Alternative investment platform iCapital wins extra funding from BofA

The investment comes amid the increasing popularity of alternative investment platforms among financial firms

by | June 24, 2022 | bobsguide

US alternative investment platform provider, iCapital, has secured a strategic investment from Bank of America, providing the fintech with additional resources for development.

Bank of America invested in iCapital at $6bn-plus, the same as the latter’s last funding round in December 2021.

The fintech company intends to use the investment to further develop the technical capabilities of its global alternative investing products.

“iCapital and Bank of America share the belief that alternative investments are an important component of a well-diversified portfolio, and it is critical to increase access, education and service to advisors and their clients,” said Nancy Fahmy, head of alternative investments, specialty asset management and investment solutions for BofA.

“Deepening our support of iCapital through a strategic investment is emblematic of the success of our collaborative relationship.”

The strategic investment builds upon the duo’s partnership from 2018 that saw Bank of America offload its feeder fund business to iCapital. The fintech group has since then continued to service Bank of America’s Merrill Lynch and US Trust feeder fund clients.

Following the investment, Bank of America joins a consortium of investors from the $50 million funding round in December, led by WestCap.

iCapital continues growth

Bank of America’s investment marks another win for iCapital, which in recent years has enjoyed a successful growth period via fundraisings, product launches and acquisitions.

In May, the company announced plans to acquire Simon Markets, a wealth management fintech platform that integrates more than 50 investment managers of structured products and annuities with wealth managers.

That same month, iCapital also secured three patents for technological advances in data security. The patents will enable asset and wealth managers to share investment documents with confidential information without disclosing sensitive client data to third parties.

Among other ongoing acquisitions and developments, the company is also in the process of acquiring Stifel’s feeder fund platform.

According to iCapital’s website, the fintech group currently services $125.4 billion in platform assets and has 146 white label platforms in the market.

Alternative investment platforms gain popularity

Alternative investment platforms like iCapital have seen increasing popularity in recent years as banks look to trim down their core assets to the most profitable businesses amid the increasing proliferation of fintech companies.

Furthermore, the increasing growth in the alternative asset industry has further pushed financial firms to partner with investment platforms for innovative, speedier, and cheaper solutions.

According to a 2022 report by UK investment data group, Preqin, alternative assets under management are expected to grow to $23.21 trillion in 2026, up from $13.32 trillion this year.

To capitalize on the market opportunity, alternative investment platforms have been at the receiving end of partnership offers and funding.

In March, LaSalle Investment management partnered with RealBlocks to enable seamless digital services to cover the investment firm’s $77 billion global real estate business.

Last month, CAIS scored wealth manager Advisor Group’s custom for improved alternative investment access, education, and transaction workflow.

The partnership followed the $100 million investment CAIS received from Reverence Capital Partners in April, adding to the $225 million it had raised in January this year.

German private equity platform Moonfare also received a $35 million investment from Virtuvian Partners, topping up its $125 million Series C funding led by Insight Partners in November 2021.

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