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Wells Fargo to Sell Alt Fund Platform to iCapital

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Wells Fargo Investment Institute entered into an agreement to sell its Global Alternative Investments Feeder Fund Platform to fintech firm iCapital Network, WFII parent Wells Fargo and iCapital said in separate announcements Thursday.

As part of the transaction, Wells Fargo also agreed to make an unspecified strategic investment in iCapital under the terms of iCapital’s latest fundraising round, the firms said.

Terms of the agreement were not disclosed. ICapital and Wells Fargo declined to say how much was being paid for the fund platform or how much of an investment Wells Fargo agreed to make. However, iCapital said the investment was made in it as part of a financing round that closed April 30.

The transaction is expected to close in the second half of 2020, the firms said. Upon completion of the deal, “iCapital’s platform will service nearly $58 billion in client assets across more than 720 funds, 120,000 underlying accounts, and more than 70 white label partners,” iCapital said.

“Wells Fargo will continue to provide clients with its existing investment services, such as upfront and ongoing investment due diligence, product selection, investment monitoring, platform management, product support, and education, while the iCapital platform will provide investors with enhanced technology and efficiency,” Wells Fargo said.

As part of the transaction, iCapital will offer employment to a team of Wells Fargo employees who currently support operations for the GAI Feeder Fund Platform, the companies said. The transitioning team will continue to support the fund portfolio to allow for the continuity of service, the companies said. They didn’t specify in the announcements how many employees are affected. However, iCapital and Wells Fargo told ThinkAdvisor that 13 employees who currently support operations for the GAI Feeder Fund Platform would be offered jobs.

The partnership with Wells Fargo will serve as “another important milestone on our mission to create the industry standard technology solution for private investments,” according to Lawrence Calcano, CEO and chairman of iCapital Network, who previously was managing director and head of Technology Investment Banking at Goldman Sachs.

“This transaction will allow us to continue to provide innovative alternative investment solutions to our clients as well as upgrade the overall platform and launch new offerings,” according to Darrell Cronk, WFII president.

ICapital’s white-label technology “will be leveraged to streamline and automate ongoing operations and fund administration services for Wells Fargo’s alternative investment feeder funds,” the fintech firm said, adding: “It will also provide best-in-class support to Wells Fargo’s advisors and their high-net-worth client base.”

Earlier this year, iCapital announced the close of a $146 million capital round to support its future growth. Wells Fargo joins Ping An Global Voyager Fund, Goldman Sachs, Affiliated Managers Group, Hamilton Lane and WestCap as new investors, iCapital said.

Additional existing strategic partners and investors in iCapital include BlackRock, Blackstone, BNY Mellon, The Carlyle Group, Credit Suisse, JPMorgan Chase, Morgan Stanley Investment Management and UBS Financial Services, iCapital said.

iCapital said in May it was buying rival Artivest for an undisclosed amount. After that deal closed, iCapital said it would be working 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.

— Check out Schwab Launches Alternative Investment Platform on ThinkAdvisor.