Nic Humphries, Senior Partner and Executive Chairman, joined co-anchors Tom Mackenzie and Guy Johnson on Bloomberg’s ‘The Opening Trade’. They discussed why product innovation is central to value creation and exits, how public markets understand the impact of AI on software, and the evolution of the PE industry as it matures.

These themes build on a recent conversation between Nic and Jim Strang, Chairman of HgT, on how AI is showing up in Hg's portfolio.

Watch the interview or read the takeaways below.

Key takeaways

Returns outlook - multiple expansion drove much of the last decade's PE returns. Nic expects the next decade to be more dependent on genuine product-led growth.

Investment criteria - product and engineering-minded leadership (CPO/CTO calibre) has moved sharply up Hg's diligence criteria over the last two to three years.

Public markets - the software sell-off earlier this year was indiscriminate. Nic believes the market is now starting to decide where the value lies.

Portfolio growth - Hg's portfolio (~$28bn revenue, ~$8–9bn EBITDA) has kept mid-teens revenue growth and high-teens EBITDA growth largely unchanged through the recent volatility.

Exits: Hg liquidity has been strong over the past 12 months because portfolio companies have shipped AI products that strategics are willing to pay for.

Talent: Nic argues PE-backed businesses can access strong AI talent in Europe. Hg has hired 120+ AI engineers directly.

Industry structure: as PE matures into its “second generation,” Nic expects a split between a few large generalist firms and specialist/niche players, with the middle squeezed.