Apollo Global Management led a $225 million round of funding for CAIS, valuing the alternative investments platform at $1 billion, the companies announced Tuesday. The investment is the latest by Apollo and others in one of the companies making private equity, hedge funds, and other asset classes more accessible to financial advisors.
“We think it was very warranted, and I think that it represented the uniqueness of CAIS and just how hard it would be to repeat our business model,” CAIS chief executive Matt Brown said about the $1 billion valuation.
Alongside Apollo, Motive Partners, a private equity firm focused on financial technology companies that manages $1.78 billion in assets, also led the round. Apollo, which manages $481 billion in assets, is also a minority owner of Motive Partners. Franklin Templeton also participated in the round.
Blythe Masters, a founding partner at Motive, and Andrew Gosden, a managing director in the Financial Services & Strategy group at Apollo, will both join the board of directors at CAIS.
In 2019, New York-based CAIS raised a $50 million Series B round of funding from Eldridge, a holding company that invests in businesses within the finance, entertainment, technology, and real estate sectors. CAIS previously had some smaller investment rounds and has now raised a total of roughly $300 million.
The alternative investment platform raised the capital it did for two reasons, Brown told RIA Intel.
CAIS has grown to a point that it can “handle a capital raise of this magnitude,” Brown said. The platform, which has facilitated more than $13.8 billion in transactions, is used by more than 4,400 advisor firms or teams that collectively oversee more than $2 trillion in assets. Transaction volume has increased 65 percent year-over-year, while the number of platform users has grown 60 percent, the company said. To meet those demands, CAIS has doubled its employee count since last year. It also hired chief technology officer Shane Williams (who has been recruiting professionals to help extract insights from the “mine of information” that CAIS has collected), chief marketing officer Abby Salameh, and others.
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Meanwhile, asset managers are “extremely focused” on the growing number of independent wealth managers, but they often lack the means to help them invest in alternative assets. Mandates for asset managers of all sizes “are just through the roof,” Brown said.
CAIS, which also has a sophisticated learning platform that brings Netflix magic to alternative investments, is helping bridge the gap between advisors and asset managers.
“This is not just a CAIS hypothesis. Everyone is trying to make things easier for advisors,” Brown said. “All alternative assets are going to be on platforms.”
CAIS might also use its new capital to acquire other companies, Brown said. The executive did not share any specific targets, but he said it would consider technology companies, platforms that would expand the alternative assets on the CAIS platform, and opportunities to grow the company internationally. CAIS has not acquired any other companies in the past.
Apollo was also part of a group that raised $50 million for iCapital, another alternative investments platform. The iCapital platform, used by more than 7,000 financial advisors, was valued at $6 billion in the round. It has raised a total of almost $750 million.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.