By Divya Chowdhury and Federico Maccioni
DAVOS, Switzerland, Jan 21 (Reuters) – Alternative investment firm Investcorp is avoiding big investments in data centers, a space it considers too saturated, its vice president and CIO said on Wednesday, opting instead for sectors that offer better returns and protection against geopolitical risks.
Investors have poured billions of dollars into artificial intelligence, including data centers, as high expectations about what many see as a transformative technology have driven spending, creating insatiable demand for capital.
However, concerns have now begun to arise over sky-high company valuations and fears of a possible AI bubble.
“Ironically, we are not really delving into data centers primarily because… too much capital has been invested in them. The returns have been compressed to levels where you could arguably get a better risk-return ratio in other areas,” Rishi Kapoor told Reuters.
Speaking on the sidelines of the World Economic Forum in Davos, Switzerland, Kapoor said Investcorp is focusing on investments in domestic professional, business and healthcare services, IT services and transportation.
“We are picking and choosing, placing our bets in areas where we clearly see high conviction and some degree of insulation, if not resilience, to these risks that would otherwise be difficult to quantify or mitigate,” he said.
Investcorp is the largest alternative investment company in the Middle East and had $60 billion in assets under management at the end of June.
It is focusing on the United States, the Gulf region and India, Kapoor said, adding that Investcorp sees a healthy IPO pipeline and context in these markets. The company has a handful of assets that could potentially list this year, he added, without providing further details.
Asked about the red-hot Indian market, which last year ranked second in the world for primary equity issuances, Kapoor said the momentum is likely to continue and IPOs demonstrate “a very valid and viable route to monetization for private sponsors.”
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(Reporting by Divya Chowdhury in Davos and Federico ‌Maccioni in Dubai; Editing by Joe Bavier)