iCapital Network, a fintech startup which has developed a platform for investing in alternative assets, announced this morning it has raised $146 million in a funding round led by Hong Kong-based Ping An Global Voyager Fund.
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New investors Goldman Sachs, Affiliated Managers Group, Hamilton Lane and WestCap put money in the round in addition to existing backers BlackRock, UBS Financial Services Inc., Blackstone Group and BNY Mellon.
As part of the financing, BlackRock has taken a ”significant minority stake” in iCapital Network, which will operate as an independent company, the company said. I was curious as to what it meant by that the company said it “has a broad based of strategic investors, rather than being backed by any one large investor.”
New York-based iCapital Network – which has developed a distribution, administration and workflow platform for high net-worth access to alternative assets – had previously only raised a total of $36.9 million in known funding since its 2013 inception, bringing its total raised to $183 million, according to Crunchbase data. Previous backers include Credit Suisse, Pivot Investment Partners, and Morgan Stanley, among others.
The company has seen impressive growth, particularly in the last year. In 2019, iCapital said it upped the assets it services from $8 billion to $46.6 billion across more than 470 funds, 100,000 underlying accounts and 55 white label partnerships. Specifically, iCapital said it saw $12.1 billion in organic platform growth as well as growth as a result of its strategic partnership acquisitions. In the first half of 2019, iCapital acquired the alternative investment feeder fund platforms of both Bank of America and Morgan Stanley. The company also expanded its senior leadership during the year, and added nearly 100 employees to bring its total headcount to 218.
In a statement, iCapital Network CEO Lawrence Calcano said the raise is indicative of the fact that asset and wealth management industries “have embraced the need for an independent, automated, transparent approach to alternatives.”
iCapital says it was founded with the goal of making high-quality alternative investments accessible to wealth advisors and their high-net-worth investors, and enabling fund managers to reach new sources of capital. The firm’s flagship platform offers advisors and their high net worth clients access to a curated menu of private equity, hedge funds, and private credit investing opportunities “at lower minimums with a full suite of due diligence in a secure digital environment.”
Additionally, asset managers and banks leverage iCapital’s tech-enabled services to streamline and scale their private investments operational infrastructure by using white labels versions of its technology.
In other words, the platform is designed to streamline access, ease operational burdens and improve the user experience. Its target users range from advisors seeking to incorporate alternative investments in their clients’ portfolios to asset managers looking to scale their fundraising efforts to wealth management firms seeking a technology platform to enhance or replace existing systems.
The company says it currently has nearly 4,000 registered network members that include financial advisors, family offices and individual investors. iCapital also has 57 white label partnerships.
iCapital says it plans to use the new capital to enhance its platform technology and expand functionality. It also plans to diversify its investment offerings and global investors base. Additionally, the company intends to continue expanding globally across North America, Asia, Europe and the Middle East by increasing its partnerships with wealth management players.
In addition to the investment, Ping An and other investors have said they either plan to partner with or have already partnered with iCapital to leverage its proprietary technology. The goal is to use the technology to help manage the end-to-end operations of their private market activities.
Jonathan Larsen, chairman and CEO of Ping An, said his firm is excited to partner with the iCapital team on its next stage of growth, as it sees “enormous opportunities to open up access to alternatives in Asia and beyond.”
BlackRock COO Rob Goldstein said that as financial advisers explore the role alternatives can play in diversified portfolios, “iCapital’s leading open-architecture platform provides technology to streamline, automate and facilitate investments in private markets.”
Illustration: Li-Anne Dias