State Street has announced its partnership with iCapital Network to facilitate accessibility to its offering of registered funds on its State Street Alternative Investment Solutions platform, as it prepares for a new group of investors.
The partnership will help to eliminate operational excesses, particularly documents such as marketing materials, PPMs, LPAs, offering documents, and subscription paperwork, and will help to manage investments from LPs, putting them all on one digital portal. Additionally, it will decrease the need for individual institutions to manage these processes manually, and advance the SEC’s push toward democratizing private market access to accredited and retail investors by allowing for easy digital access.
Institutions and managers are hoping to capitalize on the next frontier of investment capital. Private markets have traditionally focused on institutional investors, but increasingly, high-net-worth individuals and family offices have looked to the sector for its outsize returns, and there is a strong regulatory push by the SEC to expand access to new investors, including retail. “If the private markets were to capture just five to 10 percent of the affluent and mass affluent market in the US alone, it would represent between $800 billion and $1.6 trillion in assets under management,” said Paul Fleming, global head of State Street’s Alternative Investment Solutions group.
The operational benefits for State Street’s fund manager clients include further facilitating the fund subscription process by giving users access to everything they need at once, according to Cesar Estrada, head of product management for State Street’s Private Equity and Real Estate Assets Fund Services in North America. “The transparency that the platform offers is encompassing of all of the distribution channels and presents it in a dashboard format,” Estrada told Private Funds CFO. “We can see where in the workflow process they [GPs] are for each of their various distributors.”
iCapital Network boasts major institutional clients such as Blackstone, The Carlyle Group, and Brookfield, and has $46 billion worth of assets on the platform. State Street will act as the transfer agent for all transactions executed through the partnership.
“I think this partnership with State Street is really taking this experience to the next level,” said Lawrence Calcano, chief executive of iCapital Network. “Taking our platform and plugging it in directly with State Street’s platform will create more visibility for both buy and sell side to understand where an investment is at any given point in time.”
As the push for further access for retail investors to alternative investments is supported by the SEC (in part by the agency’s proposed expanding of the definition of “accredited investor”), some firms are beginning to position themselves in this direction. “Certainly, we believe there will come a time where all retail investors that have a 401(k) or a retirement account will have choices in those plans that include alternative investments,” Estrada said.
“We are very supportive of the SEC’s view,” Calcano said.