Wells Fargo Investment Institute has agreed to sell its Global Alternative Investments Feeder Fund Platform to iCapital Network. The bank is also taking part in iCapital’s latest funding round.
iCapital’s business strategy is to open up alternative assets to a larger investor pool; what the company has referred to as the “democratization” of alternative investments.
Darrell Cronk, president of WFII, tells Private Funds CFO that the group will be retaining many of its responsibilities related to the GAI feeder fund, including product sourcing, hire-fire decision making, manager selection, due diligence efforts, platform management, investment monitoring and ongoing education, among others.
iCapital will be taking over the operations, enhanced technology and reporting aspects of existing feeder funds structures in Wells Fargo’s private wealth management business and will focus on automating these functions.
The GAI Feeder Fund Platform offers access to PE, private debt, hedge funds, private real estate and direct private investments across some 70 investment vehicles. It also offers investment options in external funds or portfolio companies through feeder funds.
WFII originally partnered with iCapital in 2019, allocating administrative duties for new feeder funds to the company. The recent announcement expands on that by adding legacy or existing fund structures to be picked up by iCapital as well.
“Anything that has a feeder fund structure associated with it” is now going to iCapital, Cronk said.
The partnership also includes the migration of 13 operations-focused WFII employees to iCapital to work directly with WFII feeder fund structures, Cronk added.
The transaction is expected to close before the year-end.
Many expect investors to increasingly look to alternative assets to achieve their return targets, and Cronk said this move is part of that expectation.
“Many clients have been under-exposed for years in their portfolio and are taking a keener interest [in alternatives] today,” he said. “This only reinforces the growth we expect in this business going forward.”
iCapital has been taking over the operations of banks’ feeder fund platforms for years. It bought Credit Suisse’s HedgeFocus platform in 2016, the US Private Equity Access Fund platform from Deutsche Bank’s asset management in 2017, Bank of America Merrill Lynch’s alternatives feeder fund operations in 2018 and began overseeing Morgan Stanley’s feeder fund platform in 2019.
“The key for us is helping Wells and all of our partners to succeed in growing this business and making these assets even easier for their advisors and clients to both purchase, as well as own over time,” said iCapital chief executive Lawrence Calcano.