Monthly Archives: December 2023

AI: Transforming the Norm

The AI revolution is well and truly happening. We’ve all seen it this year, with Open AI’s tool, Chat-GPT, entering the public consciousness. The AI revolution is well and truly happening. We’ve all seen it this year, with Open AI’s tool, Chat-GPT, entering the public consciousness. Such was its impact that it had 100 million users within two months. No other technology tool has even come close to such instant, widespread adoption.

For private equity, this is an exciting time. Blackstone’s Stephen A. Schwarzman enthused about the potential transformation that AI could offer at IPEM Paris 2023, this September (watch the video). A packed room (IPEM Paris 2023 had over 6,000 attendees) listened to Schwarzman discuss the wider implications of AI to government, education, and medical innovation, noting that it could help increase the ability to develop new drugs by three to five times.

If the first version of Chat-GPT had the equivalent IQ of a genius (above 140), in three to five years’ time, it will have an IQ of 12,000. For private equity firms, one can only imagine what this level of super intelligence could mean to how they approach portfolio transformation. This will be one of the key topics of discussion at IPEM Cannes 2024, where one of the afternoon summit sessions on Day 1 (Jan. 24th) will be “Portfolio Transformation”.

What PE groups must now consider is how quickly, and to what extent, their peers are looking to implement AI to help improve the fortunes of portfolio firms. The risk is this: those who are slow to use AI could find that their competitors become more formidable, and firms that they thought were doing fine, actually become mediocre (or worse).

Schwarzman is in no doubt as to the importance of AI. Blackstone is, for example, the largest developer and builder of data centers in the world. As Schwarzman said: “The demand for data centers, which you need to process AI systems, is through the roof.”

“Strap yourself in on this one,” said Schwarzman. “You do not want to be a second mover in AI.”

Happy Holidays and see you all in Cannes to celebrate the 10th edition of IPEM!

Atlantic flight to IPO (land)

US private equity group General Atlantic, a leading growth equity investor, has apparently made a confidential filing with the US Securities and Exchange Commission as it considers an initial public offering. This is thought to be an early sign of interest, and will depend on whether the firm feels the market conditions improve. It could be a swell move, bringing General Atlantic in to the same public corporate sphere as KKR and Carlyle Group. Though it has to be said, the current IPO market has hardly been ‘awash’ with activity. Still, the fact that preliminary steps have been taken is noteworthy. Will it be a case of ‘Surf’s Up?’ Keep your eyes on the IPO forecast next year.

inspired by The Financial Times

Apollo’s new pocket rocket

Apollo Private Markets has launched its latest pocket rocket: the Apollo Clean Transition Equity ELTIF (“ACT Equity ELTIF”). The addition to its Luxembourg SICAV will give European wealth investors the opportunity to tap in to a universe of private equity investments in energy transition and sustainability. It’s a welcome boost for Europe’s ELTIF fund vehicle, an updated version of which will be introduced in January 2024 to entice private market practitioners to invest in the real economy. Apollo’s fund is the latest ACT of its investment narrative, as it hopes to commit $50 billion to clean energy and climate capital by 2027. European investors will be hoping Apollo’s ACT Equity ELTIF will take them to the moon!

inspired by APOLLO

Family Fortunes

North American family offices have shrunk their allocation to public equities in favor of private markets, as they look to preserve their inter-generational family fortunes. A new survey conducted by Campden Wealth and RBC reveals that their overall exposure to private equity, private credit and venture capital has risen to 29.2% compared to 28.5% for stocks; down from 31% last year. The role reversal is noteworthy given that US stock markets have delivered a star performance (the Nasdaq 100 is up 45.8% YTD). It shows the allure that private markets hold, as investors look for a wider selection of ‘equity’ options. As families move office, it’ll be interesting to see how much further they embrace this change in their overall portfolios.

inspired by CNBC