Private equity and venture capital firms are handing over administrative and back-office tasks to artificial intelligence agents in order to shift staff focus to more pressing matters. AI is becoming increasingly embedded across the UK private capital industry, with nine in ten firms now using the technology to support at least one business activity, according to exclusive data from UK Private Capital shared with City AM.
Over 90 per cent of firms confirmed they use AI to perform due diligence checks and document reviews, with a further seven per cent planning to do so.
Meanwhile, 84 per cent of firms use AI for deal sourcing and market mapping alongside administrative and back-office tasks.
Private capital firms are handing their admin burden to AI in a bid to offload staff’s manual workload, improve investor relations and accelerate deal execution. But some firms are also leaning on the technology to assist in portfolio management. Nearly 80 per cent reported using AI for portfolio monitoring, performance analysis and investment reporting.
UK Private Capital chief executive, Michael Moore, said: “Adoption is now widespread across the industry.
“By combining capital, expertise and long-term support, private capital firms are playing a critical role in helping companies identify practical uses for AI, build the right capabilities and manage adoption effectively.”
Encouraging AI use #
Firms are also urging their portfolio companies to use AI, particularly for admin tasks, with 93 per cent encouraging adoption of the tech.
Others called on their companies to use AI in product developments, data analysis and customer support.
In contrast, the use of artificial intelligence in compliance, legal and risk management as well as financial reporting was not as encouraged, reflecting the greater regulatory and governance burden associated with these branches of private capital.
AI minister Kanishka Narayan said: “These findings show the important role private capital firms are playing in supporting AI adoption, helping the businesses they back identify practical uses for the technology and put them into practice.”
Narayan also spoke of the government’s ambition to make the UK the “fastest adopter of AI in the G7”. Former chancellor Rachel Reeves pledged a record £2.5bn to the goal.
Financial services awareness #
Despite accelerated adoption among the private capital industry, the Financial Conduct Authority (FCA) has called for greater powers to regulate AI.
Their call for a tighter grip comes as more consumers turn to chatbots for financial advice. The watchdog argued AI will become a “defining force” in retail financial services over the next decade, changing how firms operate and how markets function.
AI tools are not regulated by the watchdog, meaning consumers are unable to access compensation or be protected from potential harm by the FCA if advice goes wrong.