Hg's Martina Sanow - unlocking opportunities to invest in Europe's largest portfolio of software and services businesses

Welcome back to the Alt Goes Mainstream podcast. Today’s episode is with someone who has successfully built a wealth solutions business tailored to her firm’s unique strengths, expertise, and investment track record. Martina Sanow is a Partner and Head of Hg Wealth, where she is focused on building the firm’s wealth solutions offering built out of the $85B AUM firm, Hg, that invests in enterprise software. Hg, one of the top 10 largest PE firms globally based on the PEI 300 ranking, has built an impressive investment engine focused mission-critical enterprise software companies. The firm has built a portfolio that is a “transatlantic ecosystem of software and services businesses” — representing over $180B in collective enterprise value across its 55 portfolio companies. Martina has been at the firm for almost 16 years. She has been an integral part of building the firm into what it is today, helping Hg grow from $2B in AUM to $85B in AUM, previously as Deputy COO and now building the Hg Wealth business. Hg’s first wealth offering, Fusion, its flagship evergreen fund that provides access to non-US investors to Hg’s private equity funds and co-investment opportunities, has exceeded $1B in NAV just 12 months after its launch. Martina is thoughtful, strategic, and long-term oriented when it comes to building a solution that amplifies Hg’s strengths and resonates with the wealth channel.  We had a fascinating discussion about how a scaled specialist like Hg can stand out in the wealth channel, unpacking the essence of who Hg is as a firm and how they’ve expressed who they are as they’ve built their wealth business. We covered:Hg’s evolution as a firm.Why Hg focuses on mission-critical enterprise software companies and why it’s a compelling investment thesis.Building a wealth business that fits the mission, ethos, and strategy of the firm.Understanding the complexity of evergreen funds.How Martina and team think about managing dealflow and investor demand in their Fusion fund.Learnings applied from HgTrust, the publicly listed UK investment trust, to figuring out how to educate and build brand in the wealth channel.Why does ownership structure matter when it comes to building a wealth business? How being privately owned informs how Hg builds their wealth business.Why Europe, why now? Thanks Martina for coming on the show to share your wisdom and expertise at the intersection of enterprise software, private equity, and private wealth. A word from AGM podcast sponsor, Ultimus Fund Solutions This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency. To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products. Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com. We thank Ultimus for their support of alts going mainstream. Show Notes 00:00 Introduction and Message from Ultimus, our Sponsor 01:55 Welcome to the Podcast 01:58 Introducing Martina Sanow 04:36 Martina's Background and Experience 05:10 Hg's Specialization in Software 05:57 Building a Team and Culture 06:54 Importance of Cognitive Diversity 07:26 Building a Diverse Team 09:28 Innovating in Wealth Business 10:14 Hg's Strategic Mindset 11:51 Hg's Entrepreneurial Journey 12:00 Maintaining Entrepreneurial Culture 13:10 Specialization in B2B Software 14:47 Focus on DPI and Cash Back 16:17 Criteria for A-Quality Businesses 16:58 Investing in Mission Critical Software 18:11 Visma Case Study 19:23 Challenges and Opportunities in Europe 33:13 Evergreen Structures: Impact on Investment Teams 33:44 Balancing Capital Raising and Deal Flow 34:13 Investment Strategies and Allocation 34:54 Managing Subscriptions and Demand 35:53 Balancing Wealth and Institutional Demand 36:06 Privately Owned Firm Benefits 36:37 Realization Committee and Evergreen Structures 37:52 Long-Term Company Partnerships 39:11 Liquidity Management Challenges 39:55 Investor Strategies for Evergreen Funds 41:40 Institutional Adoption of Evergreen Funds 42:48 Evolution of Institutional Mindset 43:26 Retail vs. Wealth Investors 44:01 Listed Trust and Wealth Business Insights 45:54 Building the Wealth Business 47:29 Strategic Importance of Wealth Capital 48:54 Innovation in Wealth Management 49:28 Partnerships and Holistic Solutions 50:58 Future of Wealth Management Products 52:44 Brand Building and Education 55:00 Software as a Core Investment 56:19 Community and Founder Investments 59:28 Value Creation and Network Benefits 01:00:15 Portfolio Synergies and Acquisitions 01:01:36 Concluding Thoughts and Favorite Investments Editing and post-production work for this episode was provided by The Podcast Consultant.