Morgan Stanley agreed to sell a business that administers its alternative investment feeder funds to iCapital, a financial technology firm run by a former Goldman Sachs banker.
ICapital will assume oversight of 115 Morgan Stanley feeder funds, which invest in private equity, hedge funds and real estate for the bank’s wealth management arm, New York-based iCapital said Friday in a statement that didn’t include terms.
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This move shows how large asset managers have taken note of certain trends.
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The firm joined BlackRock as a strategic partner of the alternative investment tool aimed at wealthy clients. Plus; other launches.
July 14 -
Both already use the fintech company’s technology to market their products to advisors.
November 9
ICapital has benefited from the willingness of Wall Street firms including Credit Suisse and Deutsche Bank to outsource some technology functions in an effort to cut costs. The agreement with Morgan Stanley will boost assets serviced by iCapital to $40 billion from $28 billion earlier this month, when it completed a similar transaction with Bank of America.
The deal “will ultimately enhance what our clients will see and get out of our feeder-fund business," Jeremy Beal, head of alternative investments at Morgan Stanley, said in an interview. “Partnering with iCapital made a lot of sense as we try and grow this business.”
Morgan Stanley has been spending to support its network of 15,000 financial advisors, which produce the highest return on equity of any division at the bank. That includes renovating office space and agreeing last month to buy stock-plan administrator Solium Capital for more than $900 million.
The new arrangement will automate some tasks and simplify management of client relationships for advisors, while Morgan Stanley will continue to make investment decisions, iCapital CEO Lawrence Calcano said. The firm will offer jobs to an unspecified number of Morgan Stanley employees, primarily in operational roles.
