Alternative investment-focused turnkey asset management program iCapital is to acquire Bank of America’s alternative investment feeder fund operations business.
The business, which provides sponsorship, administration and advisory services to alternative investment feeder funds, represents approximately $20 billion in client assets.
iCapital's chief executive Lawrence Calcano said that the deal meant the firm would fill various roles that Bank of America previously held with respect to these funds, including general partners, sponsors, administrators or investors advisors.
The deal also means iCapital will offer positions to 22 Bank of America employees who currently work within the bank's alternative investment fund operations business.
Bank of America’s investment solutions group will continue to source, distribute and monitor the alternative investment feeder funds on its platform.
Investors in these funds will also continue to be clients of Merrill Lynch and US Trust as these funds continue to be distributed through those channels.
When the deal closes, iCapital’s technology will be used to streamline and automate ongoing operations and fund administration services for the alternative investment feeder funds.
The deal is expected to close in the first half of 2019, after which time the iCapital platform will service more than $25 billion in invested capital and nearly 70,000 accounts.
Nancy Fahmy, head of alternative investments and specialty asset management for Bank of America, said the transaction with iCapital would help simplify the bank's operations and benefit financial advisors of the firm.
She added that the move did not signify a move away from alternatives at the firm.
'Alternative investments are an important component of well diversified client portfolios, and we remain committed to providing clients with access to a broad range of third-party offerings on our platform,’ said Fahmy.
Over the past two years, iCapital has secured investments from some of Wall Street’s biggest players. The firm landed the world’s biggest asset manager BlackRock as a lead investor in December 2016. In July 2017, it received an undisclosed amount of strategic investment from UBS, followed by Morgan Stanley which invested in the company’s latest funding round and brought its total funding to date to over $50 million.
The firm acquired Deutsche Asset Management’s US private equity fund platform, a portfolio of 33 funds in September 2017. In March 2016 it acquired the $1.8 billion hedge fund platform, Hedge Focus, from Credit Suisse.
New York-based iCapital provides investors access to a curated selection of private equity funds and hedge funds, due diligence information, integration support with custodial platforms as well as reporting packages.