been hired for its new team.

IMercury TMT will target smaller buyouts in thematic TMT sub-sectors, but with significant incremental resources being added to the existing HgCapital sector team.  According to a stockmarket announcement the vehicle expects to allocate roughly £2.5 million to Valueworks, a UK-based online marketplace provider.

'HGT [HgCapital Trust] has made a commitment of £60 million to HgCapital Mercury which has a target fund raising size of up to £400 million,' said the investment companies team at Winterfloods.