HgCapitalTrust (HGT ) logged asset growth of more than 10% last year, as private equity staged a recovery that made it the top-performing investment company sector in 2023, albeit with a giant contribution from 3i Group (III ).

HGT, a £1.9bn portfolio specialising in unquoted business-to-business technology investments, has reported a trading update for the year ending 31 December 2023, which pegs its estimated net asset value (NAV) of 498.6p per share.

This represents a total investment return of 10.7%, underpinning a much better shareholder return of 26.2% caused by the share price rallying faster and narrowing its discount to asset value from 28% to about 13% today.

The NAV increase was driven by earnings growth, with the portfolio enjoying last 12 months’ revenue growth of 25% and profits up 28% over the year.

Over three years, the NAV has risen 68.4% while the shares have risen 35.3%.

Proof that the private equity market was returning came from the £71m of follow-on investments that HgCapital made in the year, including in treasury management software GTreasury, software-as-a-service provider for mobile professionals Nomadia, work-based learning provider JTL, marine insurer P&I, and insurer Howden.

The fund, which is overseen by HgCapital executive chair Nic Humphries, also made proceeds of £343m from exits and refinancings, including secondary sales from the Hg Genesis and Hg Saturn funds. It fully exited two companies: freight transport platform Transporeon on which the fund doubled its money. HgCapital bought the group for $800m in 2019 and the exit valued it at $1.9bn.

In September, the HGT team sold Commify, a UK business messaging solutions provider, at a 32% uplift to its last valuation that valued HgCapital’s stake at £21.9m.

Since the period ended, the fund enjoyed another windfall from the sale of its stake in the world’s largest oil price data company Argus Media. It sold its 24% shareholding in a transaction that is predicted to value the company at $4.6bn.

In a stock market announcement, the fund said the sale ‘sets HgCapital apart in a year when many other private equity firms struggled to generate liquidity from their portfolios’.

‘HgCapital believes its realisation activity in 2023 was a clear differentiator for [the trust], highlighting the fundamental strengths and attractiveness of the underlying portfolio to both trade and financial buyers,’ it said.

There is scope for more investments to come as the year ended with outstanding commitments to Hg funds of £808m and £735m in ‘liquid resources’ that includes a £350m undrawn credit facility.

Liberum investment companies analyst Shonil Chande said the ‘tentatively improving macro backdrop and exit environment for private equity’ means the sector’s prospects ‘look broadly positive this year’.