Credit co investments
Does anyone else in the forum work with credit co investors (Hamilton Lane, Stepstone, etc)? Curious if you think the work of making co investment memo / underwriting can be replaced by AI soon.
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Based on the most helpful WSO content, while AI can handle tasks like calculating credit metrics, building financial models, and even generating basic memos, the nuanced judgment required for co-investment underwriting and memo creation is unlikely to be fully replaced anytime soon. AI struggles with assessing "known unknowns," relative value, and the intangible aspects of risk that are critical in credit co-investments.
Additionally, grooming juniors for senior roles remains essential, as senior professionals are needed to interpret AI outputs and make strategic decisions. Automation may streamline parts of the process, but the relationship-driven and judgment-heavy aspects of co-investment work will likely remain human-centric for the foreseeable future.
Sources: Q&A: VP in LO Public Credit, Is Lev Fin Credit Risk essentially?, Q&A: VP in LO Public Credit, Automation in fundamental finance roles, Google partners with Goldman Sachs in automating Investment Banking
yes in 1-2 years. ai products for underwriting and credit risk are in development right now so there's still a bit of time until it's able and ready but it'll happen real soon. The headcount for financial and credit analysis will be reduced big time.
Yes for the memo no for underwriting. Underwriting includes interpreting portfolio fit and alignment with mandate not only evaluating deals on a standalone basis. I’m observing a need for experienced investors to present to IC and their LPs but I concur that the junior/mid layer will be significantly downsized.
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