iCapital Network, a global financial technology company whose platform provides access to alternative investing opportunities for the asset and wealth management industries, has raised $440 million in its latest funding round led by Temasek.
The fund raising was based on a valuation of about $4 billion, with the sale amounting to roughly a 10% minority stake in the company. Additional commitments came from existing investors including WestCap, Ping An Voyager Partners, Blackstone, UBS, Pivot Investment Partners, BNY Mellon, Wells Fargo, Morgan Stanley and Goldman Sachs Asset Management.
iCapital will invest to grow
iCapital will use the funds raised from this round to invest in growing and developing its employee base, improving its technology solutions and further enhancing its educational offerings and tools. In addition to this, the company will also use the proceeds from the capital raise to explore strategic acquisitions that will broaden its client base.
Providing access to alternative investments to high-net-worth (HNW) individuals and investors has been on ongoing challenge for banks and wealth managers alike. The minimum investment required for access to such funds is often a deterrent for most investors, and management of the paper-based subscription process is seen as a burden. In recent years, technology has begun to assist in easing the rigmarole of providing alternative investments to clients.
Tech based solutions
iCapital’s turnkey solution is a prime example of how technology can increase the efficiency of such processes. The platform offers a completely new way in which alternative investments are bought and sold through tech-based solutions for advisors, their high-net-worth client base, asset managers, and banks. iCapital’s technology can optimize client engagement and streamline investor onboarding, whilst their extensive research and due diligence can provide ongoing evaluation of fund offerings and performance.
On the platform, users have access to a curated “menu” of private equity, private credit, real estate, and hedge funds from alternative investment managers. iCapital themselves claim that their platform “provide quality funds, simplify operational processes and improve the investor experience”.
Looking beyond traditional markets
iCapital’s recent growth is likely partly driven by the market impacts of Covid-19. In the current climate, equity markets look fully priced and bond yields remain disappointing. The pandemic has also accelerated some underlying trends that were already reshaping the wealth management industry. Amid this economic uncertainty, advisors and investors are increasingly looking beyond the traditional public markets for new sources of return and diversification, often instead turning to alternative investments.
In a 2021 wealth and asset management report by Morgan Stanley and Oliver Wyman, Competing for Growth, they predict that high-net-worth (HNW) allocations to private-market investing will climb to around $1.5 trillion of assets under management by 2025. As long financial advisors seek and promise to fulfil their clients increasing need for private market investment opportunities, long will remain iCapital’s growth.