Bain Capital is sharpening its focus on specialised technology businesses with built-in competitive barriers and clear advantages to harness AI, rather than risking being disrupted by it.

Giovanni Camera, a partner who co-heads the sponsor’s European technology vertical, said the firm is prioritising investments in highly regulated industries such as healthcare and compliance-led software. Such businesses typically possess particular knowledge of the local customer segments, end-markets and regulations, which would provide a natural “moat” against disruptions, including from AI.

“We are very aware of AI and innovation in general and we spend a lot of time trying to understand how our businesses are positioned against the innovations and disruptions that are happening in the market,” Camera said. “As investors in technology, we have to assess not only what we want to invest in going forward, but also how it impacts our existing portfolio companies.”

Softway Medical, a French healthcare software provider that Bain acquired last April, exemplifies its approach. The company, which delivers a cloud-based “system of record” for hospitals, operates in a highly regulated and specialised market.

Bain sees scope for AI to enhance Softway’s offering, generating new software modules and solutions for diagnostic and operational needs rather than threatening the core business model.

Namirial, another recent acquisition, operates as a compliance-driven digital transaction management software group. The business, which helps enterprise clients verify transactions and identities of customers, operates in a “very specific” and regulated vertical in Europe, Camera said.

“Given the key impact of local regulations and the compliance-driven nature of the business, we feel that the company is defensible from AI and, long term, could also benefit from an agent-driven increase in transaction activity,” he said.

To guide its investment decisions, Bain has established a framework for assessing the impact of AI in specific companies, starting from the end-market where they operate, the competition that they face and how they are positioned in their markets, as well as how their business economics might evolve. The sponsor then assesses whether a particular business is more a beneficiary of AI or more likely to be disrupted by it, he said.

Based on this, Bain has progressively assembled a heat map of the sub-sectors and businesses it has looked at over the last years, with an assessment on how AI might impact them. Such analysis is incorporated into its underwriting, he added.

Meanwhile, it is exploring how its existing portfolio companies can embed AI into their growth strategies, ranging from new agentic product developments and faster go‑to‑market through AI sales productivity tools, to margin enhancement driven by AI-enabled efficiencies such as customer support automation.

Its recent tech investments form part of Bain’s wider focus on B2B software, fintech and digital transformation opportunities, Camera said.

The firm is particularly interested in companies that are aligned with long-term themes such as the digitalisation of business users across the healthcare, banking and insurance, industrials and infrastructure end markets; automation in the office of the CFO; and compliance-driven software. Its interest in these themes, which are reviewed annually, is driven by how businesses are deploying new technology to improve their efficiency and support their growth.

Bain is reportedly taking interest in auctions including travel software specialist Travelsoft and Canaccord Genuity’s UK wealth arm and had shown interest in the likes of insurance services provider MSA Mizar, according to Mergermarket‘s auction pipeline.

In contrast, Bain is taking a cautious stance towards broad-based, horizontal technology companies that target global, less regulated markets. While such businesses have previously presented substantial growth opportunities, the firm now regards them as more vulnerable to competitive threats from AI-driven entrants that can benefit from their large addressable market, he said.

Europe’s tech gap lures investors

European corporates have traditionally trailed their US counterparts in technology investment across several key metrics. Nevertheless, Bain sees Europe as an attractive landscape for tech-focused investors, Camera said.

Despite this lag, European corporates’ technology spending has consistently surpassed the region’s GDP growth. Over the past 15 years, tech investment has expanded at roughly three times the pace of GDP growth, Camera noted.

This sustained, secular growth has underpinned a surge in private equity interest in European technology. As a result, tech private equity investments in the region have quadrupled over the past decade, he said.

Rewinding to the global financial crisis, tech private equity investment represented only a small slice of the European market. Today, it commands a significant share of private equity deal flow across the continent.

According to Mergermarket data, PE investments in Europe technology sector accounted for 19% of all PE investments, down from 29% in 2024, but up from 8% a decade ago.

Source: Mergermarket, data correct as at 21-Jan-26

“The good news for investors is that, taking a longer-term view, Europe’s tech private equity market has grown significantly and still has room to grow,” he said.

The sector’s appeal endures, even as overall private equity activity across industries has been “more muted” in the two to three years following Covid-19 compared to previous periods, he added.

The current environment, for instance, is witnessing a split in investment flows, favouring resilient, high-quality sectors and companies, such as B2B software, while areas less robust, from a macroeconomic standpoint, see waning interest.

This is helping sustain elevated valuations for B2B software firms, especially those that show a track record of high customer retention, strong growth, robust gross margins and healthy cash flow conversion. Investors believe these businesses are highly “sticky” and possess durable competitive moats.