Apple Develops AI, PE Slumps in the First Half of the Year and China's Growth Slows in this Week's Edition...
Take a Lap Around the Industry
Real Estate Woes and Sluggish Dealmaking Dent Goldman Sachs' Profits (Bloomberg)
Distressed U.S. Office Sector Surges to $24.8B, Surpassing Troubled Malls (Bloomberg)
Carvana's Pledge to Cut Debt Sends Stock Price Surging (Reuters)
Onex Corp. Unveils $750M Transportation Fund to Drive Growth (Bloomberg)
Apple Quietly Developing AI Tools to Challenge Competitors
Apple Inc. is quietly venturing into the realm of artificial intelligence (AI) with the development of its own tools that could rival those of OpenAI, Google, and other industry players. The company has built its own framework, known as "Ajax," to create large language models, the foundation of AI systems like ChatGPT and Google's Bard. In addition, Apple has created an internal chatbot service referred to as "Apple GPT." The company's AI efforts have gained momentum in recent months, with multiple teams collaborating on the project and addressing privacy concerns. Despite Apple's historical integration of AI features in its products, it has fallen behind competitors in the burgeoning generative tools market. However, Apple's recent focus on AI signals its recognition of the transformative potential of generative AI in revolutionizing user interactions with technology. To catch up, Apple has laid the groundwork with the Ajax framework and an internal ChatGPT-like tool. While the company has not revealed its commercialization strategy, it is actively working on improving its models and aims to make a significant AI-related announcement in the near future.
"The company was caught flat-footed in the past year with the introduction of OpenAI’s ChatGPT, Google Bard and Microsoft’s Bing AI...The technology has captured the imagination of consumers and businesses in recent months, leading to a stampede of related products."
Mark Gurman, Bloomberg
Private Funding Pulse Check
Bowery Valuation, the first tech-enabled commercial appraisal firm, has recently raised $16.3M in their Series B funding round, with the participation of Navitas Capital, a family office based in Rijn, Netherlands
Domenic Ferrante's Family Office, The Ferrante Group, has invested in a $30M Series A funding round in RADAR, a platform combining RFID and computer vision to automate the retail store process
In a recent Venture follow-on round, the Colruyt Family participated in an investment totaling $28M in Sensorfact, a smart monitoring company aiming to reduce the waste of industrial companies
Illusian has joined a $25M Seed investment round in Isometric, a London, U.K.-based carbon removal registry and science platform
Private Equity activity has seen a significant decline in the first half of 2023, following a chaotic year of rising interest rates, a banking crisis and geopolitical turbulence. The uncertainty surrounding global markets has hindered dealmaking, leaving buyers and sellers at odds over asset valuations and financing challenges. However, there are signs of a potential turnaround. Public markets have rebounded strongly, with the S&P 500 and Nasdaq showing significant growth. In major economies, inflation is showing signs of moderation, while banks are making significant strides in strengthening their financial positions. With pressure mounting on the industry to restart the capital flywheel, there is a growing need to increase distributions to LPs through exits, GP-led secondaries, recapitalizations, or other liquidity solutions.
"With the clock ticking on a record $3.7 trillion in dry powder ($1.1 trillion in buyout funds), alternative asset managers have ample incentive to get moving after four quarters of relative inactivity. They also face growing pressure to free up the massive glut of un-exited portfolio companies jamming the fund-raising flywheel."
Bain & Company
Navigating China's Growth Slowdown
China's economic growth prospects are raising concerns about its path to prosperity. With an expected annual growth rate of around 3%, falling short of expectations, and high youth unemployment, challenges are mounting. A burst property bubble, imbalances in investment and consumption, and mounting local government debt threaten stability. Government control over private businesses adds complexity. Compounding the issues are a diminishing workforce, a shrinking consumer base, and an aging population. Addressing the underlying structural weaknesses and igniting consumer demand are crucial, but concerns persist regarding the level of commitment to implementing necessary reforms. China's economic problems exceed Japan's and may lead to social instability in a nation of 1.4 billion people. Collaborative efforts and necessary reforms are crucial to secure China's prosperous future.
"The demographic problem, hard landing of the property sector, heavy local government debt burden, pessimism of the private sector as well as China-U.S. tensions do not allow us to hold an optimistic view towards mid- to long-term growth..."
Wang Jun, Huatai Asset Management
Insights from Advisor Growth Strategies Principal on Key Trends in RIA and Wealth Management for 2023
In a recent interview, Brandon Kawal, Principal at Advisor Growth Strategies, discusses important factors to watch in the registered investment advisor (RIA) and wealth management space this year. Talent acquisition and retention play a crucial role as the number of financial advisors remains stagnant. Firms excelling in attracting and retaining top talent are more likely to experience organic growth and M&A success. Emphasizing organic growth strategies, wealth managers aim to deepen client relationships and differentiate themselves in a competitive market. Additionally, M&A activity has shifted towards a more cautious approach, with a focus on collaborative deals and engaging the next generation of talent. RIAs are encouraged to consider prioritizing organic growth, talent acquisition, and unique value propositions to maintain their competitiveness.
"M&A is likely to be impacted by the same factors in 2023. On the one hand, the tailwinds driving supply such as succession and the search for scale are still in place. Demand appears to remain on track, and institutional capital continues to search out opportunities. However, changes in the cost of capital and potential market volatility will shape deal-making conversations and require creativity from both sides."
Carlyle has appointed Shane Clifford as the new head of its Private Wealth Strategy Team
This is one of Carlyle CEO Harvey Schwartz' first major hires since taking over in February
Shane comes from Franklin Templeton Investments having spent over four years as a Senior Managing Director of Alternative Strategies
The action underscores a wider pattern of private equity firms increasingly pursuing higher amounts of private funding (PENews)
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
