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Thursday: How robots are changing PE

Thursday is tech day and this morning we are talking about the robotic revolution.

Our June cover story took us on a deep dive into how robotic process automation and artificial intelligence are reshaping private equity. Survey data from KPMG suggest around one in five firms are implementing RPA. If you are thinking of joining them, check out our list of consultants in the area published this week.

We spoke with CFOs, CTOs, technologists and outsourcers; among the many themes to emerge was that the dystopian idea of humans being displaced by robots is not widely subscribed to. A more popular vision of the future is an explosion of productivity with humans enhanced by robotic assistants, not replaced by them.

That’s the optimistic view anyway. It’s countered by thoughts from Georgette Kiser, an operating executive with The Carlyle Group – formerly its chief information officer – who observes that massive operational efficiency explosion must mean fewer jobs, which in turn means an ESG issue for PE owners. Watch out for the podcast version of Georgette’s keynote coming soon.

Elsewhere: ESG is a data problem

Data were top of mind at sister publication Private Equity International’s Responsible Investment Forum 2019 in London on Wednesday. “We need some acceptable, consistent standards of reporting of the data, which means we are able to compare and combine insights across providers,” said BlackRock‘s global head of sales and marketing for alternatives, David Lomas.

RSM partner Anthony DeCandido offers these thoughts in a sponsored interview:

“The state of play in the private equity industry today feels like the early 2000s, when there was a lot of attention given to public businesses and new requirements for internal controls, governance and reporting. The industry knows that it needs to organize in a more productive and suitable way, and yet there is not an ESG reporting requirement.

A whole new market could be uncovered if a regulator with enough credibility emerges and says this is no longer just a nice-to-have, but it is a requirement to report on your ESG strategy and impact. The whole landscape will change when that happens.”

How much?!

Advent International just closed its latest fund on $17.5 billion, around 35 percent bigger than its predecessor. PEI has the details.

This newsletter was prepared by Toby Mitchenall.