iCapital Network builds out alternative investments with Axio acquisition

The alternative investing platform iCapital Network Inc. is adding access to structured notes through the acquisition of Axio Financial.

The deal, announced Tuesday morning, will add 250 RIA relationships to the iCapital platform, which currently includes $86 billion worth of investments in 790 alternative products ranging from hedge funds and private equity to venture capital and real estate.

The Axio deal, expected to close by the end of the year, represents the first product offering on the iCapitial platform that will not require investors to meet net-worth or other qualified purchaser standards. But iCapital chief executive Lawrence Calcano said the plan is to continue working through financial intermediaries to avoid providing general access to retail investors.

“We felt like acquiring Axio would accelerate our launch at scale into this asset class,” he said. “This is the first set of products that is broadly open, but our intention would not be to broadly open the spigots.”

Founded in 2013, iCapital works with “well over 7,000 financial advisers” and “most of the major banks,” according to Calcano.

In July, iCapital secured $440 million worth of funding to help build out the alts platform that is gaining popularity across the financial services industry.

On the same day iCapital announced the Axio deal, Neuberger Berman announced becoming iCapital’s latest partnership that “unlocks the opportunity for investors to access private equity via NB Crossroad Private Markets Access Fund.”

"We launched the Access Fund in large part because of a long-standing belief that private equity should be accessible to a broader scope of investors," said Tony Tutrone, head of Neuberger Berman Alternatives.

"In partnering with iCapital, we're further fulfilling that goal by delivering private equity access with a user-friendly platform,” he added. “We're excited to provide investors with direct exposure to an asset class, which is a key driver of diversified returns and risk, and that is already a key component of many institutional investors' portfolios, including major pension funds."

As part of the build out of a technology platform that links financial intermediaries with alternative investments, iCapital also recently entered into a partnership with Grayscale Investments to provide access to digital currencies.

“The digital currency landscape is complex and ever-evolving, which can make it difficult for advisers and their clients to determine the most appropriate methods to access the asset class,” said Hugh Ross, chief operating officer of Grayscale, in a statement. 

The Axio deal is another example of how iCapital is striving to gain traction in the nontraditional investments marketplace. “They have 74 people, great relationships, and they’re connected with every one of the major issuers,” Calcano said.

In terms of the timing of building out an alternatives platform at a time when the financial markets are scrambling for diversification, Calcano said his focus in on the long game.

“We feel like we have a very good long-term strategic plan to both service these assets and continue to provide great value in the context of the whole portfolio,” he said. “We don’t see investing in alternatives as a fad. We see the benefits as being fundamental.”