Hg comprises two FCA authorised entities:
HgCapital LLP (FRN 478870) and Hg Pooled Management Limited (FRN 122466). Both entities are part of the Hg Group, which is owned by its partners.
Hg Pooled Management Limited manages all funds.
Hg has a Board whose principal duties include monitoring the business and its performance and ensuring that the business has a clear and defined strategy, effective leadership and management in all areas and at all times, and that the business provides a service and delivers investment performance that exceeds client expectations.
The Senior Leadership Team is responsible for day-to-day operational leadership of the business, including:
implementation of effective internal systems relating to investments, client services, sales and marketing, financial and regulatory compliance controls;
preparing annual budget and business planning processes;
oversight of recruitment; and
implementation and management of business rules, policies and procedures.
The heads of the three fund teams, portfolio team, client services team, finance, HR, compliance and risk, and legal teams report to the Board.
There is an investment committee for each fund and an overall realisation committee. The Board appoints the chairperson for each investment committee and the realisation committee. Each chairperson then appoints the other committee members. The investment committee for each fund has the primary responsibility for all investment decisions and the realisation committee has the primary responsibility for all divestment decisions.
Hg has implemented policies and procedures to identify and mitigate potential conflicts of interest. These include, but are not limited to, the establishment of the Conflicts Committee comprising the Senior Partner, the Head of Client Services and the General Counsel to deal with any conflicts of interest that may arise.
Hg Statement on the FRC Stewardship Code
The UK Financial Reporting Council’s Stewardship Code (the “Code”) comprises a set of ‘apply and explain’ principles for asset managers and asset owners and sets high stewardship standards for those investing money on behalf of UK savers and pensioners, and those that support them. The FRC defines stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society. The Code comprises twelve principles, the purpose of which is to promote transparency in the methods used by asset managers in overseeing the companies they own, and is directed at equity holdings in UK-listed companies.
Whilst the Code itself is voluntary, under COBS 2.2.3R of the FCA Handbook, Hg Capital LLP and Hg Pooled Management Limited (together “Hg”) are required to disclose clearly this website the nature of its commitment to the Code or, where it does not commit to the Code, its alternative investment strategy.
On the basis that investment strategies managed by Hg do not in their ordinary course invest in equity holdings in UK-listed companies (and where they do, this is incidental to Hg’s primary investment strategies and does not form a material part of Hg’s assets under management), whilst Hg supports the principles underpinning the Code, it has not become a signatory to the Code. Further, the approach of Hg, in relation to engagement with issuers and their management, is determined on a global basis. A consistent global approach is taken to engagement with issuers and their management in all of the jurisdictions in which Hg invests and, consequently, Hg does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction.
While Hg has chosen not to become a signatory to the Code, it is fully committed to responsible investing and environmental, social and governance (ESG) issues, and considers that the principles behind this approach are aligned with those of the Code. Further details on Hg’s approach to responsible investing can be found at www.hgcapital.com/responsibility.
This statement is reviewed annually and updated where necessary to reflect changes in circumstances and actual practice.
Hg is committed to conforming with the Guidelines for Disclosure and Transparency in Private Equity published by Sir David Walker in 2007 (the “Walker Guidelines”) and to promoting conformity on the part of portfolio companies. As a long-term investor, the typical holding period for investments is 3-5 years, with a number of portfolio companies having been held for far longer than that.
All of the information required to be disclosed under the Walker Guidelines, and more, can be found either here or elsewhere on our website.
Hg is a UK head quartered private equity investment manager with operations in the UK, US, Germany, Luxembourg and France. The UK Tax Strategy is prepared for Hg’s UK group entities, including all UK incorporated companies and partnerships. The UK Tax Strategy set out below which is considered to meet Hg’s obligation to publish a Tax Strategy under paragraph 16 (2) of Schedule 19 to the Finance Act 2016, is drafted in respect of the financial year ended 31 March 2024.This document was approved by the board of Group HoldCo 1 Limited on 26 March 2023. The UK Tax Strategy is subject to annual review and will be updated as appropriate.
Approach to governance, risk management and compliance with UK tax laws
Responsibility for managing Hg’s tax risks and tax compliance ultimately lies with the board of Group Holdco 1 Limited who delegate to the Group CFO the ongoing management of the Group’s tax affairs. Designated tax professionals employed by Hg are charged with day-to-day management of UK tax affairs and report to the CFO and other members of the Senior Leadership Team as appropriate. The tax professionals have a close working relationship with Hg’s in-house compliance, deal execution and finance departments to ensure that tax decisions are aligned with Hg’s broader business and compliance, regulatory and legal requirements. The tax professionals provide advice to the business on tax-related issues, oversee tax filings and other tax compliance-related matters and manage Hg’s relationship with tax authorities and third-party advisors. External advice is sought in relation to areas of complexity or uncertainty to seek to ensure that risks are mitigated, and that Hg complies with applicable UK and other tax laws.
Our UK tax compliance oversight framework includes Hg’s annual Senior Accounting Officer certification filing to HM Revenue & Customs to certify that we had appropriate tax accounting arrangements throughout the relevant financial year.
Hg does not tolerate tax evasion, nor the facilitation of tax evasion, by any employee or other person acting on their behalf.
Approach towards tax planning
When conducting its business activities, Hg is fully committed to acting in accordance with applicable laws and regulations of the countries in which it operates and in line with its broader commitments to good corporate governance. When advising on the structure of business activities in the UK, including with respects to the funds it manages, the tax professionals consider relevant tax laws and utilise tax reliefs and incentives in a manner designed to be consistent with the intentions of Parliament and to enhance value to stakeholders and investors while reducing the risk of uncertainty or dispute. Hg does not participate in tax avoidance schemes or artificial tax transactions with no economic purpose. External advice is sought in relation to areas of complexity or uncertainty to seek to ensure that risks are mitigated, and that Hg complies with applicable UK and other tax laws.
Hg also seeks ongoing advice relating to international initiatives to ensure it conducts its commercial activities in compliance with applicable international tax legislation.
Following significant change to UK or other tax laws or a major change to the business, the CFO and Board are updated by the tax team on the impact on Hg. They are closely involved in decisions where there is material tax uncertainty and complexity to ensure that tax risk is appropriately monitored, controlled, and mitigated when necessary.
Level of tax risk the group is willing to accept
The level of UK tax risk Hg will accept is low, consistent with the Group’s broader business risk management, compliance and governance framework. Hg manages identified and accepted tax risks in a similar way to other areas of operational risk. Tax risk is assessed and monitored by qualified tax professionals (with external input obtained where necessary) and, where appropriate, matters are escalated to the CFO and Senior Leadership Team and relevant internal stakeholders.
Relationship with HMRC
Hg is committed to a constructive and collaborative relationship with HMRC and all tax authorities with which it interacts. Hg ensures it meets all tax filing and payment obligations in line with statutory deadlines.
When submitting tax returns to HMRC and other relevant tax authorities, Hg is committed to providing a full relevant disclosure where appropriate in the spirit of transparency. When corresponding with HMRC and other relevant tax authorities, Hg is committed to responding in a timely manner and on a clear basis. Hg will work together with all tax authorities to resolve any disputes in a collaborative, timely and transparent manner.
Approach to tax policy in investments/portfolio companies
Portfolio companies held by Funds managed or invested by Hg are not part of the Hg group. As such, the directors and management of each portfolio company are responsible for managing their own tax affairs in the countries in which they operate. As a responsible investor, Hg works closely with its portfolio companies to help them comply with their respective statutory obligations.