Fintech platform iCapital Network, used for alternative investing, is buying rival Artivest for an undisclosed amount.
The transaction includes Artivest’s technology and management of its 28 alternative investment funds. Its platform is now used by about 1,800 financial advisors and their clients to access private equity and other investments.
After the deal closes, iCapital says it will work with about $55 billion in client assets, 650 funds, 115,000 accounts, and 70 white-label partners. As of April 30, iCapital worked with $51 billion in assets and some 100,000 accounts.
“We have long admired Artivest’s technical innovations and capabilities in registered funds and direct investments, and the strength of their team,” said iCapital Chairman and CEO Lawrence Calcano, in a statement.
“We are pleased to reach an agreement with iCapital, which is well positioned to deliver the quality and continuity of client experience that is central to Artivest’s offering,” added Artivest Chairman and CEO Martin Beaulieu.
Private equity owners, like KKR, expect to convert their holdings in Artivest into equity shares of iCapital. Other owners are Aquiline Capital Partners, Genstar Capital and Thiel Capital.
Recently, iCapital said it received $146 million in funding from the Ping An Global Voyager Fund, including commitments from BlackRock, Blackstone, BNY Mellon, Goldman Sachs and UBS. Some other iCapital partners and investors are the Carlyle Group, Credit Suisse, JPMorgan and Morgan Stanley.
Artivest Holdings will continue to manage its legacy mutual fund business and commodity pools that are not part of the deal.
New RIA Platform
TradingFront has launched a white-label platform for RIAs that’s integrated with Interactive Brokers’ execution, trading infrastructure and custodial services and that aims to attract advisors frustrated with mergers and other trends.
The news comes less than a month after Motif Investing shut down its platform for RIAs and moved these accounts to Folio Investing and about six months after Charles Schwab said it was buying TD Ameritrade.
“We see the challenges and business disruption issues occurring for RIAs from the looming custodian consolidation in the industry, along with mounting complexity and costs of technology integration,” according to Yang Xu, founder of TradingFront.
But fintech firms like TradingFront face their own set of challenges.
Mainly, there’s the fact that they are joining the “ever-growing, crowded ranks of RIA ‘All-in-One’s,’” said Gavin Spitzner, head of Wealth Consulting Partners.
These platforms tend to offer RIAs “rock-bottom pricing (well, not as low Oranj’s ‘free’ platform, but close), and they have their previous incarnation as a B2B robo-advisor as their calling cards,” Spitzner added.
The general aim of such ventures is to take market share from more established firms like Orion and Envestnet Tamarac, as well as go after so-called digital turnkey asset management platforms (or TAMPs) like Betterment for Advisors and RobustWealth, according to the consultant.
“It looks like a beautiful user interface from what I’ve seen. But they face the typical challenges all startups deal with in breaking into a crowded space, especially one requiring client repapering (custody is with Interactive Brokers),” Spitzner said. “Perhaps we’ll see some breakaways and small advisors test drive it for new business.”