June 2024
WELCOME TO OUR MONTHLY NEWSLETTER.
Designed to serve as your primary source for navigating the world of alternative investments.
The news headlines have been dominated by Artificial Intelligence (AI) and the myriad ways companies are incorporating this new technology. AI shows incredible promise to enhance productivity, improve communication, and meet evolving customer needs. Given the nascent stages, it is also clear we have not yet witnessed the synergy and business leverage that could be achieved through widespread adoption.
Though it is a hot topic now, AI has been a theme in the private markets for a long time. In the past decade, private equity and venture capital strategies accounted for $785 billion in deal activity related to AI (1). In addition, there are roughly 31,000 privately held AI companies globally compared with just 495 public AI companies (2), offering investors a much broader opportunity set in the private markets for AI exposure. Looking ahead, that number is likely to grow as general partners (GPs) and limited partners (LPs) take an even greater interest in AI and see its ability to transform the future of business.
At iCapital, we are leveraging AI to support internal processes and have formed an innovation lab (“iCapital Labs”) to further adopt emerging technologies and methods to advance our strategic initiatives.
For a more in-depth take on AI, please read the articles Blackstone and Bridgewater shared in this month’s “Monthly Market Roundup.”
To learn more about private market investment opportunities focused on AI, software, or technology, please contact our sales team ([email protected]) or login to the iCapital Marketplace.
Thank you for your continued partnership and support.
Chart of the Month
Private markets offer investors a larger investment opportunity in AI
Number of private vs. public market artificial intelligence / machine learning companies
There are roughly 31,000 privately held AI companies globally compared with just 495 public AI companies, offering investors a much broader opportunity set in the private markets for AI exposure.?
Spotlight: Beyond 60/40: Episode 22
Anastasia Amoroso, Chief Investment Strategist, discusses private equity investing in enterprise software with David Flannery, President of Vista Credit Partners; and explores the preparedness of financial institutions when combatting AI deepfakes with Gary Owen, iCapital Chief Information Security Officer.??
In Case You Missed It
When looking for private credit or real estate exposure, evergreen funds may offer a more investor-friendly structure than traditional drawdown vehicles. Read more.?
Discover why a backdrop of higher benchmark rates, combined with resilient business performance, should help continue to deliver strong returns for direct lending funds. Read more.?
With private equity exit rates still slower than desired, co-investments may offer investors the opportunity to gain faster and greater exposure to private equity investments. Read more.?
Monthly Market Roundup
AI has the potential to drive productivity and growth in the economy in ways equal to or greater than the 1990s technology boom and other previous tech revolutions. But the irony is no matter how disruptive the technology, traditional economic forces determine its trajectory and economic impact. Blackstone shares why they remain optimistic about the future with AI.
While AI-related investment isn’t yet a major driver of economic growth, it looks poised to rise rapidly from here—with the potential to shape the business cycle well before AI is in widespread productive use. Bridgewater Associates provides us with perspectives on the economic impact of AI and its implications for business investment.
Narratives surrounding the disintermediation of banks have not flipped, but they have become more nuanced. The share of total credit market assets on bank balance sheets has dropped materially over the past 50 years, and this trend seems certain to continue. Carlyle reviews the overall landscape and the potential opportunity in the “Era of Bank Disintermediation.”
There are many ways to access private equity, including diversified funds-of-funds, traditional drawdown funds, evergreen vehicles, and more. As evergreen vehicles proliferate and evolve, we have observed some structural advantages that investors may not be aware of, particularly when combined with traditional drawdown funds. KKR makes the case for including both evergreen vehicles and drawdown funds in an investment portfolio.
With Worth Media at the Milken Conference
Lawrence Calcano, Chairman and CEO of iCapital, sits down with Jim McCann of Worth Media Group to discuss the latest developments at iCapital and current trends in alternative investments.?
Market Pulse
Heading into the second half of 2024, we see reasons for continued market optimism. However, with equity markets back in overbought territory and the potential for increased headline risks there are reasons why we could see the markets consolidate in the near-term. As such, we outline five potential catalysts for markets during the second half of the year. Learn more in Chief Investment Strategist Anastasia Amoroso’s latest Market Pulse.
New at iCapital
On May 23rd, we launched the first fund leveraging iCapital’s new Distributed Ledger Technology (DLT). iCapital’s DLT aims to foster a more secure, efficient alternative investment management environment, connecting key financial players and allowing for seamless data sharing and transaction processing. This marks an important technological advancement for increasing scale and real-time connectivity across the alternative investments experience. This milestone delivers on iCapital’s commitment to technology that creates unmatched operational efficiency and convenience for financial advisors.
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ALTERNATIVE INVESTMENTS ARE CONSIDERED COMPLEX PRODUCTS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prospective investors should be aware that an investment in an alternative investment is speculative and involves a high degree of risk. Alternative Investments often engage in leveraging and other speculative investment practices that may increase the risk of investment loss; can be highly illiquid; may not be required to provide periodic pricing or valuation information to investors; may involve complex tax structures and delays in distributing important tax information; are not subject to the same regulatory requirements as mutual funds; and often charge high fees. There is no guarantee that an alternative investment will implement its investment strategy and/or achieve its objectives, generate profits, or avoid loss. An investment should only be considered by sophisticated investors who can afford to lose all or a substantial amount of their investment.
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