Can Artificial Intelligence help institutional investors in their Private Equity (PE) recommitment strategies? The answer is positive according to the results of a STAREBEI research project with the University of Luxembourg presented online in January 2022 under the title “Toward AI Recommitment Strategies for ESG integration in Private Equity”.

Looking for better investment returns, many institutional investors (pension funds, insurers, endowments…) have been diversifying into PE. However, achieving and maintaining high allocations to PE and keeping them at the targeted level is a complex task and needs to be balanced against the risk of becoming a defaulting investor.

Investors need decision aid algorithms producing reliable and robust sustainable and trustworthy recommitment strategies such as those tested by this research project, one of the ten research projects at the University of Luxembourg awarded early access to MeluXina, Luxembourg’s new supercomputer.

This proof of concept is the first attempt to embed AI approaches to PE recommitment strategies. Results have been published in two international conferences on AI/Computational Intelligence with a ongoing third  financial publication (Financial Analyst Journal) submitted. Click here for the presentation.

The integration of Environmental, Social and Governance (ESG) criteria in AI recommitment strategies in Private Equity will require further research.

STAREBEI (STAges de REcherche BEI-EIB research internships) is a programme that provides grants to universities in order to finance junior researchers carrying out research projects proposed by the EIB Group (EIB and EIF) under the joint supervision of a university tutor and an EIB co-tutor.

To date, 65 young researchers from 41 universities in 14 European countries have benefited from the STAREBEI programme.