Sovereign Fund GIC Uses AI ‘Devil's Advocate' for Dealmaking
GIC on Thursday unveiled a video demonstration of its newest platform to highlight how AI is changing the way the Singapore state investor does deals. About an hour after uploading data and background materials on a proposed investment, the bot spits out a detailed summary of the key issues and examples of questions an investment committee member might ask before giving it a green light.
To truly prepare for pitching to human bosses, GIC staff can also switch to hard mode and 'Spar with an Agentic Devil's Advocate' - a live chat service named 'Ask Charlie' that will simulate conversations and ask curveball questions just as a real committee member might.
To build the in-house AI platform, which is meant for internal-use, GIC customized several large language models and input reams of its own data gleaned from four decades of dealmaking around the world.
'We've been around since 1981, so we've got 44 years of data,' said GIC Group Chief Investment Officer Bryan Yeo. 'The data that we have across different asset classes, across different regions through our investments and through our deals actually is the competitive edge we have.'
GIC is part of a growing cohort of investment firms racing to use AI to transform their operations and enhance returns. Companies including General Atlantic and Blackstone Inc. have touted their developments, while trying to back startups that could one day outshine Alphabet Inc. and Meta Platforms Inc.
And while GIC's AI demonstration could be brushed off as never-to-be-used vaporware if shown by a Silicon Valley startup, few can match the heft and access of the fund - an investment giant estimated by consulting firm Global SWF to manage $847 billion in assets.
Read: Singapore's Cautious Wealth Fund Takes More Private Markets Risk
Even the fake deal used in the demo, codenamed 'Project Blue Sky,' was a quiet flex of GIC's size. In a $50 billion privatization for an unnamed aeronautical company, $30 billion would come from GIC and its co-investors plus $20 billion in loans, with a planned exit within seven years. That's not a stretch for a fund that was part of a rejigged €6.7 billion ($7.8 billion) deal last week, and helped close a $14 billion take-private transaction for Store Capital Corp. in 2023.
The firm's internal teams are using the large language models - Yeo declined to say which - to develop agentic personas to populate the virtual investment committee. Three examples included a risk manager, a contrarian investor and an optimistic investor. Agentic AI systems can operate independently, with less human supervision than generative AI.
Deal teams are already using the service, which is currently restricted to asking questions rather than passing final judgment on any deal. But chatbots serving up tough questions have already proven popular with GIC's top leaders.
Chief Executive Officer Lim Chow Kiat said the most interesting interactions he's had with the AI agents come from asking them to pose questions that stimulate his thinking. He also repeats the same questions multiple times to see how the responses vary, to better understand their reasoning process.
'We have a separate kind of research tool, which we call Research Assistant, and I use it as a colleague that you can have a back and forth with,' he said.
In addition, GIC has been buying stakes in external AI companies, especially in the US.
'Trends like AI benefit the US the most,' because they have so many companies that are able to leverage it, said Lim.
GIC is investing in three types of AI firms: enablers that build infrastructure for the sector; monetizers that create and sell AI-infused products and services, often in the form of startups; and adopters which are using AI to improve efficiency in their core business.
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
4 hours ago
- Mint
Boeing Defense Workers Reject Contract in New Labor Turmoil
(Bloomberg) -- Boeing Co. faces the risk of a strike at its St. Louis defense hub after union workers rejected a contract offer that would boost their wages by 20% over four years. The International Association of Machinists and Aerospace Workers Local 837, which represents 3,200 Boeing defense workers in Missouri and Illinois, voted overwhelmingly against the new terms Sunday. The Boeing proposal 'fell short of addressing the priorities and sacrifices' of the company's skilled workforce, the union said in a statement. 'Our members are standing together to demand a contract that respects their work and ensures a secure future.' While the present contract expires at 11:59 p.m. Central Time on Sunday, management still has a chance to win over rank-and-file members by sweetening its offer during a seven-day 'cooling off' period. If that's unsuccessful, IAM Local 837 workers will walk off the job and shut down manufacturing in Boeing's military aircraft hub. The aerospace manufacturer is seeking to avoid another labor standoff after a strike by a Seattle-based Machinists union crippled manufacturing at its commercial jet factories for more than two months last year. Boeing could not be immediately reached for comment. Any labor strife would be costly for Boeing's defense division, which hasn't earned an annual profit since 2022 and is in the middle of a turnaround. A strike would shut down assembly lines for Boeing's F-15 and F/A-18 fighter jets, T-7A trainer, MQ-25 drone refueler and other weapons systems. The labor uncertainty will be a focus for analysts when Boeing reports quarterly earnings on Tuesday. It's also a bellwether as GE Aerospace launches contract negotiations with a separate IAM local on Sunday. St. Louis workers last went on strike in 1996 and don't have a history of activism, unlike Boeing's unions in the Pacific Northwest, according to Scott Mikus, an analyst with Melius Research. Union members initially rejected management's offer during the last negotiation with Boeing in 2022, before accepting a three-year deal with a 14% general wage increase and cost-of-living adjustments. While Puget Sound labor leaders endorsed Boeing's initial offer last year, they were rebuffed by rank-and-file members embittered by an earlier 10-year contract that stripped away pensions and locked in low wage increases while inflation soared. The lengthy strike squeezed the company's working capital and spurred Boeing to sell equity worth almost $24 billion. --With assistance from Bill Haubert. (Updates with comments from labor union in third paragraph, attempt to reach Boeing in fifth paragraph.) More stories like this are available on
&w=3840&q=100)
Business Standard
5 hours ago
- Business Standard
EM debt hedge funds eye safeguards as world-beating rally blooms
Hedge funds dedicated to emerging-market debt are increasingly turning to risk-mitigating strategies to ensure they lock in double digit gains as a broad rally in developing nation assets deepens. After a banner first half of the year, hedge funds targeting EM debt have returned nearly 13 per cent on an annual basis — more than their peers positioned in any other asset class, according to data based on Bloomberg indexes. The latest global financial flows data shows the asset class remains thriving and the extra yield investors demand to hold the sovereign debt of developing nations over US Treasuries just hit a 15-year low. Such tight pricing, along with uncertainty over US policies and global conflicts, is pushing hedge funds to curb risks as they ride the historic rally. The funds do this by swapping longer-maturity bonds in their portfolios for less risky shorter-dated ones. They also focus on higher-rated debt and the most-liquid securities while keeping an ample cash pile. 'Do you just want to be massively long on credit on these valuations? I'd say probably not,' said Anthony Kettle, who co-manages BlueBay Emerging Market Unconstrained Bond Fund with Polina Kurdyavko and Brent David. 'Having a little bit of dry powder evidently makes sense, and also running elevated cash levels.' To be clear, Kettle said, there's still a 'decent environment' to gain additional returns as funds become more selective and can profit from both rising and falling asset prices, unlike index-based investors. The $784-million BlueBay fund has returned 17 per cent over the past 12 months. Investors have taken advantage of EM inflows stoked by increased interest for alternative assets amid US policy unpredictability, which has also weakened the dollar. While many developing countries have come out of distressed debt levels as sentiment improved, further risks include another Iran-Israel flare up and potential additional increases in US tariffs, including on the buyers of Russian energy. President Donald Trump's administration has caused a 'breakdown of the traditional safe haven correlations' by shaking up the post-Cold War world order, creating an 'unusual and unpredictable' environment, said Demetris Efstathiou, the chief investment officer of Blue Diagonal EM Fixed Income Fund. 'It is very hard to predict what they will do next with tariffs, and on top of that you have ongoing wars,' Efstathiou said. His fund is 'very conservatively' positioned with shorter-maturity bonds and he avoids weak credits to protect the portfolio in the event of a global slowdown and market downturn. He has increased holdings of AAA- and AA-rated EM sovereigns along with less-indebted countries with large domestic markets like Brazil, Turkey and Mexico. EM-dedicated bond funds have received $31 billion in inflows year-to-date, with positioning increased in each of the last 14 weeks as global markets recalibrate after an era of US dominance. A near-record $5.7 billion piled into the asset class in the week though July 23, according to EPFR Global data provided by economists at Bank of America Corp. For some, flows of such a magnitude signal that EM debt is alrdy predicting the best-case scenario. 'The market is now priced for a Goldilocks scenario with the risk of a severe recession receding significantly and expectations' of one or more rate cuts by the Federal Reserve, the $847 million Enko Africa Debt Fund said in a letter to clients. Managed by Alain Nkontchou, the Africa-specific hedge fund has returned 24 per cent over the past year. Nevertheless, the expected volatility means that traditional buy-to-hold trades may not necessarily succeed and that hedge funds will prioritize holding more liquid assets to ensure an easier exit in case sentiment turns, according to ProMeritum Investment Management LLP, a $700-million fund that invests in developing markets outside China. 'Liquidity management will be critical in the second half of the year because of an unpredictable environment and geopolitical risks,' said Evgueni Konovalenko, managing partner and head of strategy at the firm. Such a focus is needed 'to take advantage of both short and long positions with sudden policy changes and a daily barrage of headlines.' What to Watch: Markets will look out for any trade talks with the US ahead of the Aug 1 deadline for Trump's latest tariffs to take effect China manufacturing and non-manufacturing PMI; second-quarter GDP data for Taiwan and Mexico, South Korea export data Brazil, Chile and South Africa central bank meetings on benchmark interest rates; South Africa may cut rates by another 25 basis points to 7 per cent, despite the likely rise in inflation later this year. (With assistance from Jorgelina do Rosario)
Mint
9 hours ago
- Mint
EM Debt Hedge Funds Eye Safeguards as World-Beating Rally Blooms
(Bloomberg) -- Hedge funds dedicated to emerging-market debt are increasingly turning to risk-mitigating strategies to ensure they lock in double digit gains as a broad rally in developing nation assets deepens. After a banner first half of the year, hedge funds targeting EM debt have returned nearly 13% on an annual basis — more than their peers positioned in any other asset class, according to data based on Bloomberg indexes. The latest global financial flows data shows the asset class remains thriving and the extra yield investors demand to hold the sovereign debt of developing nations over US Treasuries just hit a 15-year low. Such tight pricing, along with uncertainty over US policies and global conflicts, is pushing hedge funds to curb risks as they ride the historic rally. The funds do this by swapping longer-maturity bonds in their portfolios for less risky shorter-dated ones. They also focus on higher-rated debt and the most-liquid securities while keeping an ample cash pile. 'Do you just want to be massively long on credit on these valuations? I'd say probably not,' said Anthony Kettle, who co-manages BlueBay Emerging Market Unconstrained Bond Fund with Polina Kurdyavko and Brent David. 'Having a little bit of dry powder evidently makes sense, and also running elevated cash levels.' To be clear, Kettle said, there's still a 'decent environment' to gain additional returns as funds become more selective and can profit from both rising and falling asset prices, unlike index-based investors. The $784-million BlueBay fund has returned 17% over the past 12 months. Investors have taken advantage of EM inflows stoked by increased interest for alternative assets amid US policy unpredictability, which has also weakened the dollar. While many developing countries have come out of distressed debt levels as sentiment improved, further risks include another Iran-Israel flare up and potential additional increases in US tariffs, including on the buyers of Russian energy. President Donald Trump's administration has caused a 'breakdown of the traditional safe haven correlations' by shaking up the post-Cold War world order, creating an 'unusual and unpredictable' environment, said Demetris Efstathiou, the chief investment officer of Blue Diagonal EM Fixed Income Fund. 'It is very hard to predict what they will do next with tariffs, and on top of that you have ongoing wars,' Efstathiou said. His fund is 'very conservatively' positioned with shorter-maturity bonds and he avoids weak credits to protect the portfolio in the event of a global slowdown and market downturn. He has increased holdings of AAA- and AA-rated EM sovereigns along with less-indebted countries with large domestic markets like Brazil, Turkey and Mexico. EM-dedicated bond funds have received $31 billion in inflows year-to-date, with positioning increased in each of the last 14 weeks as global markets recalibrate after an era of US dominance. A near-record $5.7 billion piled into the asset class in the week though July 23, according to EPFR Global data provided by economists at Bank of America Corp. For some, flows of such a magnitude signal that EM debt is already predicting the best-case scenario. 'The market is now priced for a Goldilocks scenario with the risk of a severe recession receding significantly and expectations' of one or more rate cuts by the Federal Reserve, the $847 million Enko Africa Debt Fund said in a letter to clients. Managed by Alain Nkontchou, the Africa-specific hedge fund has returned 24% over the past year. Nevertheless, the expected volatility means that traditional buy-to-hold trades may not necessarily succeed and that hedge funds will prioritize holding more liquid assets to ensure an easier exit in case sentiment turns, according to ProMeritum Investment Management LLP, a $700-million fund that invests in developing markets outside China. 'Liquidity management will be critical in the second half of the year because of an unpredictable environment and geopolitical risks,' said Evgueni Konovalenko, managing partner and head of strategy at the firm. Such a focus is needed 'to take advantage of both short and long positions with sudden policy changes and a daily barrage of headlines.' --With assistance from Jorgelina do Rosario. More stories like this are available on
