DWS Group (DWS) has acquired a 24.9% stake in Arabesque AI, a UK-based company that focuses on Artificial Intelligence (AI) to predict stock price developments via its proprietary AI engine, combining big data, machine learning, and high-performance computing.
As part of the operation, both companies have agreed on a strategic partnership to enhance the capabilities of the AI engine, and to develop sophisticated AI-based investment solutions.
Both the price and further financial details of the transaction have not been disclosed, DWS confirmed that closing transaction had already taken place.
Key to the partnership will be the ongoing development of the AI engine, combining DWS' investment expertise with Arabesque AI's machine-learning and high-performance computing capabilities. Furthermore, innovative investment products and services that use the AI engine will be jointly developed. For this, both companies have agreed to establish an expert working group for ongoing collaboration that will enable DWS to strengthen its AI knowledge and capabilities going forward and to accelerate its digital readiness efforts.
Asoka Woehrmann, CEO of DWS, said: "The strategic partnership with Arabesque AI is the next step towards the digitalisation of DWS. It will clearly strengthen our digital capabilities and, in particular, our Artificial Intelligence know-how. We will be able to harness disruptive technology within the asset management industry for our advantage.
"In the future, the AI engine will deliver innovative signals that will help us identify additional alpha sources, and will enable us to make smarter decisions."
Yasin Rosowsky, co-CEO of Arabesque AI, added: "Artificial Intelligence is rapidly shaping global asset management, with investors increasingly exploring how to harness the power of AI technology to gain a competitive edge. We are delighted to welcome DWS Group as a strategic partner of Arabesque AI, combining their vast investment expertise with our AI technology to deliver market-leading AI powered portfolios and services.
"This partnership will see us collaborate with DWS Group on innovative new AI-based solutions, as well as expanding the current capabilities of the Arabesque AI engine", added Dr Qasim Nasar-Ullah, Co-CEO of Arabesque AI. "AI will transform portfolio management, and has the potential to further the mainstreaming of ESG across global markets."
The acquisition comes to bolster existing tie-ups between the two parties following last year's DWS investment in a minority stake in Arabesque S-Ray GmbH, an ESG data provider. This deal, which was for 2.68% of the ESG-scoring company, also coincided with initial talks to take a stake in Arabesque AI.