iCapital expands menu of alternative investments with Simon acquisition

The 800-pound gorilla of alternative investments just got even heavier.

With the closing Tuesday of its acquisition of Simon Markets, alternative investments fintech iCapital adds structured investments, annuities, digital assets and risk-managed products to its already sizable marketplace of private offerings. In 2021, Simon, which was developed at Goldman Sachs and was spun off in 2018, closed a $100 million of funding and had more than $48 billion of issuances.

iCapital closed its own round of funding — $497 million — in 2021 that valued the company at more than $6 billion. The fintech services $134 billion in client assets, and the addition of Simon brings the total number of asset managers and product manufacturers on the iCapital platform to nearly 300, according to the company. Terms of the deal were not disclosed.

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For comparison, CAIS, iCapital’s closest competitor in the alternative investments space, closed a round of funding in June that valued the company at $1.1 billion.

In addition to an expanded menu of investments, Simon also expands iCapital’s educational material, support services for advisers and clients, and technology — notably the Simon Spectrum allocation analysis and portfolio construction tool.

“Incorporating Simon’s tremendous capabilities into our already robust offering is further demonstration of our commitment to provide the wealth management industry with an unparalleled alternative investing experience,” iCapital CEO Lawrence Calcano said in a statement.

Interest in alternative investment is surging among financial advisers as wealthy investors increasingly demand diversification, noncorrelation and hedges against inflation. A recent survey of advisers from Cerulli Associates and Blue Value found allocations to alternatives significantly higher in 2022, with advisers reporting an average of 14.5% and seeking to increase that to 17.5% over the next two years.

“As advisors seek access to nontraditional investment structures to help clients meet long-term financial objectives, they can be best supported by a full-service platform offering a comprehensive set of strategies and tools to meet their needs,” Calcano said.

The annuities that Simon adds to iCapital starts to blur the lines between iCapital and DPL Financial Partners, said Charles Failla, principal of Sovereign Financial Group. The competition should ultimately benefit advisers who have freedom to choose their investment products, he said.

“If you’re in the broker-dealer world, are you going to have as easy of access to these choices as the RIA space?” Failla said.

Jason Broder, CEO of Simon, has joined iCapital as a managing director and head of iCapital Solutions to lead market development and sales of the company’s technology. Additionally, Simon’s 200 employees have joined iCapital.

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