In a rapidly evolving global tech landscape, one British private equity firm has quietly emerged as a dominant force.
With over $100bn in assets under management, Hg has redefined what it means to invest in technology from the UK.
Its journey from traditional mid-market buyouts to becoming Europe’s premier software investor offers a compelling blueprint for success.
As the firm prepares to take Visma public in London, its story underscores the UK’s growing influence in global tech investment.
What Sparked the Rise of British Private Equity in Tech?
The rise of British private equity in the technology sector can be traced back to a handful of visionary firms that recognised the untapped potential of European software companies.
Among them, Hg emerged as a leader, capitalising on a market where competition was limited and technology valuations were modest compared to their US counterparts.
Hg’s journey began in the 1990s as part of Mercury Asset Management before becoming an independent entity.
By 2001, it had begun to pivot toward technology, a strategic shift spearheaded by Nic Humphries, who took over in 2007.
At that time, technology made up only half of Hg’s investments. Rather than remain a generalist firm, it made a calculated choice to specialise in software, positioning itself as a European counterpart to US firms like Vista Equity Partners and Thoma Bravo.
The decision was high-risk but ultimately transformative. Hg focused on recurring revenue software models, particularly in payroll, accounting, compliance and business management systems.
This niche focus allowed it to build deep expertise, streamline due diligence processes and identify scalable companies that could generate consistent returns.
Regulatory and policy support from the UK government also helped facilitate this rise.
Investment in digital infrastructure, R&D incentives and an expanding innovation ecosystem made the UK an increasingly attractive base for private equity-led tech growth.
How Did This Firm Identify the Right Tech Opportunities?
Hg’s ability to identify high-value opportunities in the tech sector has been a cornerstone of its rise to a $100 billion asset manager.
Unlike many private equity firms that rely heavily on generalist approaches, Hg built a dedicated investment framework based on deep sector expertise, strategic market mapping, and a disciplined focus on enterprise software.
The firm’s focus has been consistently on business-critical software platforms, particularly those offering recurring revenue models, high retention rates, and long-term value potential. This strategy gave it the clarity to act decisively when others hesitated.
Targeting Predictable and Resilient Revenue Models
One of Hg’s most successful investment criteria is its preference for companies that operate on subscription-based or SaaS (Software-as-a-Service) models. These businesses often benefit from:
- Predictable cash flows from recurring contracts
- High customer lifetime value
- Built-in customer stickiness due to software integration into core operations
Hg believes that software used in areas such as payroll, compliance, enterprise resource planning (ERP), accounting and business intelligence is unlikely to be removed once embedded. This durability of revenue has been key to identifying long-term winners.
Sector Mapping and Market Intelligence
Hg doesn’t just wait for opportunities to appear; it actively maps sectors and sub-sectors across Europe to identify gaps in the market. It has built proprietary market data and insight tools that allow it to:
- Track emerging trends in vertical and horizontal software
- Monitor performance of mid-market players across Europe
- Benchmark financial metrics against peer groups
Through this approach, the firm has developed long-term relationships with potential targets, sometimes tracking a business for years before making a move.
This patient, insight-driven pipeline strategy has allowed it to act quickly when the timing is right, often securing deals ahead of rivals.
The Visma Case: A Blueprint for Opportunity Identification
Hg’s most iconic example of opportunity identification is Visma, a Norwegian payroll and accounting software provider. At the time of the acquisition in 2006, Visma was involved in a high-profile takeover battle with Sage Group, a larger UK-based software company.
What Hg recognised, which others missed, was that Visma had the core characteristics of a platform that could scale across borders. The firm saw:
- A leadership team capable of driving regional expansion
- A highly modular software architecture suitable for bolt-on acquisitions
- Strong market positioning in compliance-heavy sectors
This foresight allowed Hg to step in as a white-knight investor and later expand Visma’s operations into multiple European markets, significantly increasing its valuation over time.
Today, Visma is not just a success story it is Hg’s flagship company, helping define the firm’s strategy moving forward.
Strategic Alignment and Due Diligence
What further separates Hg from other private equity firms is its in-depth due diligence process. The firm doesn’t just look at financials. It evaluates:
- The technical robustness of the software
- The scalability of the business model
- Organisational readiness for rapid growth
- Cultural fit with Hg’s operating philosophy
This comprehensive analysis ensures that Hg invests only in companies where it can add strategic and operational value, not just financial capital. In many cases, Hg already has a post-acquisition plan developed before the deal is closed.
Avoiding Overexposure to High-Risk Bets
Another hallmark of Hg’s strategy is its avoidance of speculative tech investments. It stays away from early-stage ventures and consumer tech startups that may offer quick returns but carry higher volatility and lower predictability.
By focusing almost exclusively on mature, mission-critical software companies with strong market positions, Hg reduces downside risk while still positioning itself for attractive returns.
Its preference for businesses serving regulated industries—such as legal, education, healthcare and government—adds another layer of stability.
Building Relationships, Not Just Transactions
Hg’s approach to opportunity identification is also relationship-driven. The firm maintains long-standing ties with founders, CEOs, and intermediaries across Europe.
It often works collaboratively with management teams, offering strategic insight and operational guidance well before an acquisition is finalised.
Many of Hg’s deals are proprietary or semi-proprietary, meaning they are not part of formal auction processes.
This reduces deal competition and pricing pressure, increasing the likelihood of favourable terms and post-deal success.
Portfolio-Driven Insights
Another factor that strengthens Hg’s investment strategy is the feedback loop from its existing portfolio. Learnings from one company are rapidly applied to others within the ecosystem.
For instance, insights on customer retention from Visma may inform strategic decisions for Iris or Access Group. This interconnected knowledge base allows Hg to make smarter, more informed investment decisions.
What Role Did Strategic Acquisitions and Buyouts Play?
Strategic acquisitions and buyouts have been central to Hg’s growth. Instead of pursuing single large exits, the firm opts for gradual value creation through bolt-on acquisitions and strategic partnerships.
These activities not only enhance the value of existing portfolio companies but also consolidate Hg’s position in key software verticals.
The firm’s portfolio includes several standout acquisitions that demonstrate this strategy:
| Company | Specialism | Valuation | Year |
| The Access Group | Business management software | £9.2bn | 2022 |
| IFS | Software vendor | €15bn | 2025 |
| Iris | Accountancy and payroll software | £3.2bn | 2023 |
| Team.blue | Tech services | €4.8bn | 2024 |
| Septeo | Software for professionals | €3bn | 2024 |
| AuditBoard | Connected risk platform | $3bn | 2024 |
These companies often undergo digital transformation under Hg’s ownership. The firm injects capital to modernise systems, expand cloud capabilities and implement automation. It also assists in leadership transitions to strengthen governance and operational discipline.
In some cases, Hg deploys a multi-fund strategy to roll over investments. Rather than cash out, it moves assets like Visma between different funds within the firm, often involving third-party institutional investors like Singapore’s GIC. This method has proven effective for retaining control while providing liquidity to earlier fund investors.
How Did the Firm Scale Startups to Global Tech Giants?
Hg’s scaling strategy centres on adding value through structure, systems and strategy. Rather than passive capital deployment, the firm becomes a hands-on partner, helping businesses expand across Europe and beyond.
Visma is a prime example. Acquired nearly two decades ago, Visma has grown from a regional software company into a tech giant valued at over €19bn. This transformation was achieved through:
- Systematic international expansion across Northern and Western Europe
- Investment in R&D and product development
- Recruiting experienced leadership teams to drive performance
Hg doesn’t merely aim to grow revenue; it builds resilient, process-oriented companies that can operate at global scale.
The firm employs a comprehensive operating model that includes best practices in sales execution, cybersecurity, IT infrastructure, and human capital development.
To facilitate such growth, Hg also offers access to a shared knowledge ecosystem. Portfolio companies benefit from an internal playbook and collaborative community that encourages innovation and problem-solving across the group.
Why Is Long-Term Capital Strategy Crucial for Tech Success?
Long-term thinking has been instrumental to Hg’s model. Unlike venture capitalists who typically target exits within 3-5 years, Hg often holds investments for more than a decade. This enables it to:
- Participate in multiple funding cycles
- Reap benefits of compounding growth
- Execute complex strategic transformations
One of Hg’s most innovative strategies has been to borrow against assets within its funds to distribute returns to investors more quickly.
While controversial, this tactic has enhanced cash flows and improved DPI (distributions to paid-in capital).
Between 2008 and 2023, Hg funds consistently achieved first-quartile internal rates of return. This performance, combined with regular distributions, strengthened its reputation among institutional investors including pension funds and sovereign wealth groups.
A deeper look at fund metrics highlights the effectiveness of this strategy:
| Fund Launch Year | Initial Fund Size | DPI (Distributions to Paid-in Capital) | IRR Performance | Notes |
| 2007 | £7bn | 2–3x | Top quartile | Focused on early software plays |
| 2020 | £25bn | Up to 50% distributed | Still maturing | Relies more on asset-backed borrowing |
However, as fund sizes increase, sourcing quality investments becomes more difficult. The challenge now lies in replicating the same performance at a much larger scale and with increased market visibility.
How Does This Success Reflect on the UK’s Global Tech Influence?
Hg’s performance has broader implications for the UK’s position in global technology. The firm’s commitment to listing Visma in London, despite headwinds in the IPO market, sends a powerful signal about the viability of the UK as a tech hub.
In the first half of 2025, only £160mn was raised through IPOs in London, marking a historic low. Yet Visma’s anticipated listing could reverse that trend, attracting more tech companies to consider London Stock Exchange over NASDAQ or Frankfurt.
Hg’s approach also showcases how British private equity can compete globally. By specialising in software and avoiding overreliance on consumer tech, the firm sidestepped many pitfalls that affected rivals.
Its ability to retain and reinvest capital within Europe ensures that value creation remains local even as companies scale globally.
Moreover, Hg’s model has inspired a new generation of UK-based investment firms to adopt similar strategies.
The focus is shifting from fast exits to durable enterprise value, supporting a healthier and more sustainable tech ecosystem.
The UK’s role in the global tech economy is not just about startups but about enabling long-term capital to scale those startups into enduring giants. Hg has provided a compelling example of how this can be achieved through discipline, expertise and innovation.
Conclusion
Hg’s transformation from a modest mid-market investor to a $100bn software powerhouse is a landmark in British finance.
Its disciplined focus, innovative fund structure, and long-term mindset demonstrate that private equity can thrive in tech without succumbing to short-termism.
As Hg prepares to take Visma public and enters a new chapter, it remains a beacon for how British private equity can lead global transformation in the technology-driven workplace.
Frequently Asked Questions
What sets British private equity apart in the tech industry?
British private equity, particularly firms like Hg, stands out due to its sector specialisation and long-term investment strategy, especially in software.
How do private equity firms differ from venture capital firms in tech investments?
While VC focuses on early-stage startups with high risk and high reward, PE firms like Hg typically invest in mature businesses, offering strategic scaling and operational support.
What are the risks of PE firms investing heavily in tech?
Risks include overvaluation, difficulty in exiting large investments, and changes in market sentiment affecting IPO prospects.
Can private equity sustain long-term tech growth?
Yes, especially when firms adopt patient capital strategies and maintain operational involvement post-acquisition.
How does the UK government support private equity and tech?
Through R&D tax credits, innovation grants, and regulatory reforms aimed at improving IPO prospects and foreign investment attractiveness.
Are British tech firms still attractive to global investors?
Yes, despite economic challenges, the UK remains a hub for software and fintech innovation with strong institutional backing.
What future trends may influence private equity in UK tech?
AI, cybersecurity, SaaS consolidation, and ESG-focused investing are likely to shape future tech investment strategies.
