Private equity investments in AI, machine learning tick up in Q1

Global private equity deal values in artificial intelligence and machine learning companies are showing signs of recovery in 2023 after slumping to the lowest levels in the fourth quarter of 2022 since at least 2020.

From Jan. 1 to May 14, private equity and venture capital firms announced $10.34 billion of investments across 342 transactions in the AI and machine learning sector worldwide, according to S&P Global Market Intelligence data.

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During the first quarter, AI and machine learning companies pulled in $5.81 billion across 247 deals. The aggregate transaction value in the first quarter was a marked improvement from the previous quarter, up 49.7%.

The first-quarter total was down 60.6% from $14.74 billion across 485 transactions during the corresponding period in 2022. Just one transaction surpassed the $1 billion threshold in the first quarter.

The US and Canada had the most number of transactions in the year to May 14, with 147 deals worth an aggregate $5.05 billion, followed by Europe with 94 transactions totaling $4.54 billion.

Largest transactions

Silver Lake Technology Management LLC's $2.70 billion offer to acquire Germany's Software AG, which offers solutions for predictive analytics, artificial intelligence and machine learning, is the largest private equity investment in the space year to date. The offer stands at €30 per share, contingent on an acceptance threshold of 50% plus one share.

Francisco Partners Management LP's acquisition of continuous intelligence platform Sumo Logic Inc. for $1.42 billion marks the second-largest deal thus far in 2023.