Is AI taking over?

A survey of private equity general partners conducted by Pictet Alternative Advisors (PAA) between October and November 2024 explores the impact of AI on the future of the private equity industry.

So far, the industry is getting to grips with the technology. The survey shows that 60% of GPs believe the hype around AI is justified, with almost 40% having a strategy for AI in their business; a quarter (25%) already using it; and 54% actively testing or exploring the use cases.

GPs cite data and output quality, privacy and cybersecurity as the barriers to AI adoption, with more than a third (36%) indicating that data and output quality is close to being a critical issue.

However, GPs are recognising the integration of AI in their portfolio companies: 36% report that over a quarter use AI in several different processes already and 25% said the majority of their portfolio is testing or piloting uses.

More than 60% of respondents reported some revenue increase as a result of AI at their portfolio companies, with one respondent indicating that more than 25% of their revenue growth was attributable to the technology.

Pierre Stadler, Head of Thematics - Private Equity, PAA, comments: “Private companies have been at the forefront of AI’s emergence. We are pleased to see many of our underlying managers embrace AI’s potential, both for their own investment businesses and to create value in their portfolio companies.”

Stanislas Chanavat, Principal Thematics – Private Equity, PAA, adds: “By seeing AI companies now starting to deliver great results with much less computing power, we expect more businesses to benefit from adopting the technology. This transition from manufacturers to users sets the stage for the next wave of AI growth, opening a wider set of investment opportunities.”