PSG Equity has closed its third European growth equity fund, PSG Europe III, at more than €4.4 billion in total committed capital as the firm expands its strategy of investing in European software and technology-enabled services companies.
The fund reached its hard cap and attracted commitments from both new and existing investors, including state pension funds, sovereign wealth funds, insurance companies, family offices and high-net-worth individuals.
PSG Europe III is significantly larger than its predecessor, PSG Europe II, which closed at €2.6 billion in October 2023.
The new fund will continue PSG’s strategy of partnering with European software and technology businesses that have the potential to scale into pan-European category leaders and eventually build broader global operations.
A major area of focus will be companies benefiting from artificial intelligence, including both AI-native businesses and established enterprise software providers incorporating AI into existing products and workflows.
Recent PSG investments in Europe include Mistral AI, BrightAnalytics, Aikido Security, Quality Hosting, Emotion Mobility, Namirial and Glasswall.
PSG sees several structural forces creating opportunities across the European technology market.
The firm pointed to accelerating enterprise adoption of AI, growing demand for trusted European technology providers and greater attention to digital sovereignty as businesses and governments become more focused on where critical software, data and infrastructure are developed and operated.
That environment could create opportunities for European software companies that combine deep industry expertise with proprietary data, European-first infrastructure and products capable of benefiting from increasingly capable AI models.
PSG’s European investment operation was established in 2019 and now includes 83 professionals spanning investors and operational experts focused on software and technology.
The team is headquartered in London and also operates from an office in Paris.
Since establishing its European strategy, PSG has completed 43 platform investments, 98 add-on acquisitions and 12 realization events across businesses operating in 24 European cities.
Recent exits include Sellsy, Signaturit, N2F, Artur’in, Hornetsecurity and Mapal.
The firm’s investment model typically involves backing established software and technology-enabled businesses and then supporting their expansion through organic growth, operational resources and acquisitions.
Add-on acquisitions can allow portfolio companies to enter additional geographic markets, expand into adjacent product categories or consolidate fragmented segments of the software market.
PSG believes AI will create opportunities on both sides of that strategy.
New AI-native companies are emerging around software categories that previously did not exist, while established systems of record and infrastructure platforms can incorporate AI to improve existing products, introduce new capabilities and accelerate customer adoption.
The firm plans to use PSG Europe III to invest across both categories as European technology companies increasingly compete for customers beyond their domestic markets.
The size of the new fund also gives PSG substantially more capital to deploy than its previous European vehicle, allowing it to support companies through larger growth stages and potentially participate in more significant expansion opportunities.
Across its broader platform, PSG Equity has backed more than 170 companies and facilitated more than 550 add-on acquisitions since its founding in 2014.
The growth equity firm operates from offices in Boston, London and Paris and focuses primarily on software and technology-enabled services companies undergoing significant expansion.
With PSG Europe III now closed at more than €4.4 billion, the firm is positioning the fund around the thesis that Europe’s next generation of major software companies could increasingly be built around AI, proprietary enterprise data and the growing demand for regionally trusted technology infrastructure.
KEY QUOTES:
“We are delighted by the strong support PSGE III has received from both long-standing and new investors globally. This outcome underscores the strength of PSG’s global platform and our consistent, disciplined approach to creating value, with a focus on supporting high growth software companies with the capital and operational resources needed to build enduring category leaders.”
Peter Wilde, Chairman of PSG
“It’s an exciting time to partner with leading software scale-ups in Europe. We see AI materially expanding the enterprise software opportunity, creating the next generation of category leaders while accelerating innovation across established software platforms. We are excited to continue to support AI-native businesses with differentiated technology and clear competitive advantages, while helping mission-critical systems of record and infrastructure harness AI to enhance their products, accelerate innovation, and drive growth.”
Mark Hastings, Chief Executive Officer of PSG
“The close of PSGE III marks an important milestone for PSG Equity and reflects our conviction in the vibrant European software and technology ecosystem. We see Europe accelerating its pace of producing exceptional software and AI businesses. Our platform allows us to identify what we believe are some of the best businesses across the region and partner with founders and management teams as they build pan-European market leaders with global reach.”
Dany Rammal, Managing Director and Head of Europe at PSG
