VIDEO: Building The PE Firm Of The Future

A fireside chat with Hg Managing Partner Matthew Brockman

At this year's virtual BVCA Summit, Kristina Widegren had the privilege of interviewing Rede client Matthew Brockman, Managing Partner at Hg, about Hg's approach to building the GP of the future. We are incredibly proud of our partnership with Hg, having now worked with the team across six different fundraisings. Matthew shared the thinking behind Hg's 'Private Equity 4.0 Industrial Strategy' and how this benefits the firm, its LPs and its portfolio companies. You can watch the 15 minute interview by clicking the link below before 20th November 2020.  

Rede more about our work for Hg here

'Private Equity 4.0'

Hg has been implementing an industrial strategy over the best part of a decade. Today Hg looks less like a traditional private equity firm and more like an industrial software and services organisation.   Hg’s leadership and employees consider the firm as one of the largest software companies in Europe, with over 30 divisions, rather than a portfolio of businesses. Hg believes that this strategy can bring the best of private equity (incentives, governance, capital) whilst marrying this with the advantages of industrial scale and expertise.

Building the strategy

To implement ‘Private Equity 4.0’, a firm must first focus on specialisation. Hg looked at its best performing sector historically – mission-critical B2B software and services – and doubled down, with a significant investment to develop this focus whilst deepening the firm’s knowledge across this sector.

Next comes the industrial approach – looking to do 8-10 deals a year in a sector requires repeat expertise. This means investing in talented specialists in the investment teams, whilst also bringing in specialist operators who can help the businesses in the portfolio grow across areas they want to develop, such as data analytics or technology systems.

Third comes scale. Hg has sought to increase its scale to be major player in this space. The firm’s most recent fundraise has positioned Hg as one of the larger GPs in Europe with over $30bn funds under management. For far longer, Hg has been the largest software and tech focused investor in Europe by a long way.

Finally – support. All the above requires supportive and long-term LPs. Hg could have never have done this without backing of its clients. Taking them on this journey, creating a mutual understanding, is what Hg has looked to achieve. As such clients have played a crucial part in forming and implementing this strategy.