Investcorp Brings AI Lens To Deals Arabian Post

2026-06-08 07:26:58

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Arabian Post Staff -Dubai

Bahrain-based Investcorp has launched an Artificial Intelligence Investment Framework to guide its investment decisions across private equity, real assets and credit, positioning the technology as a central factor in deal screening, portfolio construction and value creation across its global alternatives platform.

The framework, set out in a new report, formalises how the Manama-headquartered firm will assess AI-led opportunities and risks at a time when private markets managers are under pressure to show discipline in a sector marked by rapid adoption, high valuations and uneven commercial outcomes. The initiative places AI inside Investcorp's core investment process rather than treating it as a separate thematic strategy.

Investcorp said the framework will be applied across sourcing, diligence, investment committee work, portfolio monitoring and operational improvement within portfolio companies. The firm is targeting businesses and assets that are mission-critical, data-rich and resilient, where AI can improve productivity, scalability and profitability without weakening underwriting standards.

Mohammed Alardhi, executive chairman of Investcorp, said artificial intelligence represents“a fundamental shift in how value is created across the global economy,” adding that private markets require a selective, cross-platform approach rather than indiscriminate exposure to the technology cycle. Rishi Kapoor, vice-chairman and chief investment officer, said AI is being embedded“from sourcing and diligence through to portfolio management and value creation,” describing it as a lens for assessing opportunities, managing risk and enhancing performance.

The move comes as alternative investment firms are racing to adapt their operating models to AI. Large private equity groups have been building internal AI teams, signing partnerships with technology providers and pushing portfolio companies to automate workflows, improve pricing, strengthen customer analytics and reduce costs. At the same time, investors have grown more cautious about areas where capital inflows have already compressed returns, particularly data centres and high-profile AI infrastructure plays.

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Investcorp's approach reflects that tension. Kapoor said at Davos earlier this year that the firm was not pursuing large data centre investments because heavy capital inflows had reduced prospective returns. Instead, the firm has been focusing on domestic professional, commercial and healthcare services, IT services and transportation, with an emphasis on businesses offering clearer risk-return profiles and some insulation from geopolitical shocks.

That stance is consistent with the new framework's emphasis on selectivity. Rather than simply chasing companies branded as AI beneficiaries, Investcorp is seeking areas where AI can be measured through operational gains, stronger margins, better customer retention or improved decision-making. The strategy also recognises that AI can disrupt existing holdings, especially in software, outsourcing, media, business services and other sectors where automation can alter pricing power and labour intensity.

Investcorp, founded in 1982, manages about $62bn in assets and operates across private equity, real assets, credit and liquid strategies. Its private equity activity includes mid-market buyouts, growth investments and GP staking, while its real assets platform covers infrastructure and property. Its credit business spans collateralised loan obligations, broadly syndicated loans, structured credit and middle-market direct lending.

The firm's AI framework is expected to influence how it evaluates new acquisitions and monitors existing investments. In private equity, the focus is likely to fall on whether companies can use AI to improve sales productivity, procurement, customer service, compliance, product development and finance functions. In real assets, AI may help assess demand patterns, energy use, building operations, logistics networks and infrastructure resilience. In credit, it can support borrower analysis, portfolio surveillance, documentation review and early-warning systems for stress.

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The launch also comes during a period of broader adjustment in private markets. Higher interest rates over the past two years have made leverage more expensive, slowed exits and forced managers to focus more heavily on operational value creation. AI offers a potential route to margin expansion, but the technology also introduces fresh diligence challenges, including data quality, cyber risk, intellectual property exposure, regulatory scrutiny and questions over whether productivity gains can be converted into durable cash flows.

Private markets firms are also facing closer scrutiny from limited partners over how they use AI internally. Faster research and diligence tools can improve productivity, but investors expect stronger governance around model reliability, data privacy, bias, human oversight and accountability. Investcorp's framework attempts to address these concerns by linking AI deployment to disciplined underwriting and risk management rather than presenting technology adoption as an automatic source of returns.

Competition in the field is intensifying. Global buyout houses have been moving beyond passive exposure to AI by helping portfolio companies identify use cases and negotiate access to software, cloud and cybersecurity tools. Several managers have formed partnerships with major technology companies to speed up deployment across hundreds of portfolio businesses. For mid-market-focused firms, the challenge is to convert AI from a boardroom theme into measurable improvements at companies that may lack large internal technology teams.

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