AP3, Wafra Introduce Private Equity Investment Platform

Swedish pension fund AP3 and New York-based alternative investment manager Wafra Inc. have launched an investment platform called Covalent, which will initially be capitalized with $1.05 billion and focus on mid-market buyouts and growth equity investments, mainly in North America and Europe.

AP3 and Wafra describe Covalent as a collaborative asset owner platform that aims to develop and institutionalize a new approach to co-investing to earn risk-adjusted returns for its investors.

“For AP3, this is a way to accomplish cost-efficient, sustainable asset management as we strive to be a world-class investor,” Henrik Nordlander, AP3’s head of private equity, said in a release. “Covalent is further evidence that strategic partnerships among asset owners can support our commitment to generating superior net returns for our beneficiaries.”

Wafra likens Covalent to Capital Constellation, which it formed in 2018 in partnership with institutional investors, including the Alaska Permanent Fund, the Public Institution for Social Security of Kuwait and U.K. pension fund Railpen, to back private equity and other alternative mangers.

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“Like Capital Constellation, Covalent is intended to better align all parts of the private markets value chain and allow like-minded asset owners to achieve together what they could not alone,” the companies stated in the release.

According to AP3 and Wafra, Covalent will support and partner with private market asset managers to fund their investments, as well as collaborate on complementary deal flow, scaled resources and relevant data and intellectual capital by working with institutional investors worldwide.

The joint venture will seek out investment opportunities that include those led directly by the Wafra investment team, as well as investments with more than two dozen asset managers with whom Wafra has formed strategic investment relationships.

“By deploying flexible, patient capital and collaborating with highly skilled investment sponsors, we expect to continue to construct high quality portfolios of carefully selected private equity investments in targeted sectors alongside top tier investment firms,” Steve Moseley, Wafra’s managing director, said in the statement.

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Tags: Alternative Investments, AP3, Covalent, Henrik Nordlander, Private Equity, Steve Moseley, Wafra

Asset management firms are expected to make investments in artificial intelligence tools over the next 12 months, according to a report from cloud computing company Rackspace Technology.

Of asset managers surveyed, 63% said the current economic climate will cause them to invest in information technology over the next 12 months, as security threats compound, and as AI tools promise to help reduce costs, manage risks and inform decisions, according to the report.

The report also found that 73% of respondents believe pervasive AI will be the thing that has the most impact on their organization. Out of these respondents, 58% said an increase in regulation will be the most impactful thing for their organization, while 38% of respondents say hiring talent, capital constraints, cybersecurity and data privacy will have the most positive or negative impact on their organization.

Generative AI tools like ChatGPT took the world by storm in 2023, and the Rackspace report predicted that companies will actively implement AI in 2024. Some investment professionals, including CIOs, told CIO this year that they are using artificial intelligence tools to summarize meeting notes and perform other clerical tasks, although none so far have used the technology to directly inform investment decisions.

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“These results highlight an evolution in artificial intelligence, signaling a decisive shift from the theoretical exploration of generative AI,” said Jeff DeVerter, chief technology evangelist at Rackspace Technology, in the report. “The proliferation of pilot programs we saw in 2023 will result in active implementation in 2024.”

Among the challenges that asset managers report with AI implementation, labor issues are the most prevalent, according to the report. The overwhelming problem with implementing AI is a lack of talent, with 62% of asset managers saying they struggle to hire people with the requisite skill sets related to artificial intelligence.

Asset management firms also expect that AI will bring improved security, as 54% of surveyed asset firms identified security as the most expected benefit from AI in the near future.

Rackspace interviewed 1,420 IT professionals across many professions located in the Americas, Europe, the Middle East and Asia. The survey was conducted in collaboration with Dell and VMWare.

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Tags: AI, Artificial Intelligence, Asset Management, Jeff DeVerter, Rackspace