Berkshire, Arsenal Capital hire AI execs; arms race is on!

Buyout firms are adding more data analysts to their payrolls, particularly experts in artificial intelligence and machine learning, as a way of staying ahead of the competition for deals and, ultimately, investor dollars.

Among the latest moves, Boston-based technology investor Berkshire Partners this spring hired data scientist Limor Gulchin as a vice president of artificial intelligence and machine learning to work with portfolio companies.

This March New York City-based buyout shop Arsenal Capital Partners announced that it had formed a digital, AI and data analytics group to support investments and work with healthcare portfolio companies. Its starting lineup includes Dr. Dimitris Agrafiotis, director of digital, analytics and AI and previously chief digital officer at Generate Biomedicines; Scott Blanchette, senior advisor and product & technology director and previously senior managing director of Greenbrier Group; and Nick Reding, director of data science and AI and founder of Allium Health.

More details about the new roles were not immediately clear, and we were unable to get comment from either firm for the story to learn more about the positions.

Similar hires over the past year include that of Nathan Atkinson, who joined London-based buyout firm Cinven last year as an executive-AI and machine learning after previously serving as a data science lead at Accenture. And New York City-based middle-market buyout shop Blue Wolf Capitalrecently hired former EY-Parthenon senior associate Kyle Fisher to serve as an associate of portfolio analytics. He joins Senior Manager-Portfolio Analytics Blake Montag, who joined last May.

The Upshot: To be sure, firms such as Bertram Capital, Blackstone Group, Blue Wolf Capital, Carlyle Group, Insight Partners, Shore Line Capital, Summit Partners and TCV have already invested heavily in data analytics. Others have been working with outside vendors on similar projects. But the advent of generative AI and other machine learning tools sets the stage for rapid evolution on a grand scale, from deal sourcing to due diligence to adding value to portfolio companies. Practically everyone in PE will have to gain a working knowledge of these technologies.

Job Opportunities: Certainly the trend is already impacting the job market, as PE firms scramble to hire people with expertise in data science. Recent examples of job openings in this realm include the following:

  • New York City-based credit, equity and real assets investor Apollo Global Management, which in 2021 hired Vikram Mahidhar as a PE operating partner focused on data and digital transformation that includes AI, seeks an AI architect to lead efforts in implementing generative AI at the firm.
  • Baltimore-based middle-market buyout firm Access Holdings Management Company seeks a data scientist.
  • Montreal-based Canadian middle-market investor Sagard seeks a head of AI in Toronto to lead the firm’s AI strategy and work with portfolio company CTOs.
  • Los Angeles-based credit specialist The TCW Group seeks an AI-focused software engineer to develop models that can produce content, forecast trends and make data-driven decisions.

Practical Uses: Almost every aspect of the PE market stands to be impacted by the rise of AI and machine learning tools. Here are just a few of the trends that we’re hearing about:

  • Evaluating Investments: Data analytics has evolved from compiling and analyzing data to learning from it and then creating something new, according to Nevin Raj, co-founder and chief operating officer at Grata, which provides business development and deal sourcing tools to private investment firms. Said Raj: “It’s going to be less of an advantage that your firm can process 100 CIMs a week, and it’s going to be more to your advantage that you find an insight that no one else finds about a company because you asked different questions.” An AI tool, for example, may be able to learn enough from those CIMs and related sources to predict the risks and potential of individual companies.
  • Measuring Risk: PE firms have to consider how AI is going to impact the performance of prospective portfolio companies, said Nadim Malik, founder and chief executive officer at SPS by Bain & Company, which provides deal sourcing and data analytical tools to PE firms and M&A advisors. “They have to look at their portfolio companies and make sure they’re evolving and making the right moves strategically,” Malik told us.
  • Assessing Opportunities: At the same time, Malik said, firms are looking at how to use AI to produce cost savings and to drive expansion and growth. AI tools, for example, can make short work of the research needed to identify opportunities to expand into other markets, Malik said.