Bank of America makes its first investment in the Alts Platform iCapital

The iCapital alternative investment platform, used by more than 7,000 financial advisers, has attracted an undisclosed round of funding from Bank of America, the company said Thursday.

Bank of America invests $ 6 billion in iCapital, the same value as the company’s last round of financing in December 2021. During that round, iCapital raised $ 50 million from WestCap, a $ 8 billion growth company. ; Temasek, Singapore State Investment Company for approximately $ 282 billion; and Apollo Global Management, a $ 481 billion alternative investment firm in New York City.

That’s what iCapital CEO Lawrence Kalkan said RIA Intel that iCapital has nearly $ 500 million in capital on its balance sheet due to previous fundraising rounds and that it did not actively seek funds when Bank of America offered the capital.

However, “iCapital was happy to include them in the capital table, given [that] they are an important strategic partner and [we see] that’s a valuable way to create even closer alignment, “Kalkan said.

Nancy Famy, Bank of America’s Alternative Investment Manager, will join the iCapital Advisory Board to help target the product. Other terms of the deal were not disclosed.

Since its founding in 2013, the alternative giant has raised about $ 750 million, up from more than $ 490 million last year.

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Strategic investors from previous rounds include BlackRock, Blackstone, BNY Mellon, The Carlyle Group, Citi Ventures, Credit Suisse, Goldman Sachs Asset Management, Golub Capital, Hamilton Lane, JPMorgan Chase, KKR, Morgan Stanley, UBS and Wells Fargo.

iCapital said in a statement that it will use the investment from Bank of America to continue building the technical capabilities of its global alternative investment solution. The platform supports more than $ 130 billion in platform assets, a significant increase of $ 68 billion on the platform in early 2021.

The investment marks a “cornerstone” in the strategic relationship between iCapital and Bank of America, which dates back to 2018, when the companies began negotiating a deal. In March 2019, they reached an agreement and iCapital acquired Bank of America’s alternative investment fund operations, which streamlined and automated Bank of America’s ongoing operations and administrative services for Merrill advisers and private banks and their clients.

“ICapital and Bank of America share the belief that alternative investments are an important component of a well-diversified portfolio and [that] it is crucial to increase the access, education and service of counselors and their clients, ”Fahmi said.

Since then, iCapital has made 10 acquisitions and launches to expand its technical capabilities and expand the menu of investment opportunities offered on its platform. (This year, iCapital acquired a private market supply platform from Bank of Singapore, an alternative investment supply platform from Stifel and SIMON, a structured notes provider.)

The New York-based company has grown to more than 800 employees – 100 of whom were added in 2022, mostly in technical roles – and also has offices in Hong Kong, Singapore, Lisbon, Toronto, London and Zurich. .

The high volume of investment in alternative platforms is not surprising, given that global alternative assets under management are expected to increase by 60 percent and reach $ 17 trillion between the end of 2020 and the end of 2025, far outpacing world GDP and inflation rates, according to alternative data and research firm Preqin. Competitor iCapital CAIS, an alternative platform used by more than 5,000 consulting firms valued at $ 1.1 billion, also raised more than $ 325 million from investors in 2022.

That’s what Dave Lowry, head of research insights at Preqin, said RIA Intel thatthe long-term appetite for alternatives remains strong and that any decline in value due to rising interest rates, higher inflation and market volatility are potential purchase opportunities for investors.

In a recent survey of advisors, 83 percent already recommend that clients who qualify for accredited investors allocate alternatives.

Holly Dayton (@HollyLDeaton) is a full-time writer at RIA Intel and based in New York

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