Private Funds Leaders Survey: Most PE firms not in a rush to adopt AI

Private equity firms have been slow to implement artificial intelligence, and the majority of PE firms have no intention of implementing AI at their firms, according to Private Equity International’s Private Fund Leaders Survey 2023.

The survey, which compiled responses from 101 senior buyout, growth, private debt, venture capital, real estate and infrastructure executives globally over the summer, found that 60 percent of managers have no plans to implement AI solutions for tasks such as due diligence and data analysis. This is despite the fact that 46 percent of managers agree that AI will be the most significant technology shaping businesses and industries over the next decade. Another 17 percent of managers strongly agree with this.

Thirty-two percent of managers said that AI will have the greatest impact on due diligence and data analysis in the next five years. Another 20 percent think portfolio management and performance tracking will be most impacted, while 18 percent said investor relations and reporting will see the greatest impact. Fifteen percent of respondents said either regulatory compliance and risk management or deal sourcing and screening will be greatly impacted by AI.

Despite the confidence many in the industry have in AI’s impact on private equity, PE CCO’s have expressed caution about using AI technology since there are still questions regarding regulatory requirements and cybersecurity risks. Echoing this guarded sentiment, 64 percent of firms said they have no plans to use AI for regulatory compliance and risk management.

The hesitancy to implement the technology extends to other operations, as 66 percent of firms said they have no plans to invest in or implement AI solutions for investor relations and reporting.

Firms are a bit more accepting of using AI for portfolio management and performance tracking. While more than half of firms (54 percent) have no plans to invest in or implement AI solutions for the tasks, 6 percent of firms already use AI technology for these operations and 40 percent plan to implement AI in this area in the next year.