Dry Powder: The Private Equity Podcast
Over the last several years, we’ve noticed a high degree of innovation in the private equity space, and one particularly noteworthy innovation is sector expertise. In fact, sector specialization and even hyperspecialization—that is, a focus on a few subsectors within a sector—is on trend for a growing number of LPs and GPs worldwide.
We’ve written about this trend, and we’ve talked about it in previous episodes of Dry Powder, but today on the show we’ll hear from a leading practitioner: Nic Humphries, senior partner and executive chairman of Hg, one of the largest software investors in Europe.
If you ask Nic how he developed such a high degree of focus on the software space, he’ll tell you the strategy emerged organically, over decades of trial and error.
“It’s a long journey,” Nic told me in part one of our two-part interview series. “When I was fortunate enough to arrive at Hg and have the support of prior partners, I was able to take that decades’ worth of experience and frankly work through where we’ve made mistakes and try and figure out how we could avoid making those mistakes again.”
Today on the show, I’ll ask Nic to share his journey from generalist to specialist, and how a deep, sustained focus can yield surprisingly stable returns.
“We found we were able to generate superior returns, but with lower levels of volatility … and candidly, when you present that to clients ... they like that.”
The Private Equity Podcast
In our podcast series, Bain's Hugh MacArthur interviews leading experts on the trends and opportunities that will redefine the private equity industry.
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First published in juillet 2021