Partnering with New York firm Parkway Venture Capital has helped alternative asset manager Arcapita better identify high-potential artificial intelligence (AI) investment opportunities for its ARC AI Portfolio, Neil Carter, the firm’s managing director of US private equity, told IFN Investor.
Adopting a co-investment stance, “this partnership adopts a private equity approach, focusing on high-conviction investments rather than the traditional venture capital ‘spray and pray’ model”.
The ARC AI Portfolio has committed to two existing Parkway VC ventures.
Parkway VC joined the US$70 million Series A round in 2023 for AI-powered robotics firm Figure AI – which has reportedly secured strategic partnerships with BMW and Amazon, as well as investments from Microsoft, OpenAI and Nvidia.
The other Parkway VC investment is in SandboxAQ, involved in quantum computing applications to advance cybersecurity and materials science. This firm was initiated within Alphabet and claims the backing of former Google CEO Eric Schmidt, Salesforce’s Marc Benioff and Allianz.
Neil said the ARC AI Portfolio will initially deploy capital across five identified seed assets – the remaining assets are either in the final stages of identification or yet to be disclosed. Plans are to allocate 50% of available investor capital to the seed assets and the remaining 50% to follow-on funding rounds or additional high-growth opportunities within the next 12 to 24 months.
“A portion of the funds may also support subsequent funding rounds for the seed assets, ensuring a robust and scalable growth trajectory.”
Neil said the ARC AI Portfolio has been fully subscribed after the offer was opened to its network of clients – which includes institutional and high net-worth individual investors.
In offering exposure to early-stage firms at the forefront of the AI revolution, Neil said: “While it diversifies beyond the traditional focus, this investment aligns with Arcapita’s vision to foster innovation and growth in emerging technologies. It underscores the firm’s commitment to advancing industries with profound global impact while adhering to its Shariah compliant principles.”
Although these AI investments are US-based, Neil said Arcapita often considers global expansion opportunities with a focus on GCC and Bahrain in particular. Adopting a private equity strategy which it defines as ‘essential business services’, Arcapita’s outlook encompasses a range of functions deemed critical to the smooth operation of economies.
“These services are typically cash-generative, asset-light, and contracted rather than transactional, providing resilient and sustainable revenue streams. Examples include facilities management, building maintenance, fire safety, IT services and waste treatment.”
Neil pointed to how within the MENA region, Arcapita executed this strategy with investments such as UAE payment solutions provider NeoPay and DataFlow, a provider of credential verification services in the GCC.
“Over the past 20 years, the firm has successfully invested more than US$17 billion in private equity and overseen approximately 50 real estate investments with a total value of US$13 billion.”
