Institutional investors globally anticipate the role of artificial intelligence will grow in the private equity industry, with nearly half of limited partners showing interest in venture capital funds targeting AI investments, according to Coller Capital's Global Private Equity Barometer, a semiannual investor survey.
Among the 110 institutional investors, 54% said they acknowledge the need to develop in-house AI capabilities.
Thirty-eight percent of limited partners said they plan to implement AI across fund monitoring in the next two to three years; 31% said they would look at utilizing AI capabilities in their competitor benchmarking efforts, and 19% said they were looking to integrate AI processes into investment decision making and recruitment.
Investors in North America, Europe and the Asia-Pacific region that were surveyed represent an aggregate minimum $2.2 trillion in assets under management. Multiple answers were permitted.
A total of 47% of investors had interest in venture capital funds specifically targeting AI investments, and the Coller Capital report also said that European LPs had the "strongest investment appetite" for both private equity and venture capital AI-focused funds, although a specific number was not provided.
Overall, 90% of surveyed respondents plan to maintain or increase their overall allocation to alternatives over the next 12 months.
When asked which asset classes they plan to increase their allocations to over that period, 44% said private debt/credit, 27% said infrastructure, 25% each said "overall" alternative assets and private equity, 17% said real estate and 2% said hedge funds. Multiple answers were permitted.
In the area of co-investment opportunities, 50% of limited partners expect to see increased deal flow offered by general partners in 2024. When asked whether their appetites for co-investments has increased over the past 12 months, 22% said they had.
"LPs are committed to maintaining their allocation and expanding their portfolios in areas such as private credit and co-investments," said Jeremy Coller, chief investment officer of Coller Capital, in a Dec. 11 news release.
"But fundamentals in the market are shifting — the opportunities offered by generative AI and the challenges of an evolving regulatory landscape have the potential to change the way both LPs and GPs operate in the future."
The survey report is available on Coller Capital's website.
