A fast-growing alternative investments platform used by more than 70 companies, iCapital Network, said Thursday it acquired AI Insight, an education, research, and compliance company focused on the same asset class.
The deal is a meaningful step toward becoming an “end-to-end” solution to help financial advisors learn about and allocate to alternative assets, Lawrence Calcano, CEO of iCapital Network, told RIA Intel.
All of AI Insight’s 10 employees, including President and CEO Sherri Cooke, will join iCapital, which has more than 340 employees. Terms of the deal were not disclosed.
Founded in 2013, New York City-based iCapital services more than $68 billion in alternative assets, including hedge funds, private equity, private debt, real estate, and others. Hundreds of companies use it to service 125,000 underlying accounts, including 90 broker-dealers, RIAs, and other wealth managers with white-labeled versions for their advisors. It is openly seeking to become as ubiquitous as the New York Stock Exchange and has made nine acquisitions, including a platform from Wells Fargo’s Global Alternative Investments division and AI Insight.
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Calcano contacted AI Insight last summer to learn more about it.
“I had heard a lot of good things about what they were doing in the marketplace and I just reached out to Sherri to learn more. And she was super forthcoming and just a great person,” he said.
The two companies discovered they were in a deal sweet spot, overlapping enough to understand each other but not enough to preclude a deal. They would complement each other well if merged. In addition to its platform that enables advisors to buy and sell alternatives, iCapital has always intended to expand its education, research and, compliance — the strengths of AI Insight, which is used by 160 broker-dealers and RIAs with a total of about 50,000 advisors.
The addition of AI Insight’s tutorials and tests for specific funds would immediately benefit advisors, investors, and compliance departments, Calcano said. Currently, iCapital only has educational material for the broad sub asset classes of alternatives. More than 140 alternative investment managers have investments on the AI Insight platform.
Calcano’s iCapital will continue to invest in AI Insight’s technology and fold its services into its own platform. The goal is to create an end-to-end alternative investment solution for companies. However, AI Insight will also continue to serve its existing clients like it has been.
Only 45% of financial advisors make allocations to alternative investments. But that number is growing and has led to surging interest in the CAIA designation. A small but growing portion of wealth managers are even investing in cryptocurrencies.
Advisors and investors will only benefit from learning about and allocating to alternatives, Calcano said.
“I think education is relevant to all of these assets, to all of these types of investments. People just really need to understand the way these products work. What will make them successful or unsuccessful...before they invest, not to learn along the way,” he said.
As advisors do that and use iCapital “we will succeed in their wake.”
The executive added that the acquisition of AI Insight won’t likely be the last deal of the year. “You’ll probably hear more about this kind of activity from us in the not-too-distant furniture.”
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.