iCapital Acquires UBS Feeder Funds

iCapital Acquires UBS Feeder Funds

  • Funds
  • August 24, 2022
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Global fintech platform iCapital has agreed to acquire UBS’s AlphaKeys Funds in a deal that will transfer more than $7 billion in assets from one firm to the other.

The firms have a relationship that dates back to 2017 when New York-based iCapital and UBS in New York reached an agreement for iCapital to manage each new UBS private equity, hedge fund and real estate feeder fund for UBS clients on iCapital’s technology platform. Before that, UBS managed its own legacy feeder funds. 

To simplify matters for advisors, the firms entered into this latest agreement, which saw iCapital acquire the legacy feeder funds that UBS was managing in-house before the 2017 agreement, along with the UBS team that manages the book, to continue the funds’ operations under one cohesive iCapital platform.

“This transaction brings these two funds together and simplifies things for the advisor,” said Lawrence Calcano, chairman and CEO of iCapital. “It was a natural progression from our working relationship.”

A feeder fund is an underlying fund that feeds into a larger investment. There can be multiple sub-investments that can be incorporated into the larger fund. When there are any profits earned by the overall fund, they are distributed among the feeder funds according to their contribution to the master fund. These types of funds allow a greater number of investors to access those investments that they might not normally be eligible for or able to invest in. 

The deal specifically includes UBS Fund Advisor, UBS’s legacy proprietary U.S. alternative investment manager, and the feeder fund platform it manages. The funds will continue to be managed by the same teams that have managed them at UBS so that there is no disruption for advisors or investors, Calcano said. The deal will close later this year.

“iCapital is uniquely qualified to manage the ongoing operations of this platform and service our clients’ existing investments, enabling us to help our financial advisors focus on what’s important—providing personalized advice and solutions to their clients,” said Jerry Pascucci, global co-head of alternative investment solutions at UBS Global Wealth Management, in a statement.

There was no reason for the timing of the deal, Calcano said, other than that it made sense given the working relationship between the two companies.

“There wasn’t necessarily a special trigger [that prompted this deal],” he said. “It just made sense.”

Calcano said the transaction strengthens the relationship between UBS and iCapital. When UBS wants to roll out new feeder funds, iCapital will still handle the management as it did before.

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