London’s tech sector faces uncertainty as Visma, a €19bn accounting software giant owned by Hg, delays its planned IPO due to the SaaSpocalypse—a software stock sell-off fueled by AI advancements. Hg, a London-based buyout firm with €100bn in assets, now grapples with portfolio risks, as its heavily indebted investments face valuation pressures. The hold raises questions about Hg’s strategy and the sector’s ability to weather AI-driven market shifts.

Hg’s portfolio teeters on high leverage, with average debt at seven times earnings and valuations 25 times earnings. A €5bn fund tied to Visma carries a loan equaling 20% of its value, risking painful writedowns. While Visma grows 20% annually with €270mn EBITDA, its decentralized structure of 170 businesses across 28 countries complicates AI integration. Analysts debate whether its payroll and accounting services—critical for SMEs—can avoid AI displacement, despite proprietary data advantages.

Investor confidence wavers as Hg defends Visma’s AI readiness, citing “strong capabilities” and €20bn+ valuations. Yet peers warn that rapid AI evolution makes predictions perilous. Hg’s last decade-long absence from public markets deepens scrutiny, as Visma’s IPO—once a decade-defining exit—languishes. Private sales and fund-level debt returns have temporarily eased liquidity, but prolonged delays risk eroding trust in Hg’s valuation model.

Market re-rating reshapes valuations, with Hg investors noting software firms now trade at 10x forward earnings, down from Visma’s €30bn IPO hopes. A 2023 €19bn deal and recent €20bn+ estimates highlight volatility. If public markets eventually discriminate between software niches, Hg may revive a partial listing. For now, the firm bets on time, using debt to return cash while monitoring IFS’s planned 2027-2028 IPO. The saga underscores a pivotal test: can legacy buyout models adapt to AI’s disruptive pace?