The AI imperative: rethinking alternative investment

Artificial intelligence is changing everything, not only by reshaping the economy as a whole, but also - and more importantly - transforming how we work and revolutionizing the business models of companies that embrace this technology. By catalyzing new market opportunities and shaking up competition in the alternative investment sector, AI invites us to rethink our approaches to managing financial assets. Ardian assembled experts and executives from the worlds of investment and tech to explore this topic at its recent conference entitled "AI x AI - The AI imperative: rethinking alternative investment." Read on to learn more about the event and its takeaways.

REPLAY ► Ardian Conference AI x AI

The AI imperative: rethinking Alternative Investment

Benefits and challenges of AI's exponential growth for the economy

Benefits and challenges of AI's exponential growth for the economy

From a global perspective, AI has already had a transformative impact on the finance, health and retail sectors in particular.

In his opening remarks, Mathias Burghardt, Executive Vice-President and CEO of Ardian France observed that, from a global perspective, AI has already had a transformative impact on the finance, health and retail sectors. AI has stimulated productivity growth not just by automating tasks involved in the production of goods and services, but also by generating new ideas for the business models of companies and investment funds.

This technological breakthrough forces companies to engage in a race to innovate, striving to stay competitive as each new discovery makes the previous one obsolete, in a process of continual renewal and creative destruction first conceptualized in 1987 by researchers Philippe Aghion and Peter Howitt. The innovation race creates a risk that the market could become concentrated around a handful of dominant players. "Let us remember the computer revolution: Google or Amazon were far better at leveraging the technology than their competitors. The mergers and acquisitions carried out by these companies drove the growth process. Since competition policy was not designed to regulate such practices, the GAFAM companies ended up discouraging the entry of new firms. This scenario is even more likely to recur with AI," explains Philippe Aghion, Economist and Professor at the Collège de France. An appropriate competition policy is therefore needed to facilitate access to data and enable other participants to exist.

Besides transforming competition between AI players, artificial intelligence is also changing the job market and corporate strategies. Aghion referred to a study on 9,000 companies with 50 or more employees comparing AI adopters with non-adopters, which revealed that adoption had a positive impact overall on employment.

Companies embracing AI see a boost in their productivity, which makes them more competitive.

They offer better value for money, and market demand for their products goes up, so they hire more. Productivity effects comfortably offset substitution effects. However, not all job categories are affected in the same way. By automating some repetitive tasks, AI supports people in management roles by freeing them to spend more time on creating value added. Conversely, automation creates replacement risk for mid-level admin and sales positions.

AI integrated by asset managers in their business models

AI integrated by asset managers in their business models

Convinced of AI's potential to accelerate productivity and growth, 58% of finance teams globally used the new technology in 2024. Now widely adopted in their business models, AI is enhancing their analytical capabilities and enabling them to support portfolio companies more effectively. AI systematizes and facilitates the collection and analysis of huge volumes of strategic data in short turnaround times, ensuring that managers are better able to take informed decisions about their asset portfolios. Data intelligence offers managers new ways to spot and assess alternative investment opportunities in segments such as private equity, venture capital, hedge funds and real estate.

• 58 %

  of finance teams are using AI in 2024

While AI is a game-changer that has attracted the attention of asset managers, Riaan Potgieter, Investment Director of StepStone Group, said that it has also revived their interest in other tried and tested technologies, which they are now using to explore other possibilities. Through strategic technological diversification, asset managers can mitigate the risk connected with exclusive adoption of new generative AI technology. Given AI's many diverse applications, Pauline Thomson, Head of Data Science and Managing Director in the Infrastructure team at Ardian, stressed the importance of choosing projects that will create value added, keeping in mind that AI comes with an energy and financial cost.

She identified data confidentiality and security as another operational challenge.

Staff can use our Gaia application, which we developed in partnership with Artefact, to safely download and analyze documents, get summaries and make comparisons. This gives them a competitive edge. We believe that internalizing this independent platform is key to unlocking the full benefits of AI.

But while it can make collection and analysis more efficient by handling large volumes of data, AI is still no substitute for human beings, who remain at the heart of strategic decision-making to maximize performance and investment returns. AI needs to be treated as a decision-support tool. Thomson touched on this point as well.

The idea is not to fully automate work processes, but rather to delegate low value-added tasks while keeping humans involved, especially in final decisions.

Management companies provide support

Management companies provide support

But extensive data processing possibilities are not the whole story. High-quality results are what really matter. Claire Calmejane, CEO of CAILEG and Non-Executive Director, Hub France IA, observed that in some use cases, productivity goals are missed, value added is not measured, and expected results are not achieved. She said that before launching any project, "cockpits" must be set up to measure the impact of AI use on income and assess the potential gains in terms of operating costs and efficiency. AI is transforming business models, value chains and working methods. As internal processes are overhauled, senior executives must be actively involved to optimize company management, mitigate risks and leverage the opportunities offered by AI for financial performance.

• 2.5 GW +

  of renewable energy production and storage assets optimized by the Opta platform

• 800

  data signals collected every 10 minutes on the Opta platform

• €10 million

  in additional net income generated from AI in Ardian's portfolios

Ardian is looking to instill this awareness in companies, aiding them to determine use cases and identify applications that are beneficial to their organizations. For example, since 2020 Ardian has been developing the Opta platform, which is used to optimize a portfolio of more than 2.5 gigawatts (GW) of renewable-energy production and storage assets. "Opta gathers up to 800 signals every ten minutes on its renewables portfolio, which spans ten different countries. We gather and interpret the data to identify opportunities for operational improvements. We then inform management teams so that they can act accordingly," explained Marion Calcine, Chief Investment Officer in the Infrastructure team & Senior Managing Director at Ardian.

Thanks to Opta and their inclusion in Ardian's portfolio, companies gain an enhanced understanding of their market environment.

We offer portfolio companies access to software at lower cost, due to scale effects. And we provide them with anonymized data from a 2.5GW portfolio, whereas they have access only to data on their own assets, which might amount to just a few hundred megawatts

These are factors that set Ardian apart on its market. The results speak for themselves, with assets generating an additional €10 million in net income.

Investing in AI: a strategic priority for asset managers

Investing in AI: a strategic priority for asset managers

So, AI is revolutionizing alternative investment. But equally, alternative investment is expected to shape AI, setting the stage for new entrants to defy the domination of the tech titans. Convinced of the long-term impact of artificial intelligence, Ardian has invested at virtually every level of the AI technological value chain, as its investment portfolio attests.

In March 2024, Ardian finalized the acquisition of Verne, a leading and sustainable platform of data centers based primarily in Nordic countries. Since its inception in 2012, Verne has pursued the goal of helping customers to reduce their carbon footprint.

Data centers are the brick-and-mortar base that underpins the entire technological value chain, providing a platform for applications, knowledge generation and the intelligence produced by large language models, which have a significant influence on companies.

One such company is Wintics, an innovative firm that builds AI software for smart cities and that operates in the application space of the tech value chain. Since it was founded in 2017, Wintics has used deep learning algorithms to gather data from cameras installed along roads, on buildings and elsewhere in cities. Speaking at the conference, Wintics co-founder Quentin Barenne reminded investors that AI can be a buzzword that entrepreneurs use to attract investors and stressed the need to do in-depth financial, social, tax and especially technical due diligence, with an AI focus.

Ardian would like to extend its warmest thanks to the experts who shared their analyses and thoughts and helped us to deepen our understanding of AI's potential: Mathias Burghardt (Executive Vice-President and CEO of Ardian France), Philippe Aghion (Collège de France), Vincent Luciani (Artefact), Frister Haveman (Gain.pro), Claire Calmejane (CAILEG, Hub France IA), Riaan Potgieter (StepStone Group), Andrea Andorno (SAGAT Capital, Turin Airport), Marco Di Dio Roccazzella (JAKALA), Guillaume Liegey (Explain), Philippe Limantour Ph.D. (Microsoft), Fanjuan Shi, Ph.D. (Prosol), Marion Calcine (Infrastructure, Ardian), Pauline Thomson (Data Science, Ardian), Clément Marty (Digital Transformation, Ardian), Quentin Barenne (Wintics), Christophe Duverne (Ardian Semiconductor), Marco Trombetti (Translated), Dominic Ward (Verne), Lise Fauconnier (Ardian Semiconductor), Jonas Corné (Greenbyte), the Ardian Growth , Expansion and Buyout teams.

Find out more about the conference speakers here

• Mathias Burghardt Executive Vice-President and CEO of Ardian

• Pauline Thomson Head of Data Science and Managing Director in the Infrastructure team at Ardian

• Marion Calcine Chief Investment Officer in the Infrastructure team & Senior Managing Director at Ardian