iCapital opens war chest to acquire Artivest

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Alternative investing platform iCapital Network, flush from a recent multimillion-dollar capital raise, is acquiring one of its biggest rivals: Artivest.

The deal gives iCapital a competing technology startup focused on connecting financial advisors with alternative investments. It includes Artivest’s technology and operating platform, 28 proprietary alternative investment funds, several large enterprise relationships and Open Network, a digital menu of alternative products and strategies used by 1,800 financial advisors.

Terms were not disclosed. The deal is expected to close in June, a spokeswoman for iCapital says.

The acquisition comes less than two months after iCapital closed a $146 million round of funding to fuel its international growth, develop products and make “thoughtful acquisitions when they become available,” says iCapital CEO Lawrence Calcano. The funding wasn’t raised specifically to buy Artivest; the deal just happened to fit, he says.

While the two companies have a lot of competitive overlap in products, clients and partnerships, Artivest has technology geared toward direct investments that will expand what iCapital can offer, says Calcano.

“When you think about M&A — if there is zero overlap, you run the risk of buying something you really dont understand. If there is complete overlap, you end up creating redundancies,” Calcano says. The Artivest acquisition hits the complementary sweet spot, he adds.

The acquisition of Artivest will expand iCapital's functionality, says CEO Lawrence Calcano.

The purchase furthers iCapital’s rapid growth in alternative investments. In March, it purchased and assumed oversight of 115 alternative investment feeder funds from Morgan Stanley.

Artivest services about $4 billion on its platform, a spokeswoman says. When the deal closes, iCapital will service a total of $55 billion in client assets across 650 funds, 115,000 underlying accounts and 70 white-label partners.

Including the latest capital infusion, iCapital has raised a total of $225 million and counts firms like The Carlyle Group, Credit Suisse, JPMorgan Chase and Morgan Stanley among its backers.

For Artivest, which has raised $17 million led by private equity firm KKR, now is the right time to maximize the company’s value, says Chief Marketing Officer Paul Nobile. KKR will convert its holdings into equity shares of iCapital.

“Artivest and iCapital share a mission — to open up alternatives to a wider audience and use technology to drive efficiency — so the combination makes sense for our clients and team,” Nobile said in an email.

Not included in iCapital’s acquisition was a legacy Altegris mutual fund business and some commodity pools. These will be overseen by Altegris Advisors, the existing portfolio management team, to ensure continuity post-transaction.

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M&A Fintech Alternative investments iCapital Network Morgan Stanley KKR INVEST West 2020