Andres Saenz, EY Global Private Equity Leader, explores three hypothetical future scenarios and how they impact PE’s right-to-win in 5-10 years.   

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The future for private equity (PE) is going to look very different in the coming years. New technology, tighter regulation, retail investor empowerment, growing digitalization and increased competition are set to impact heavily on how the PE industry functions. To bring these impacts to life, we explore three hypothetical scenarios for PE in this new landscape.

“Democratization of investing”

Retail investors (investing relatively small sums) can participate in the PE universe in a way they have never been able to before. New PE fund structures combine with online trading apps and brokerage platforms to allow ordinary investors access to the same functionality previously reserved for pensions, endowments and foundations.

“First artificial intelligence fund raises over US$20b”

A PE firm competes with top Silicon Valley names for talent and resources to build the first fund driven entirely by artificial intelligence (AI) and data analytics. Pulling data from thousands of disparate sources, the fund algorithmically originates deal ideas, monitors portfolio companies and charts an optimal path for exit.

“A private equity firm becomes the world’s largest employer”

While this represents great success for the PE sector, it also increases levels of responsibility. Regulatory bodies scrutinize more heavily the duty of care that PE firms have to their employees, portfolio companies and the general public.

PE firms must begin to think now about how they will thrive in a future in which these scenarios are playing out in real time. Acquiescing to a lagging position is not an option for PE if they want to remain competitive in 5-10 years as the industry landscape and right-to-win continues to evolve.