PSG Equity closes third European growth fund at €4.4bn

PSG Equity has raised more than €4.4bn for its third European growth equity fund, significantly increasing the size of its predecessor vehicle as investors continue to commit capital to software and technology-focused private markets strategies. PSG Europe III reached its hard cap following commitments from a mix of new and existing investors, including state pension funds, sovereign wealth funds, insurers, family offices and high-net-worth individuals. The fund is more than 70% larger than PSG Europe II, which closed on €2.6bn in October 2023, underlining the growth equity firm’s expansion in the European technology market. PSG Europe III will focus on software and technology-enabled businesses across the region, with PSG seeking to help companies scale into pan-European category leaders with international operations. The strategy includes investments in established software platforms that can use artificial intelligence to expand their products and accelerate growth, alongside companies developing AI-native technologies. PSG’s recent European investments include Mistral AI, BrightAnalytics, Aikido Security, Quality Hosting, Emotion Mobility, Namirial and Glasswall. PSG said it sees opportunities emerging from increased AI adoption, demand for European technology providers and growing emphasis on digital sovereignty. The firm is targeting businesses with specialist industry expertise, proprietary data and technology infrastructure that can benefit from the expansion of AI. PSG established its European operation in 2019 and now has 83 professionals across its London headquarters and Paris office, including investment professionals and software and technology specialists working with portfolio companies. The firm has made 43 platform investments in Europe to date, alongside 98 add-on acquisitions and 12 realisation events. Its European portfolio companies have operations across 24 cities, while recent exits include Sellsy, Signaturit, N2F, Artur’in, Hornetsecurity and Mapal. Peter Wilde, chairman of PSG, said the fund’s close demonstrated support from both existing and new investors and reflected the firm’s approach to backing high-growth software companies with capital and operational resources. Mark Hastings, CEO of PSG, said AI was expanding the enterprise software opportunity by creating new categories while also providing established platforms with opportunities to improve their products and accelerate innovation.